Document:

Dated                           April 2003

                         GOLAR FREEZE (BERMUDA) LIMITED
                  (to be renamed SOVEREIGN FREEZE LIMITED) (1)

                                       and

                       GOLAR GAS HOLDING COMPANY, INC. (2)

                                 LEASE AGREEMENT
                           relating to "GOLAR FREEZE"

                                                                NORTON ROSE
 <PAGE>

                                    Contents

clause                                                                 Page

1      Purpose and definitions..........................................

2      Lessee's representations and warranties..........................

3      Term of Lease....................................................

4      Conditions.......................................................

5      Delivery and acceptance..........................................

6      Extent of Lessor's liability.....................................

7      Rental...........................................................

8      Payments, interest and calculations..............................

9      Costs and indemnities............................................

10     Taxation.........................................................

11     General undertakings.............................................

12     Sub-leasing......................................................

13     Use and trade of the Ship........................................

14     Title, registration, name and house flag.........................

15     Maintenance and operation........................................

16     Insurance Undertakings: wreck removal............................

17     Powers of Lessor to remedy defaults..............................

18     Redelivery.......................................................

19     Consumable stores................................................

20     Use of equipment and replacement.................................

21     Encumbrances: Lessor's undertakings..............................

22     Loss and damage..................................................

23     Salvage..........................................................

24     Requisition for hire.............................................

25     Security Provisions..............................................

26     Termination Events...............................................

27     Lessor's rights following a Termination Event and Mandatory
         Prepayment Event..........................

28     Notices..........................................................

29     Liens and indemnities............................................

30     Assignment and sale of Ship......................................

31     Increased costs, funding problems and illegality.................

32     Refinancings.....................................................

33     Miscellaneous....................................................

34     Governing law and jurisdiction...................................

Schedule 1 List of documents and evidence...............................

Schedule 2 Form of Delivery Request Notice..............................

Schedule 3 Form of Protocol of Delivery and Acceptance under Lease......

Schedule 4 Financial Schedule...........................................

Schedule 5 Forms of Loss Payable Clause.................................

Schedule 6 Form of Compliance Certificate...............................
<PAGE>
THIS LEASE is dated April 2003 and made BETWEEN:

(1)     GOLAR FREEZE (BERMUDA) LIMITED (whose name is to be changed to Sovereign
        Freeze Limited), a company incorporated in Bermuda whose principal place
        of business is situated at Sovereign House, 298 Deansgate, Manchester M3
        4HH (the "Lessor"); and

(2)     GOLAR GAS HOLDING COMPANY,  INC., a company incorporated in the Republic
        of Liberia  whose  registered  office is  situated  at 80 Broad  Street,
        Monrovia, Republic of Liberia (the "Lessee").

BY WHICH IT IS AGREED as follows :

1       Purpose and definitions

1.1     Purpose

        This Lease sets out the terms and  conditions  upon and subject to which
        the Lessor agrees to lease to the Lessee,  and the Lessee agrees to take
        on lease, the Ship.

1.2     Definitions

        In this Lease, unless the context otherwise requires:

        "Account  Bank" means Nordea Bank  Finland Plc of 8th Floor,  City Place
        House, 55 Basinghall Street, London EC2V 5NB and includes its successors
        in title;

        "Accounting  Period" means an accounting period as defined in section 12
        ICTA;

        "Additional  Amount" has the  meaning  given to that  expression  in the
        Letter of Credit;

        "Additional  Security" means any additional security for the obligations
        of the Lessee under this Lease provided in accordance  with clause 25 in
        form and  content  acceptable  to the Lessor  and,  where the context so
        requires,  includes any replacement of such  additional  security issued
        pursuant to clause 25;

        "Additional  Security Amount" means, at any time, the amount in Sterling
        (as certified by the Lessor whose  certificate  shall, in the absence of
        manifest  error,  be conclusive  and binding on the Lessee) which is the
        value of any  Additional  Security  at such time (but for the purpose of
        the definition of the Applicable  Security Amount and in the case of any
        Additional  Security  provided  by a  Relevant  Bank,  disregarding  any
        Relevant  Bank Change of Law Event or  Relevant  Bank  Illegality  Event
        which may affect the  liability  of the LC Bank to the Lessor in respect
        of the relevant Additional Security at such time);

        "Additional   Security   Documents"  means  all  documents  under  which
        Additional  Security  is  constituted  or  by  which  such  security  is
        evidenced or pursuant to which any person  secures the  provision of any
        Additional Security;

        "Additional  Security  Provider" means any entity  providing  Additional
        Security and,  where the context so requires,  means any entity  issuing
        any replacement Additional Security pursuant to clause 25;

        "Additional  Security Table" has the meaning given to that expression in
        the Financial Schedule;

        "Adjustment  Period" has the  meaning  given to that  expression  in the
        Financial Schedule;

        "Adverse  Event" has the meaning given to that  expression in the Letter
        of Credit;

        "Adverse  Event Notice" has the meaning given to that  expression in the
        Letter of Credit;

        "Agency  and Trust  Deed"  means the  agency and trust deed of even date
        herewith made between the Lessor,  the Other Lessors,  the Lessor Agent,
        the  Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees  and the  Standby
        Purchaser relating to (inter alia) the Lessee Third Party Assignment and
        the Sub-Lessee Third Party Assignment;

        "Annual Financial Statements" means annual:

        (a)     financial  statements of the Lessee, the Manager, the Sub-Lessee
                and each of the Other Sub-Lessees;

        (b)     consolidated financial statements of the Lessee Group; and

        (c)     proforma combined and consolidated  financial  statements of the
                Golar Gas Group,

        each  comprising a profit and loss account and a balance  sheet and cash
        flow statement and audited by the Lessee's Auditors;

        "Applicable  LC  Increased   Amount"  has  the  meaning  given  to  that
        expression in clause 25.8.1;

        "Applicable  Rate"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Applicable  Security Amount" means, at any relevant time, the aggregate
        of the  Letter of  Credit  Amount  and the  Additional  Security  Amount
        attributable to an Additional  Security  Document provided by a Relevant
        Bank less any amount which,  by virtue of any Relevant  Bank  Illegality
        Event and/or  Relevant  Bank Change of Law Event,  the Relevant  Bank is
        relieved from its  obligation to make payment under the Letter of Credit
        or,  as the  case  may be,  the  Additional  Security  Document  at such
        relevant time;

        "Applicable  Security Table" has the meaning given to that expression in
        the Financial Schedule;

        "Approved  Brokers" means Marsh Marine & Energy AS or such other firm of
        insurance  brokers  appointed  by the Lessee as may from time to time be
        approved  in writing by the Lessor for the  purposes of this Lease (such
        approval not to be unreasonably withheld or delayed);

        "Arranger" means Citibank N.A. of 33 Canada Square, Canary Wharf, London
        E14 5LB and includes its successors in title;

        "Arrangement  Fee"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Assumed Rate" has the meaning given to that expression in the Financial
        Schedule;

        "Assumptions"  has the meaning given to that expression in the Financial
        Schedule;

        "Auditors" means the auditors from time to time of the Lessor;

        "Banking  Day"  means a day (other  than a Saturday  or Sunday) on which
        dealings in deposits in Sterling are carried on in the London  Interbank
        Eurocurrency  Market and on which banks are open for  business in London
        (or any other relevant place of payment under clause 8);

        "Borrowed Money" means Indebtedness incurred in respect of:

        (a)     money borrowed or raised and debit balances at banks;

        (b)     any  bond,   note,   loan  stock,   debenture  or  similar  debt
                instrument;

        (c)     acceptance or documentary credit facilities;

        (d)     receivables sold or discounted (otherwise than on a non-recourse
                basis);

        (e)     deferred  payments for assets or services  acquired  (other than
                assets or services  acquired on normal  commercial  terms in the
                ordinary course of business where payment is deferred by no more
                than one hundred and eighty (180) days);

        (f)     Capitalised Lease Obligations;

        (g)     any other transaction  (including,  without limitation,  forward
                sale or purchase  agreements)  having the commercial effect of a
                borrowing or raising of money;

        (h)     guarantees  in respect  of  Indebtedness  of any person  falling
                within any of (a) to (g) above; and

        (i)     preference  share  capital in the Lessee or any other  member of
                the Golar Gas Group  which is or may be  redeemable  before  the
                full and final discharge of all  Indebtedness and liabilities of
                the Lessee under this Lease;

        "CAA" means the Capital Allowances Act 2001;

        "Capitalised Lease Obligation" of any person means the obligation to pay
        rent or other payment  amounts under a lease of (or other Borrowed Money
        arrangements conveying the right to use) real or personal property which
        is required to be classified and accounted for as a capitalised lease or
        a liability on the face of a balance  sheet of such person in accordance
        with Relevant GAAP (in the case of this Lease and the Other Ship Leases,
        net of an  amount  equal to the  aggregate  of the  Applicable  Security
        Amount and the Applicable  Security Amount (as defined in the Other Ship
        Leases));

        "Cash  Balances"  means,  at any relevant  time,  an amount equal to the
        aggregate amount which is, at such time,  credited to and/or invested in
        the Earnings Accounts;

        "Casualty  Amount"  means  five  million  Dollars  ($5,000,000)  (or the
        equivalent  in any other  currency)  or, if the  context so  requires in
        respect of any single  refurbishment of the Ship to be undertaken by the
        Lessee  or, as the case may be,  the  Sub-Lessee  during  the  period of
        twenty  four (24)  months  from the date of this  Lease,  eight  million
        Dollars ($8,000,000);

        "Change of Law" means, in each case after the date of this Lease:

        (a)     the  introduction,   imposition,   assessment,   application  or
                amendment by any  governmental  authority,  central bank or Tax,
                fiscal,  monetary  or other  authority  of any  applicable  law,
                order,  regulation,  official directive or guideline (whether or
                not having the force of law but, if not having the force of law,
                compliance   with  which  is  regarded  by  banks  and/or  other
                financial  institutions  conducting  business  in  the  relevant
                jurisdiction  as customary  (including,  but not limited to, the
                introduction  of or changeover to the Euro in any  participating
                member state of the European Union); and/or

        (b)     any  change  in, or any new or  further  or  different  official
                interpretation,  administration  or  application  after the date
                hereof of,  any  applicable  law,  order,  regulation,  official
                directive or  guideline  (whether or not having the force of law
                but,  if not having the force of law,  compliance  with which is
                regarded by banks and/or other financial institutions conducting
                business in the relevant jurisdiction as customary) or Generally
                Accepted Accounting Principles; and/or

        (c)     any  compliance  with any  request,  requirement,  directive  or
                guideline  (whether  or not having the force of law but,  if not
                having the force of law,  compliance  with which is  regarded by
                banks and/or other financial institutions conducting business in
                the relevant  jurisdiction  as  customary)  issued by an central
                bank, Tax, fiscal, monetary or governmental authority; and/or

        (d)     the  adoption,  introduction  or variation of, or change in, any
                ruling,  decision,   judgment,  statement  of  policy,  official
                proposal or any other  assessment or  determination  (whether or
                not having the force of law but, if not having the force of law,
                compliance   with  which  is  regarded  by  banks  and/or  other
                financial  institutions  conducting  business  in  the  relevant
                jurisdiction  as  customary) by any court,  central  bank,  Tax,
                fiscal, monetary or governmental authority;

        "Classification"  means the classification +1A1 Tanker for Liquefied Gas
        EO SBM, bis, dat (-10(degree)C) or such other  classification  available
        for liquefied natural gas carriers of the same age and type as the Ship,
        in each case,  with the  Classification  Society as the Lessor shall, at
        the  request of the Lessee,  have agreed in writing  shall be treated as
        the Classification for the purposes of this Lease;

        "Classification   Society"  means  Det  Norske  Veritas  or  such  other
        classification  society  which the Lessor  shall,  at the request of the
        Lessee,  have agreed in writing  shall be treated as the  Classification
        Society for the Ship for the purposes of this Lease;

        "Compulsory Acquisition" means requisition for title or other compulsory
        acquisition,  requisition,  appropriation,  expropriation,  deprivation,
        forfeiture or confiscation  for any reason of the Ship by any Government
        Entity or other competent  authority,  whether de jure or de facto,  but
        shall exclude  requisition for use or hire not involving  requisition of
        title;

       "Corporation  Tax" means  corporation tax in the context of the scheme of
       taxation  contained in the  Corporation  Taxes Act (as defined in section
       831 ICTA) or any other Tax on companies  imposed in the United Kingdom in
       substitution for corporation tax;

        "Cost of  Lessor's  Management  Time"  means  the  cost of the  Lessor's
        personnel  charged  at  an  amount  of  two  hundred  and  fifty  Pounds
        ((pound)250) per hour for a senior officer of the Lessor and one hundred
        and seventy five pounds  ((pound)175)  per hour for a junior  officer of
        the Lessor,  in each case  excluding  VAT,  escalated at the rate of RPI
        from the Delivery Date;

        "Credit  Rating"  means,  in  respect  of  any  person,  the  unsecured,
        unguaranteed  and  unsubordinated  long term debt  rating of such person
        with the applicable credit rating agency;

        "Credit Review Date" means 31 December 2010;

        "Current Assets" means, on a consolidated  basis, the current assets (as
        determined in accordance with Relevant GAAP) of the Golar Gas Group;

        "Current  Liabilities"  means,  on a  consolidated  basis,  the  current
        liabilities  (as  determined  in accordance  with Relevant  GAAP) of the
        Golar Gas Group;

        "Default Rate" means the rate of interest determined by the Lessor to be
        one per cent (1%) per annum above the  aggregate of the Margin and LIBOR
        for such  period  not  exceeding  six (6) months in respect of which the
        Default  Rate falls to be  determined  as the Lessor  may  determine  in
        amounts  comparable  with the sum in respect of which the  Default  Rate
        falls to be determined  or, where by reason of  circumstances  affecting
        the London Interbank Market generally, deposits in the relevant currency
        are not, in the ordinary  course of business,  available at any relevant
        time in the London Interbank Market, the rate of interest  determined by
        the Lessor to be one per cent (1%) above the aggregate of the Margin and
        the  cost  (expressed  as a  percentage  per  annum)  to the  Lessor  of
        obtaining  funds in the currency and in amounts  comparable with the sum
        in respect of which the Default Rate falls to be determined;

        "Delivery"  means the time when the Lessor shall deliver the Ship to the
        Lessee pursuant to clause 5;

        "Delivery  Date" means the date  (which must be a Banking  Day) on which
        Delivery shall occur;

        "Delivery  Request Notice" means a notice  substantially in the terms of
        Schedule 2;

        "Determination"  have the  meaning  given to  those  expressions  in the
        Financial Schedule;

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

        "Dollars"  and "$" means the lawful  currency  for the time being of the
        United States of America and in respect of all payments to be made under
        this Lease in Dollars,  means funds which are for same day settlement in
        the New York Clearing  House  Interbank  Payments  System (or such other
        U.S.  dollar  funds as may at the  relevant  time be  customary  for the
        settlement of international  banking transactions  denominated in United
        States dollars);

        "Earnings  Account"  means  any of the  accounts  of the  Lessee  or the
        Sub-Lessee  or the  Other  Sub-Lessees  of the Ship or any of the  Other
        Ships  designated in writing by the Lessor (based,  where  applicable on
        information  received  from  the  First  Security  Agent  or the  Second
        Security Agent) to be an Earnings Account for the purposes of this Lease
        (and includes any fixed term deposit contract or account associated with
        such  account) and  "Earnings  Accounts"  means all of such accounts and
        fixed term deposit contracts and/or accounts;

        "EBITDA" means, for any period, the earnings before interest,  taxes and
        depreciation and amortisation (calculated as income from operations plus
        any  depreciation  and  amortisation,  Interest  Expense,  and  taxes on
        overall net income  deducted in  calculating  income from  operations in
        respect of such period) of the Golar Gas Group  determined in accordance
        with Relevant GAAP on a consolidated basis;

        "Economically  Burdensome"  has the meaning given to that  expression in
        the Financial Schedule;

        "Encumbrance"  means any mortgage,  charge  (whether fixed or floating),
        pledge, lien, hypothecation,  assignment,  trust arrangement or security
        interest or other encumbrance of any kind securing any obligation of any
        person  or any  type of  preferential  arrangement  (including,  without
        limitation,  title  transfer  and/or  retention  arrangements  having  a
        similar effect);

        "Environmental  Affiliate"  means any agent or employee of the Lessee or
        any other Relevant Party or any person having a contractual relationship
        with the  Lessee  or any other  Relevant  Party in  connection  with any
        Relevant  Ship  or  its  operation  or  the  carriage  of  cargo  and/or
        passengers  thereon and/or the provision of goods and/or  services on or
        from the Relevant Ship;

        "Environmental  Approval" means any consent,  authorisation,  licence or
        approval of any  governmental  or public body or  authorities  or courts
        applicable  to any  Relevant  Ship or its  operation  or the carriage of
        cargo and/or  passengers  thereon  and/or the  provision of goods and/or
        services on or from the Relevant Ship required  under any  Environmental
        Law;

        "Environmental Claim" means:

        (a)     any  and  all  enforcement,   clean-up,  removal  or  any  other
                governmental or regulatory  action or order or claim  instituted
                or made pursuant to any  Environmental  Law or any Environmental
                Approval or resulting from a Spill; and

        (b)     any claim made by any other person relating to a Spill;

        "Environmental Incident" means any Spill:

        (a)     from any Relevant Ship; or

        (b)     from any other vessel in circumstances where:

                (i)     the Ship or the Lessor,  the Lessee,  the  Sub-Lessee or
                        the  Manager  may  be  liable  to  Environmental  Claims
                        arising from the Spill; and/or

                (ii)    the  Ship  may be  arrested,  attached  or  attached  in
                        connection with any such Environmental Claims;

        "Environmental Laws" means laws,  regulations and conventions concerning
        pollution or protection of human health or the environment;

        "Financial    Schedule"    means    Schedule   4   and    includes   its
        appendices/annexes;

        "Financial  Year" has the meaning given to that expression in Schedule 1
        of the Interpretation Act 1978;

        "First  Security  Agent" means Den norske Bank ASA of Stranden 21, Oslo,
        Norway and includes its successors in title;

        "Fixed Liability Amount" has the meaning given to that expression in the
        Letter of Credit;

        "Free  Available  Cash" means,  at any relevant  time, the amount of the
        Cash  Balances,  freely  available  for  use by the  Lessee  and/or  the
        Sub-Lessee   and/or   any   of  the   Other   Sub-Lessees   which   may,
        notwithstanding any Encumbrance,  right of set-off or agreement with any
        other party, be withdrawn  and/or encashed and used by it for any lawful
        purpose without  restriction  (save for restrictions that may be imposed
        by the First Security Agent or the Second Security Agent);

        "GIMI" means the liquefied  natural gas carrier "GIMI"  registered under
        British flag in the ownership of the relevant Other Lessor;

        "Golar  Gas  Group"  means  the  Lessee,  the  Sub-Lessee  and the Other
        Sub-Lessees;

        "GOLAR  SPIRIT" means the liquefied  natural gas carrier  "GOLAR SPIRIT"
        registered  under  British flag in the  ownership of the relevant  Other
        Lessor;

        "Gotaas  Larsen"  means Gotaas  Larsen  Shipping  Corp.,  a  corporation
        incorporated in the Republic of Liberia having its registered  office at
        80  Broad  Street,  Monrovia,  Republic  of  Liberia  and  includes  its
        successors in title;

        "Government  Entity" means and includes (whether having a distinct legal
        personality or not) any national or local government  authority,  board,
        commission,  department,  division,  organ,  instrumentality,  court  or
        agency and any association,  organisation or institution of which any of
        the foregoing is a member or to whose  jurisdiction any of the foregoing
        is subject or in whose activities any of the foregoing is a participant;

        "HILLI" means the liquefied natural gas carrier "HILLI" registered under
        British flag in the ownership of the relevant Other Lessor;

        "Holding  Company"  means any  holding  company  within  the  meaning of
        section 736 of the Companies Act 1985;

        "ICTA" means the Income and Corporation Taxes Act 1988;

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

        "Indemnified  Person"  means each  member of the Lessor  Group and their
        respective officers, directors, employees, servants and agents;

        "Indexation  Relief Letter" means a side letter to this Lease in respect
        of indexation relief, to be executed by the Lessor and the Lessee;

        "Initial Security Table" has the meaning given to that expression in the
        Financial Schedule;

        "Insolvency  Event"  means,  in  relation  to the  Lessee or the  Lessee
        Parent,  any of the  events  referred  to in  clauses  26.1.8 to 26.1.14
        inclusive occurring in respect of the Lessee or, as the case may be, the
        Lessee Parent;

        "Insurances"  means all  policies  and  contracts  of  insurance  (which
        expression  includes  all  entries  of  the  Ship  in a  protection  and
        indemnity or war risks  association)  which are from time to time during
        the Lease  Period in place or taken out or  entered  into by the  Lessee
        pursuant  to  clause  16  (or,  during,  the  Sub-Lease  Period,  by the
        Sub-Lessee)  for the  benefit of the Lessee  alone or the Lessee and the
        Lessor and,  during the Sub-Lease  Period,  the Sub-Lessee in respect of
        the Ship (but  excluding any policies and  contracts of insurance  taken
        out or entered into for the sole benefit and, save as provided in clause
        16.1.1,  at the cost of the  Lessor  and  without  being  subject to any
        indemnity  provision  under  this  Lease  (provided  such  policies  and
        contracts  of insurance do not affect  recoveries  under the  Insurances
        effected by the Lessee and/or the Sub-Lessee) or otherwise  howsoever in
        connection with the Ship and all benefits thereof  (including  claims of
        whatsoever nature and return of premiums);

        "Interest  Expense" means, for any period,  interest charges and related
        expenses for such period of the Golar Gas Group determined in accordance
        with Relevant GAAP on a consolidated basis;

        "Irrecoverable  VAT" has the  meaning  given to that  expression  in the
        Financial Schedule;

        "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  regulations  issued  pursuant to
        it;

        "KHANNUR" means the liquefied natural gas carrier  "KHANNUR"  registered
        under British flag in the ownership of the relevant Other Lessor;

        "LC Bank" means  Bayerische  Landesbank,  a German company acting out of
        its London branch at 13/14 Appold Street, London EC2A 2NB and, where the
        context so requires,  means such other bank  acceptable to the Lessor as
        may replace such bank as an "LC Bank" pursuant to clause 25 and includes
        its successors in title;

        "Lease  Documents"  means  this  Lease,  the  Proceeds  Deed,  the Third
        Priority  Three Party Deed,  the Agency and Trust Deed,  any  Additional
        Security  Documents  executed  by the Lessee and any other  document  to
        which the  Lessee is party and which the  Lessor  and the  Lessee  agree
        shall be a "Lease  Document"  for the  purposes  of this  Lease  and all
        notices,  consents,  certificates  and other documents and agreements to
        which the  Lessee is party  issued  or, as the case may be, to be issued
        pursuant to any of the foregoing;

        "Lease Fee" has the meaning  given to that  expression  in the Financial
        Schedule;

        "Lease  Obligations" means all moneys,  obligations and liabilities from
        time to time  owing or  payable,  incurred  or  assumed by the Lessee in
        favour of the Lessor under or pursuant to this Lease and the other Lease
        Documents;

        "Lease  Period"  means  the  period  during  which the  Lessee  shall be
        entitled to the possession  and use of the Ship in accordance  with this
        Lease;

        "Legal  Fee"  means the fees and  disbursements  of Messrs  Norton  Rose
        acting as counsel to the  Lessor,  together  with the fees in respect of
        any  correspondent  counsel  instructed  by Messrs  Norton Rose with the
        approval of the Lessee;

        "Lessee" means Golar Gas Holding Company,  Inc., a Liberian  corporation
        having its registered office at 80 Broad Street,  Monrovia,  Republic of
        Liberia and includes its successors in title;

        "Lessee  Group"  means  together  the  Lessee  Parent  and  each  of its
        Subsidiaries from time to time and for the purposes of "Annual Financial
        Statements"  and "Quarterly  Financial  Statements"  (and the expression
        "Lessee  Group"  where used in such  definitions)  any company or entity
        whose accounts are to be consolidated with those of the Lessee Parent in
        accordance  with  Relevant  GAAP shall be treated as a Subsidiary of the
        Lessee Parent;

        "Lessee Parent" means Golar LNG Limited,  a Bermudan  company having its
        principal  place of business at  Par-la-Ville  Place,  Second Floor,  14
        Par-la-Ville  Road,  Hamilton  HM08,  Bermuda,  and being  the  indirect
        Holding Company of the Lessee and includes its successors in title;

        "Lessee Parent  Guarantee" means the guarantee of the obligations of the
        Lessee  under this Lease  issued or (as the context  may  require) to be
        issued by the Lessee Parent in favour of the Lessor in the agreed form;

        "Lessee's Auditors" means  PricewaterhouseCoopers or another first class
        firm of international accountants;

        "Lessee's  Quiet  Enjoyment  Letter" means the letter of quiet enjoyment
        executed or (as the context may  required)  to be extended by the Lessee
        in favour of the Time Charterer;

        "Lessor"  means  Golar  Freeze  (Bermuda)  Limited  (whose name shall be
        changed to Sovereign Freeze Limited), a Bermudan company whose principal
        place of business is at Sovereign  House,  298 Deansgate,  Manchester M3
        4HH and includes its successors in title;

        "Lessor  Agent"  means  Sovereign  Finance Plc of Sovereign  House,  298
        Deansgate, Manchester M3 4HH;

        "Lessor Group" means the group of companies from time to time comprising
        the Lessor Parent and all of its Subsidiaries;

        "Lessor  Mortgage"  means the first priority  statutory  mortgage of the
        Ship and  collateral  deed of covenant  (containing an assignment by the
        Lessor of its interest in the  Insurances  (other than the Insurances in
        respect  of  protection  and  indemnity  and other  third  party  risks)
        executed or (as the context may require) to be executed by the Lessor in
        favour of the Lessee in the agreed form as security for its  obligations
        to pay certain sums to the Lessee under this Lease;

        "Lessor Parent" means Alliance & Leicester plc;

        "Lessor Payment  Account" means the account of the Lessor referred to in
        clause 8.1;

        "Lessor Proceeds Accounts" means any proceeds accounts opened or, as the
        context  may  require,  to be opened by the  Lessor  pursuant  to and in
        accordance with clause 2.8 of the Proceeds Deed;

        "Lessor Proceeds Accounts  Assignment" means the assignment  executed or
        (as the context  may  require) to be executed by the Lessor in favour of
        the Lessee in respect of the Lessor  Proceeds  Accounts,  and, where the
        context  requires,  includes  any Lessor  Proceeds  Accounts  Assignment
        executed pursuant to clause 8.6 of the Proceeds Deed;

        "Lessor  Support  Letters"  means the support  letters issued or (as the
        context may require) to be issued by the Lessor Parent to (inter alios):

        (a)     the Lessee,  the First  Security  Agent and the Second  Security
                Agent in respect of,  amongst  other  things,  the ownership and
                obligations  of the  Lessor  under  this  Lease  and  the  other
                Transaction Documents to which it is a party in the agreed form;
                and

        (b)     the Time  Charterer in respect of the  obligations of the Lessor
                under the Quiet Enjoyment Letter;

        "Lessor's  Encumbrance" means any Encumbrance which arises or is created
        solely as a result of:

        (a)     any  obligation of the Lessor or a member of the Lessor Group or
                any claim  against  or  affecting  the Lessor or a member of the
                Lessor  Group  (other than  (except for the  purposes of clauses
                3.6.3 and 21) a claim for or obligation in respect of Taxes or a
                claim or obligation in respect of which the liability to pay the
                same, or the amount of the same,  is then being  disputed by the
                Lessor or a member of the  Lessor  Group in good faith and which
                will not cause any interference to the use, possession and quiet
                enjoyment of the Ship by the Lessee during the Lease Period), in
                each case, that is not related to, or does not arise directly or
                indirectly as a result of, the transactions contemplated by this
                Lease  or any  of the  other  Transaction  Documents  including,
                without limitation,  any Encumbrance which arises as a result of
                the  operation of any vessel  (other than the Ship and the Other
                Ships) of which any member of the Lessor Group is the owner or a
                disponent owner;

        (b)     any Taxes  imposed  upon the  Lessor  or a member of the  Lessor
                Group which are not  required to be  indemnified  against by the
                Lessee or by any other  person  under this Lease or under any of
                the other  Transaction  Documents  (other  than  (except for the
                purposes of clauses  3.6.3 and 21) Taxes in respect of which the
                liability to pay the same,  or the amount of the same,  is being
                disputed  by the Lessor or a member of the Lessor  Group in good
                faith and which  will not  cause  any  interference  to the use,
                possession and quiet  enjoyment of the Ship by the Lessee during
                the Lease Period);

        (c)     any act or  omission  of the  Lessor or a member  of the  Lessor
                Group (but not of any member of the Lessee Group acting as agent
                or representative of the Lessor or a member of the Lessor Group)
                that is not related  to, or does not arise  directly as a result
                of, the  transactions  contemplated  by this Lease or any of the
                other Transaction Documents;

        (d)     any act or  omission  of the  Lessor or a member  of the  Lessor
                Group (but not of any member of the Lessee Group acting as agent
                or representative of the Lessor or a member of the Lessor Group)
                constituting  a breach by the Lessor of its express  obligations
                under this Lease or any of the other Transaction Documents; or

        (e)     any act or omission of the Lessor  which  constitutes  the gross
                negligence or wilful misconduct of the Lessor;

        "Letter of Credit"  means the Letter of Credit issued or (as the context
        may  require)  to be issued by the LC Bank in favour of the  Lessor in a
        form and in an amount acceptable to the Lessor and, where the context so
        requires,  means any replacement  letter of credit executed  pursuant to
        clause 25, such letter of credit to be for a period  initially  expiring
        on 14 January 2015;

        "Letter of Credit  Amount"  means,  at any  relevant  time,  the maximum
        amount  of the  liability  of the LC Bank to the  Lessor  under,  and as
        determined  pursuant to, the Letter of Credit at such time (but, for the
        purpose of the definition of Applicable Security Amount disregarding any
        Relevant  Bank Change of Law Event or  Relevant  Bank  Illegality  Event
        which may affect the  liability  of the LC Bank to the Lessor  under the
        Letter of Credit at such relevant time);

        "Letter of Credit Expiry Date" means,  at any relevant time, the date on
        which the Letter of Credit expires in accordance with its terms;

        "LIBOR"  has the  meaning  given  to that  expression  in the  Financial
        Schedule;

        "Loss Payable  Clauses"  means the  provisions  regulating the manner of
        payment  of  sums  receivable  under  the  Insurances  which  are  to be
        incorporated  in the  relevant  insurance  documents,  such Loss Payable
        Clauses to be in the form set out in  Schedule 6 or in such forms as may
        from time to time be agreed in writing by the Lessor;

        "Management  Agreement"  means  an  agreement  entered  into  or (as the
        context may require) to be entered into between the  Sub-Lessee  and the
        Manager on terms  acceptable to the Lessor  providing for the Manager to
        provide services relating to the commercial and technical management and
        crewing of the Ship during the Sub-Lease Period;

        "Manager" means Golar  Management (UK) Limited,  an English company with
        company  number  04396172  having its principal  place of business at 30
        Marsh Wall, London E14 9TP and includes its successors in title;

        "Manager's  Undertaking"  means an  undertaking  in  respect of the Ship
        executed or (as the  context may  require) to be executed by the Manager
        in favour of the Lessor Agent in respect of the Ship in the agreed form;

        "Mandatory  Prepayment  Event" means any of the events or  circumstances
        described in clause 26.2;

        "Manuals and Technical  Records"  means all such books,  records,  logs,
        manuals,  handbooks,  technical  data,  drawings and other materials and
        documents (whether or not kept or required to be kept in compliance with
        any applicable laws or the requirements of the  Classification  Society)
        relating to the Ship;

        "Margin" has the meaning given to the expression  "Percentage Return" in
        the Financial Schedule;

        "Maximum  Unsecured Strip Liability  Amount" means the maximum unsecured
        Strip Liability  Amount permitted under this Lease as determined for any
        Security  Period by  reference to the amounts set out in column 4 of the
        Initial  Security Table for such Security  Period set out in column 1 of
        the Initial Security Table;

        "Minimum  Free  Available  Cash"  means an amount  equal to twenty  five
        million Dollars ($25,000,000);

        "Minimum LC Bank  Credit  Rating"  means,  in relation to the Initial LC
        Bank or any Relevant Bank, A3 "with negative  credit watch" by Moodys or
        A- by Standard & Poor's;

        "month" means a period beginning in one (1) calendar month and ending in
        the next calendar month on the day numerically  corresponding to the day
        of the  calendar  month on which it  started,  provided  that (a) if the
        period  started on the last Banking Day in a calendar  month or if there
        is no such  numerically  corresponding  day,  it  shall  end on the last
        Banking  Day in such next  calendar  month  and (b) if such  numerically
        corresponding  day is not a Banking  Day,  the  period  shall end on the
        preceding  Banking Day and  "months"  and  "monthly"  shall be construed
        accordingly;

        "Moodys"  means Moodys  Investors  Services  Inc. or its  successors  in
        title;

        "Net  Debt"  means,  on a  consolidated  basis,  an amount  equal to the
        aggregate  of all  Borrowed  Money of the  Golar Gas  Group  other  than
        Subordinated Debt minus Free Available Cash;

        "Net Sale Proceeds" means, in relation to a sale of the Ship, the amount
        of all consideration actually received by the Lessor from a purchaser on
        the sale of the Ship and any non-refundable  deposit irrevocably paid to
        the Lessor by a person  acquiring or proposing to acquire the Ship under
        a contract or offer to purchase or otherwise  acquire the Ship which has
        been withdrawn,  terminated or cancelled or has lapsed,  less any VAT in
        respect  of the sale of the Ship for which the  Lessor  is  required  to
        account,  the  Lessor's  expenses  (excluding  Recoverable  VAT on  such
        expenses)  reasonably  incurred in connection  with such sale including,
        without limitation,  (where applicable) broker's  commissions,  Lessor's
        marketing expenses, legal costs, agency fees and port charges, insurance
        premiums and stamp duties,  registration  fees and any expenses relating
        to the repair of the Ship (including putting the Ship in class) intended
        to restore the Ship to the condition  required by this Lease or pursuant
        to the  provisions of any sale and purchase  agreement in respect of the
        sale of the Ship;

        "Net  Total  Loss  Proceeds"  means the  Total  Loss  Proceeds  actually
        received by the Lessor from the  insurers  following a Total Loss of the
        Ship,  less any expenses  (excluding  Recoverable VAT on such expenses),
        taxes or duties incurred by the Lessor in connection with the collection
        of such proceeds;

        "Notified  Termination Date" has the meaning given to that expression in
        clause 3.3.1;

        "Other Lessor" means:

        (a)     Golar Gimi  (Bermuda)  Limited  (whose  name shall be changed to
                Sovereign Gimi Limited) in respect of "GIMI";

        (b)     Golar Spirit  (Bermuda)  Limited (whose name shall be changed to
                Sovereign Spirit Limited) in respect of "GOLAR SPIRIT";

        (c)     Golar Hilli  (Bermuda)  Limited  (whose name shall be changed to
                Sovereign Hilli Limited) in respect of "HILLI"; and

        (d)     Golar Khannur  (Bermuda) Limited (whose name shall be changed to
                Sovereign Khannur Limited) in respect of "KHANNUR",

        and "Other Lessors" means all of them;

        "Other Ships" means "GIMI",  "GOLAR  SPIRIT",  "HILLI" and "KHANNUR" and
        "Other Ship" means any of them;

        "Other Ship Leases" means the lease  agreements  made or (as the context
        may  require)  to be made  between  the Other  Lessors and the Lessee in
        respect of the Other Ships;

        "Other Ship Relevant Documents" means all of the "Relevant Documents" as
        that expression is defined in each of the Other Ship Leases;

        "Other  Sub-Lessees"  has the meaning  given to that  expression  in the
        Proceeds Deed;

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

        "Original  Time Charter"  means the time charter dated 25 September 2002
        as amended by Addendum  No. 1 dated 2 February  2003,  both made between
        the Time  Charterer  and Golar  Freeze  Inc.  pursuant to which the Time
        Charterer  has  taken  the Ship on time  charter  for a period  from the
        Ship's delivery  thereunder and expiring within a thirty (30) day period
        of 31 March 2008;

        "Permitted Encumbrance" means:

        (a)     any Lessor's Encumbrance;

        (b)     any  Encumbrance  for  Taxes  either  not yet  assessed  or,  if
                assessed,  not yet due and  payable or being  contested  in good
                faith by appropriate  proceedings  (and for the payment of which
                adequate  reserves  have  been  provided)  so long  as any  such
                proceedings  or the continued  existence of such  Encumbrance do
                not involve any  likelihood of the sale,  forfeiture or loss of,
                or of any interest in the Ship;

        (c)     liens  arising in the ordinary  course of business by statute or
                by  operation  of law in  respect of  obligations  which are not
                overdue  or  which  are  being   contested   in  good  faith  by
                appropriate  proceedings  (and for the payment of which adequate
                reserves have been provided) so long as any such  proceedings or
                the  continued  existence  of  such  lien  do  not  involve  any
                likelihood  of  the  sale,  forfeiture  or  loss  of,  or of any
                interest in the Ship;

        (d)     any  Encumbrance  arising  out of  claims,  judgments  or events
                against the Lessee  which are being  contested  in good faith or
                which are the  subject of a pending  appeal (and for the payment
                of which  adequate  reserves  have been provided or, as the case
                may be, which the Lessor is satisfied are covered by Insurances)
                so long as any such claims, judgments or the continued existence
                of such Encumbrance do not involve in the reasonable  opinion of
                the Lessor any likelihood of the sale, forfeiture or loss of, or
                of any interest in the Ship;

        (e)     Permitted Liens;

        (f)     any Encumbrance  granted pursuant to the Transaction  Documents;
                or

        (g)     any other Encumbrance,  the creation of which has been expressly
                permitted in writing by the Lessor;

        "Permitted Liens" means:

        (a)     any Ship repairer's or outfitter's possessory lien for a sum not
                (except with the prior written consent of the Lessor)  exceeding
                the Casualty  Amount unless the Lessor has received  evidence to
                its  satisfaction  that the cost of the work in respect of which
                the  lien  may  arise  is   covered  by   insurances   on  terms
                satisfactory to the Lessor (in its absolute discretion) or;

        (b)     any lien on the Ship for  Master's,  officer's  or crew's  wages
                outstanding in the ordinary course of trading; and

        (c)     any lien for salvage or general average;

        "Pollutant"  means  and  includes  oil  and  its  products,   any  other
        polluting,  toxic or hazardous  substance and any other  substance whose
        release into the  atmosphere is regulated or penalised by  Environmental
        Laws;

        "Primary  Period"  means the period from and including the Delivery Date
        and  terminating,  subject to the terms and conditions of this Lease, on
        the earlier of (a) the date falling twenty (20) years after the Delivery
        Date and (b) the date of  termination  of the  leasing of the Ship under
        this Lease;

        "Primary  Rental"  has  the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Primary  Rental Date" has the meaning  given to that  expression in the
        Financial Schedule;

        "Proceeds  Deed"  means the  agreement  entered or (as the  context  may
        require)  to be entered  into  between  (inter  alios) the  Lessor,  the
        Lessee, the Sub-Lessee,  the Account Bank, the Lessor Agent, the Standby
        Purchaser, the First Security Agent and the Second Security Agent in the
        agreed form;

        "Protocol of Delivery and Acceptance" means the protocol of delivery and
        acceptance in relation to the Ship in the form of Schedule 3;

        "Qualifying  Replacement  Bank"  means a Bank  incorporated  in a Zone A
        country (as the terms  "Bank" and "Zone A" are  defined in the  Guidance
        Notes to Bank of England  Return BSD2) with a Credit  Rating of not less
        than the Minimum LC Bank Credit Rating and otherwise approved in writing
        by the  Lessor  (such  approval  not  to be  unreasonably  withheld  but
        withholding  of  such  approval  it is  agreed  shall  be  deemed  to be
        reasonable where, inter alia, for internal credit reasons, the Lessor is
        unable to  accept  any  additional  credit  exposure  to such bank in an
        amount  equal to the  liability  which  such  bank will be  assuming  in
        relation to the transactions contemplated by this Lease);

        "Quarterly Financial Statements" means quarterly:

        (a)     financial  statements of the Lessee, the Manager, the Sub-Lessee
                and each of the Other Sub-Lessees;

        (b)     consolidated financial statements of the Golar LNG Group; and

        (c)     pro-forma  consolidated and combined financial statements of the
                Golar Gas Group,

        prepared as at 31 March,  30 June and 30 September (but not 31 December)
        in each year (or three (3),  six (6) or nine (9) (but not  twelve  (12))
        months after the commencement of the Lessee's  accounting  period should
        its accounting reference date be changed, with the prior written consent
        of the Lessor from 31 December) comprising a profit and loss account and
        a balance sheet and a cash flow statement;

        "Quiet  Enjoyment  Letter(s)"  means the  letter(s)  of quiet  enjoyment
        executed or (as the context may require) to be executed by (inter alios)
        the Lessor and/or the Lessor Agent in favour of, and agreed, by the Time
        Charterer pursuant to the Time Charter;

        "Rated Time  Charterer"  has the  meaning  given to that  expression  in
        clause 25.6;

        "Recoverable VAT" means Value Added Tax which is not Irrecoverable VAT;

        "Relevant  Bank"  means  the LC Bank  and/or,  as the case  may be,  any
        Additional Security Provider (other than an Additional Security Provider
        which is a member of the Lessee Group);

        "Relevant  Bank Change of Law Event"  means,  in respect of any Relevant
        Bank,  an event or  circumstance  arising  by  virtue of a Change of Law
        which  requires or, in the reasonable  opinion of the Lessor,  will when
        implemented   require  the  Relevant  Bank  to  make  any  deduction  or
        withholding  in  respect  of Taxes  from any  payment  to be made to the
        Lessor under any of the Relevant  Bank  Documents to which such Relevant
        Bank is a party and/or which would  otherwise  cause the amounts payable
        by such  Relevant  Bank to the Lessor  under any of such  Relevant  Bank
        Documents  to be less than the amount  which would have been payable but
        for such event or circumstance (save where such event or circumstance is
        due to a Relevant Bank Event);

        "Relevant Bank Documents"  means, in relation to any Relevant Bank, each
        of the  documents  executed  from time to time by such  Relevant Bank as
        security for the  obligations  and  liabilities of the Lessee under this
        Lease or otherwise in connection with this Lease;

        "Relevant Bank Event" means, in respect of any Relevant Bank, any of the
        following events:

        (a)     any Relevant  Bank is unable to pay its debts within the meaning
                of section 123(1)(a), (b), (e) or (2) of the Insolvency Act 1986
                or  becomes  insolvent  or stops  or  suspends  making  payments
                (whether of principal  or  interest)  with respect to all or any
                class of its debts or announces an intention to do so; or

        (b)     any petition is presented or other step is taken for the purpose
                of  winding  up  such  Relevant  Bank  or an  order  is  made or
                resolution passed for the winding up of such Relevant Bank which
                remains  unstayed or a notice is issued  convening a meeting for
                the  purpose  of  passing  any  such  resolution  which  remains
                unstayed; or

        (c)     any petition is presented or other step is taken for the purpose
                of the  appointment  of an  administrator  of such Relevant Bank
                which  remains  unstayed or an  administration  order is made in
                relation to such Relevant Bank; or

        (d)     any  administrative  or  other  receiver  is  appointed  of such
                Relevant  Bank or any part of its assets and/or  undertaking  or
                any other steps are taken to enforce any Encumbrance over all or
                any material (in the  reasonable  opinion of the Lessor) part of
                the assets of such Relevant Bank; or

        (e)     any steps are taken, or negotiations commenced, by such Relevant
                Bank  or by any  of its  creditors  with a view  to the  general
                readjustment or rescheduling of all or part of its  indebtedness
                or  to  proposing  any  kind  of   composition,   compromise  or
                arrangement   involving  such  Relevant  Bank  and  any  of  its
                creditors; or

        (f)     there  occurs,  in relation to such Relevant Bank in any country
                or  territory  in  which  it  carries  on  business  or  to  the
                jurisdiction  of whose courts any part of its assets is subject,
                any  event  which,  in the  reasonable  opinion  of the  Lessor,
                appears in that country or territory to correspond with, or have
                an effect  equivalent  or similar to, any of those  mentioned in
                paragraphs  (a) to (d)  (inclusive)  above or otherwise  becomes
                subject,  in any such country or territory,  to the operation of
                any law relating to insolvency, bankruptcy or liquidation; or

        (g)     such  Relevant Bank fails to pay any sum payable by it under the
                Relevant  Bank  Documents to which it is a party at the time, in
                the currency and in the manner  stipulated in such Relevant Bank
                Documents  (having  regard to any grace  periods  applicable  to
                payments contained in such Relevant Bank Documents) and such sum
                remains unpaid;

        "Relevant Bank Illegality Event" means, in respect of any Relevant Bank,
        an event or circumstance  which causes or, in the reasonable  opinion of
        the  Lessor,  will  when  implemented  cause  any of the  Relevant  Bank
        Documents  executed by such  Relevant Bank to become at any time and for
        any reason illegal,  invalid or  unenforceable  or otherwise to cease to
        remain  in full  force or  effect  or makes it  illegal,  impossible  or
        unlawful  at any  time  for  such  Relevant  Bank to  fulfil  any of the
        covenants and obligations  expressed to be assumed by such Relevant Bank
        in the Relevant Bank Documents executed by such Relevant Bank or for the
        Lessor to  exercise  the rights or any of them vested in it under any of
        the Relevant  Bank  Documents  executed by such Relevant Bank but in any
        such case other than in circumstances where, in relation to the Relevant
        Bank, the relevant event or circumstance  arises by reason of a Relevant
        Bank Event in respect of the Relevant Bank;

        "Relevant Bank Security" means:

        (a)     in relation to the LC Bank, the Letter of Credit; and

        (b)     in relation to any Additional  Security  Provider which is not a
                member of the Lessee Group, the Additional  Security provided by
                such Additional Security Provider;

        "Relevant  Documents" means the Lease Documents,  the Standby Documents,
        the Management  Agreement,  the Lessee Parent  Guarantee,  the Manager's
        Undertaking,  the Third Sub-Lessee Share Security, the Letter of Credit,
        any Additional Security Documents, the Quiet Enjoyment Letter, the Third
        Earnings  Account  Security,  the  Supplemental  Agreement and any other
        document or instrument from time to time executed as a guarantee  and/or
        security for the obligations of the Lessee and/or any sums of money from
        time to time owing whether actually or  contingently,  under or pursuant
        to  this  Lease  or any of the  other  Lease  Documents  and  any  other
        documents  supplemental  to any of them of which the parties  agree from
        time to time shall be Relevant  Documents  for the purpose of this Lease
        and  all  notices,  consents,   certificates  and  other  documents  and
        agreements  issued or, as the case may be, to be issued  pursuant to any
        of the foregoing;

        "Relevant Event" means any Termination Event or any Mandatory Prepayment
        Event or any event  which after the giving of notice or lapse of time or
        the  satisfaction of any other  condition (or any  combination  thereof)
        would constitute a Termination Event or a Mandatory Prepayment Event;

        "Relevant  GAAP"  means  accounting  principles,   concepts,  bases  and
        policies generally adopted and accepted in the respective  jurisdictions
        in which the  Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees  and the
        Lessee  Parent are  required to produce and file  accounts  from time to
        time;

        "Relevant  Jurisdiction"  means any  jurisdiction  in which or where any
        Relevant Party is  incorporated,  resident,  domiciled,  has a permanent
        establishment,  carries on, or has a place of business or to which it is
        otherwise effectively connected;

        "Relevant  Party" means any of the Lessee,  the  Sub-Lessee,  the Lessee
        Parent,  the  Manager or any other party which is a member of the Lessee
        Group who is a party to any of the other Relevant Documents;

        "Relevant Period" means:

        (a)     in relation to a Relevant Bank Illegality  Event,  the period of
                sixty  (60)  days from the  occurrence  or  announcement  of the
                Relevant Bank Illegality  Event or, if shorter,  the period from
                the occurrence or  announcement of such Relevant Bank Illegality
                Event up to the  date  falling  five (5) days  prior to the date
                upon which the Relevant Bank Illegality Event is to take effect;
                and

        (b)     in relation to a Relevant  Bank Change of Law Event,  the period
                of sixty (60) days from the  occurrence or  announcement  of the
                Relevant  Bank  Change of Law Event or, if  shorter,  the period
                from the occurrence or announcement of such Relevant Bank Change
                of Law Event up to the date  falling  five (5) days prior to the
                date upon which  such  Relevant  Bank  Change of Law Event is to
                take place;

        "Relevant  Security  Agent" has the meaning given to that  expression in
        the Proceeds Deed;

        "Relevant  Shareholder"  has the  meaning  given to that  expression  in
        clause 2.2.10;

        "Relevant  Ship" means the Ship,  the Other  Ships and any other  vessel
        from  time to time  (whether  before  or after  the date of this  Lease)
        owned,  managed or crewed by, or leased to the Lessee or the  Sub-Lessee
        for which that person has or may have  responsibility for liabilities or
        claims resulting from  non-compliance with Environmental Laws and/or the
        occurrence of an Environmental Incident;

        "Rental"  has the  meaning  given to that  expression  in the  Financial
        Schedule;

        "Required LC Amount" means an amount equal during each  Security  Period
        shown in the Applicable  Security Table to the Total Security Amount for
        and during each such  Security  Period minus the  corresponding  Maximum
        Unsecured  Strip  Liability  Amount  for and during  each such  Security
        Period;

        "Required  Letter of Credit Expiry Date" means the date falling ten (10)
        days after the expiry of the Primary Period;

        "Required  Security  Amount"  means,  in relation to each new Additional
        Security Table provided in accordance  with paragraph 9 of the Financial
        Schedule, the amount shown in column (6) of that new Additional Security
        Table and, where additional security is required to be provided pursuant
        to clause 25.2 by reference  to such  amount,  ignoring for this purpose
        the fact that such amount is shown as a negative  figure for the purpose
        of that new Additional Security Table;

        "Requisition Compensation" means all sums of money or other compensation
        from time to time payable in respect of the  Compulsory  Acquisition  of
        the Ship;

        "RPI"  has  the  meaning  given  to  that  expression  in the  Financial
        Schedule;

        "Secondary  Period"  means the  period  for  which  the Lease  Period is
        extended in accordance with clause 3.2;

        "Secondary  Rental"  has the  meaning  given to that  expression  in the
        Financial Schedule;

        "Second  Security Agent" means Nordea Bank Norge ASA of  Middlethunsgate
        17, 0107 Oslo, Norway and includes its successors in title;

        "Security  Period"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Ship" means the liquefied  natural gas carrier  "GOLAR  FREEZE"  having
        International Maritime Organisation Number registered in the name of the
        Lessor under the British flag with  Official  Number 905530 and includes
        any share or interest therein and her engines, machinery, boats, tackle,
        outfit,  equipment,  spare gear, belongings and appurtenances whether on
        board  or  ashore,  (but  excluding   consumable  or  other  stores  and
        provisions,   bunkers,  domestic  fuel,  lubricants,  rented  or  leased
        equipment  and  charterer's  and  sub-charterer's  additions)  which are
        property of the Lessor on the Delivery  Date or become  installed on the
        Ship  thereafter  or which,  having been removed  therefrom,  remain the
        property of the Lessor pursuant to this Lease, together with any and all
        substitutions therefor and all additions,  improvements and replacements
        and removals  thereof from time to time made in or to her in  accordance
        with the provisions of this Lease and, where the context  permits "Ship"
        shall include the Manual and Technical Records;

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

        "Spill" means any emission,  spill,  release or discharge of a Pollutant
        from any Relevant Ship into the environment;

        "Standard & Poor's" means Standard & Poor's Rating Services and includes
        its successors in title;

        "Standby  Documents" means the Standby Put Option  Agreement,  the Third
        Standby  Purchaser   Assignment,   the  Third  Standby  Purchaser  Share
        Security,  the Standby Lease Agreement,  the Standby Rental  Assignment,
        the Third Standby  Mortgage and any other  document,  notice,  letter or
        instrument  entered  into or given  pursuant  to the terms of any of the
        foregoing  or any  document  which it is  agreed  should  be a  "Standby
        Document" for the purpose of this Lease;

        "Standby Lease Agreement"  means the standby lease agreement  entered or
        to be entered into between the Lessee and the Standby Purchaser pursuant
        to which the Standby Purchaser shall, following the purchase of the Ship
        or by the Standby Purchaser, lease the Ship to the Lessee;

        "Standby  Option Notice" has the meaning given to that expression in the
        Standby Put Option Agreement;

        "Standby  Purchaser"  means LNG Shipping Co., a Cayman  Islands  company
        having its principal place of business at P.O. Box 694GT, CIBC Financial
        Centre, 11 Dr Roys Drive, George Town, Grand Cayman,  Cayman Islands, or
        any other  person who may from time to time,  with the  approval  of the
        Lessor,  replace  that  person as Standby  Purchaser  and  includes  its
        successors in title;

        "Standby Put Option Agreement" means the agreement entered into or to be
        entered  into between the Lessor and the Standby  Purchaser  pursuant to
        which  the  Lessor  may sell  its  interest  in the Ship to the  Standby
        Purchaser on the terms and conditions set out therein;

        "Standby  Rental  Assignment"  means the assignment  executed or (as the
        context may require) to be executed by the Lessee, the Standby Purchaser
        and the Lessor in the agreed  form  pursuant  to which the Lessee  shall
        assign in favour of the Standby  Purchaser its rights under clause 5.1.1
        of the Proceeds Deed and the Standby Purchaser shall assign in favour of
        the Lessor the Initial  Rental (as defined in the Standby Lease) and the
        property assigned by the Lessee in favour of the Standby Purchaser under
        this assignment;

        "Sterling",  "Pounds" and  "(pound)"  means the lawful  currency for the
        time being of the United  Kingdom  and in respect of all  payments to be
        made under this Lease in Sterling  mean  immediately  available,  freely
        transferable cleared funds in Sterling;

        "Strip  Liability  Amount"  means,  at any date,  an amount equal to the
        difference  between the Total  Security  Amount and the aggregate of the
        Letter of Credit Amount and the Additional Security Amount at that date;

        "Sub-Lease"  means a lease made or (as the  context  may  require) to be
        made between the Lessee and the  Sub-Lessee  for a period of twenty (20)
        years in the agreed form;

        "Sub-Lease Period" means the period during which the Sub-Lessee shall be
        entitled to the use and  possession of the Ship in  accordance  with the
        Sub-Lease;

        "Sub-Lessee" means Golar Freeze UK Ltd., an English company with company
        number 04679420 having its principal place of business at 30 Marsh Wall,
        London E14 9TP and includes its successors in title;

        "Subordinated Debt" means any Indebtedness of the Lessee, the Manager or
        any of their  Subsidiaries which is a Relevant Party owing to the Lessee
        Parent which is subject to the Subordination Deed;

        "Subordination  Deed" means a deed dated  April 2003  entered or (as the
        context  may  require)  to be entered  into  between  (inter  alios) the
        Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees,  the Manager,  Gotaas
        Larsen,  the Lessee  Parent and the First  Security  Agent in the agreed
        form;

        "Subsidiary" of any person means:

        (a)     in respect of a person  incorporated  outside  England and Wales
                means any company or entity directly or indirectly controlled by
                such  person,  and for this purpose  "control"  means either the
                ownership  of more than fifty per cent (50%) of the voting share
                capital (or  equivalent  rights of ownership) of such company or
                entity  or the  power to  direct  its  policies  and  management
                whether by contract or otherwise; and

        (b)     in respect of a person  incorporated  in  England  and Wales,  a
                subsidiary within the meaning of section 736 Companies Act 1985;

        "Supplemental  Agreement" means the Supplemental  Agreement of even date
        herewith  relating to a certain tax deed made  between the Lessor  Agent
        and the Lessee;

        "Swap  Liabilities"  means  Indebtedness  incurred  in respect of swaps,
        foreign exchange  contracts,  futures and other derivatives (but so that
        when  calculating  the  value of any  derivative  transaction,  only the
        marked to market value shall be taken into  account) and  guarantees  in
        respect of such Indebtedness;

        "Tax  Authority"  has  the  meaning  given  to  that  expression  in the
        Financial Schedule;

        "Tax  Contest  Letter"  means a side  letter to this Lease to be entered
        into by the  Lessor and the Lessee  and  regulating  the  conduct of tax
        disputes;

        "Tax Written Down Value" has the meaning given to that expression in the
        Financial Schedule;

        "Taxes" includes all present and future taxes, levies, imposts,  duties,
        fees or charges in the nature of a tax  including,  without  limitation,
        corporation, capital gains, income, gross receipts, franchise, transfer,
        sales, use, business,  occupation,  transaction,  purchase, value added,
        excise, personal property, real property, stamp,  documentary,  national
        insurance  or  other  taxes at the rate  applicable  for the time  being
        imposed by any national or local taxing or fiscal authority or any other
        agency or  government,  together with interest  thereon and penalties in
        respect thereof and "Tax" and "Taxation" shall be construed accordingly;

        "Termination"  means the  termination  of the  leasing of the Ship under
        this Lease otherwise than by the expiry of the Lease Period by effluxion
        of time;

        "Termination  Event" means any of the events or circumstances  described
        in clause 26.1;

        "Termination  Fee" means a sum  calculated  pursuant to paragraph 6.3 of
        the Financial Schedule;

        "Termination  Notice"  means a notice served by the Lessor on the Lessee
        pursuant to clause 27.1;

        "Termination  Payment Date" has the meaning given to that  expression in
        the Financial Schedule;

        "Termination  Sum"  has the  meaning  given  to that  expression  in the
        Financial  Schedule  and shall  include,  for the  purpose of this Lease
        (except the Financial Schedule), any Termination Fee;

        "Third  Earnings  Account  Security"  means  third  priority  deed(s) of
        assignment  executed or (as the  context may  require) to be executed by
        any person in favour of the Lessor  Agent in respect of (inter  alia) an
        Earnings  Account as security  for the  obligations  of the Lessee under
        (inter  alia) this Lease in the agreed form or in such other form as the
        Lessor may  reasonably  require for the  purpose of  creating  effective
        security over such account under any applicable laws;

        "Third Priority Three Party Deed" means the third priority assignment of
        (a) the Lessee's rights, title and interest in and to (i) all Insurances
        and  Requisition  Compensation of the Ship, (ii) the Lease and (iii) the
        Sub-Lease and (b) the Sub-Lessee's  rights, title and interest in and to
        (i) all Insurances and Requisition Compensation of the Ship and (ii) the
        Time Charter  executed or (as the context may require) to be executed by
        the  Lessee  and the  Sub-Lessee  in favour of the  Lessor  Agent in the
        agreed form;

        "Third Standby Mortgage" means any third priority mortgage in respect of
        the Ship  executed  by the  Standby  Purchaser  in favour of the  Lessor
        pursuant to clause 5.2.5 of the Proceeds Deed;

        "Third Standby Purchaser Assignment" means the third priority assignment
        executed or (as the  context may  require) to be executed by the Standby
        Purchaser in favour of the Lessor Agent in the agreed form in respect of
        the rights, title and interest of the Standby Purchaser in and to (inter
        alia) the Insurances and Requisition Compensation;

        "Third Standby Purchaser Share Security" means the third priority charge
        of the issued and  outstanding  share  capital of the Standby  Purchaser
        executed  or  (as  the  context  may  require)  to be  executed  by  the
        shareholder  of the Standby  Purchaser  in favour of the Lessor Agent in
        the agreed form;

        "Third Sub-Lessee Share Security" means the third priority charge of the
        issued and outstanding  share capital of the Sub-Lessee  executed or (as
        the context may  require) to be executed by the Manager in favour of the
        Lessor Agent in the agreed form;

        "Time  Charter"  means the Original  Time Charter as novated by the Time
        Charter  Novation  Agreement  and as further  amended  and  supplemented
        pursuant to Addendum No. 2 dated April 2003 and including any extensions
        and replacement  thereof pursuant to the terms thereof and including any
        other time charter(s) approved by the Lessor pursuant to clause 25.6;

        "Time Charter Novation  Agreement" means the novation  agreement dated 4
        April 2003 made  between the Time  Charterer,  Golar Freeze Inc. and the
        Sub-Lessee  pursuant to which the  rights,  title and  interest  and all
        obligations  of Golar Freeze Inc.  under the Original  Time Charter have
        been novated in favour of the Sub-Lessee; "Time Charterer" means Methane
        Services Limited,  an English company with company number 0737366 having
        its  principal  place of  business  at 100  Thames  Valley  Park  Drive,
        Reading,  Berkshire,  RG6 1PT and includes its  successors  in title and
        includes  any  other  person  which  is a  party  to a Time  Charter  as
        charterer from time to time;

        "Total Loss" means:

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

        (b)     the Compulsory Acquisition of the Ship; or

        (c)     the hijacking,  theft,  condemnation,  capture, seizure, arrest,
                detention or confiscation of the Ship (other than where the same
                amounts to Compulsory  Acquisition  of the Ship) by any persons,
                unless  the Ship be  released  and  restored  to the  Lessee or,
                during the Sub-Lease Period, the Sub-Lessee from such hijacking,
                theft,  condemnation,  capture,  seizure,  arrest,  detention or
                confiscation   within  sixty  (60)  days  after  the  occurrence
                thereof; or

        (d)     the expiry of one hundred and eighty  (180) days (or such longer
                period as the Lessor, the Lessee and the Relevant Security Agent
                may agree) after the Ship shall have been requisitioned for hire
                by a Government Entity or other competent authority,  whether de
                jure or de facto;

        "Total  Loss Date"  means the date upon which the Ship is deemed to have
        become a Total Loss pursuant to clause 22.2.2;

        "Total Loss  Payment  Date" means the  earliest of any of the  following
        dates next occurring after the Total Loss Date:

        (a)     the date  falling one  hundred  and twenty  (120) days after the
                Total  Loss Date (or such later day as the Lessor may agree from
                time to time); or

        (b)     the first Banking Day after the day on which the Lessor receives
                the Total Loss Proceeds or Requisition Compensation;

        "Total Loss  Proceeds"  means the  proceeds of any policy or contract of
        insurance arising in respect of a Total Loss;

        "Total Security  Amount" has the meaning given to that expression in the
        Financial Schedule;

        "Transaction  Documents" has the meaning given to that expression in the
        Proceeds Deed;

        "Transaction  Fees"  means the  Arrangement  Fee,  the Lease Fee and the
        Legal Fee;

        "United Kingdom" means Great Britain and Northern Ireland;

        "Value Added Tax" or "VAT" means value added tax as provided for in VATA
        and legislation (whether delegated or otherwise) supplemental thereto or
        in any primary or  subordinate  legislation  promulgated by the European
        Union or any body or agency thereof and any tax similar or equivalent to
        value added tax imposed by any country other than the United Kingdom and
        any similar or turnover Tax  replacing or  introduced in addition to any
        of the same;

        "Variable  Liability Amount" has the meaning given to that expression in
        the Letter of Credit;

        "Variable  Assumption"  has the meaning given to that  expression in the
        Financial Schedule;

        "VATA" means the Value Added Tax Act 1994; and

        "WDA Letter" means a side letter to this Lease to be entered into by the
        Lessor  and  the  Lessee  in  relation  to  the  rate  of  writing  down
        allowances.

1.3     Insurance definitions

        In clause 16:

1.3.1   "excess  risks"  means the  proportion  (if any) of claims  for  general
        average,  salvage and salvage  charges and under the ordinary  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;

1.3.2   "protection and indemnity risks" means:

        (a)     the usual risks  (including oil  pollution)  covered by a United
                Kingdom protection and indemnity association or a protection and
                indemnity association which is managed in London or Norway or is
                otherwise a member of the  "International  Group" of  protection
                and indemnity associations (including,  without limitation,  the
                proportion  (if any) of any sums  payable to any other person or
                persons in case of collision which are not recoverable under the
                hull and  machinery  policies  by  reason  of the  incorporation
                therein of clause 8 of the Institute  Time Clauses  (1/11/95) or
                the  Institute  Amended  Running  Down clause  (1/10/71)  or any
                equivalent provision); or

        (b)     (if placed on Norwegian  terms) means  protection  and indemnity
                risks as defined in the Norwegian  Marine Insurance Plan of 1964
                as amended; and

1.3.3   "war risks" includes those risks covered by the standard form of English
        marine policy with  Institute War and Strike  Clauses  (Time)  (1/11/95)
        attached or similar  cover (or if placed on Norwegian  terms,  means the
        war risks described in The Norwegian  Maritime Insurance Plan of 1966 as
        amended).

1.4     Headings

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

1.5     References

        In this Lease, unless the context otherwise requires:

1.5.1   references to Clauses and Schedules are to be construed as references to
        Clauses of, and  Schedules  to, this Lease and  references to this Lease
        include its Schedules;

1.5.2   references to (or to any specified provision of) this Lease or any other
        document shall be construed as references to this Lease,  that provision
        or that  document  as in force  for the time  being  and as  amended  in
        accordance  with the terms  thereof,  or,  as the case may be,  with the
        agreement of the relevant parties;

1.5.3   references to a "regulation"  include any present or future  regulation,
        rule,  directive,  requirement,  request or  guideline  (whether  or not
        having  the  force of law) of any  agency,  authority,  central  bank or
        government  department  or any  self-regulatory  or  other  national  or
        supra-national authority;

1.5.4   words importing the plural shall include the singular and vice versa;

1.5.5   references to a time of day are to London time;

1.5.6   references   to  a  person  shall  be  construed  as  references  to  an
        individual, firm, company,  corporation,  unincorporated body of persons
        or any Government Entity;

1.5.7   references to a "guarantee"  include references to an indemnity or other
        assurance  against  financial loss  including,  without  limitation,  an
        obligation to purchase  assets or services as a consequence of a default
        by any other person to pay any Indebtedness  and  "guarantees"  shall be
        construed accordingly;

1.5.8   references to an  "obligation"  include,  for the avoidance of doubt, an
        obligation to make a payment;

1.5.9   except in the Financial  Schedule  references to any enactment  shall be
        construed as  references  to such  enactment as  re-enacted,  amended or
        extended; and

1.5.10  references to any person include the successors and permitted assigns of
        such person.

1.6     Value added tax

        Any Value Added Tax or any similar tax properly chargeable in respect of
        supplies  of goods or  services  under the terms of this Lease or any of
        the other Relevant  Documents shall be payable (subject to production of
        an  appropriate  Value  Added Tax  invoice)  in  addition to the amounts
        otherwise payable hereunder or thereunder,  which amounts are determined
        exclusive of Value Added Tax.

1.7     Conflicts

        In the event of any  conflict  between  this  Lease and any of the other
        Lease  Documents,  the provisions of this Lease shall prevail but in the
        event of any conflict  between a Lease  Document and the Proceeds  Deed,
        the provisions of the Proceeds Deed shall prevail.

1.8     Agreed forms

        In this Lease, any document expressed to be "in the agreed form" means a
        document  in a form agreed by (and for the  purposes  of  identification
        signed by or on behalf  of) the Lessee and the Lessor or (in the case of
        any of the Relevant  Documents) a document in the form actually executed
        by both the Relevant Party or Relevant Parties and the Lessor.

1.9     Contracts (Rights of Third Parties) Act 1999

        With the  exception of any  Indemnified  Persons,  no term of this Lease
        shall be enforceable pursuant to the Contracts (Rights of Third Parties)
        Act 1999 by a person who is not a party to this Lease. For the avoidance
        of doubt however it shall not be necessary for the parties to this Lease
        to obtain  the  consent  of the  Indemnified  Persons in order to amend,
        supplement or modify the terms of this Lease.

2       Lessee's representations and warranties

2.1     Continuing representations and warranties

        The Lessee represents and warrants to the Lessor that:

2.1.1   Due incorporation

        each Relevant Party is duly  incorporated and validly existing under the
        laws of its  country or state of  incorporation  as a limited  liability
        company  and has  power  to  carry on its  business  as it is now  being
        conducted and to own its property and other assets;

2.1.2   Corporate power

        each  Relevant  Party has power to  execute,  deliver  and  perform  its
        obligations  under  the  Relevant  Documents  to which it is or is to be
        party and all necessary corporate, shareholder and other action has been
        taken to authorise the execution, delivery and performance of the same;

2.1.3   Binding obligations

        this Lease  constitutes and each other of the Relevant  Documents,  upon
        execution and delivery  thereof,  will  constitute the legal,  valid and
        binding  obligations  of each Relevant  Party  enforceable in accordance
        with its terms except as such enforcement may be limited by any relevant
        bankruptcy,   insolvency,   administration  or  similar  laws  affecting
        creditors' rights generally and by general principles of equity;

2.1.4   No conflict with other obligations

        the  execution  and  delivery  of, and the  performance  of the Relevant
        Documents to which any Relevant Party is a party will not (a) contravene
        any  existing  applicable  law,  statute,  rule  or  regulation  or  any
        judgment,  decree or permit to which any Relevant Party is subject,  (b)
        conflict  with,  or  result  in any  breach  of any of the  terms of, or
        constitute a default under,  any agreement or other  instrument to which
        any Relevant Party is a party or is subject or by which it or any of its
        property is bound,  (c) contravene or conflict with any provision of the
        memorandum and articles of  association/articles  of  incorporation  and
        by-laws or other  constitutional  documents of any Relevant Party or (d)
        result in the creation or imposition of or oblige any Relevant  Party to
        create any  Encumbrance  (other  than a  Permitted  Encumbrance)  on the
        undertakings, assets, rights or revenues of any Relevant Party;

2.1.5   Choice of law

        the choice by the Relevant Parties of English law to govern the Relevant
        Documents and, where applicable,  the submission by the Relevant Parties
        to the  non-exclusive  jurisdiction  of the English courts are valid and
        binding;

2.1.6   No immunity

        no  Relevant  Party nor any of its assets is entitled to immunity on the
        grounds of  sovereignty or otherwise from any legal action or proceeding
        (which shall include,  without  limitation,  suit,  attachment  prior to
        judgment, execution or other enforcement);

2.1.7   Financial statements correct and complete

        the unaudited proforma consolidated and combined financial statements of
        the Lessee and its Subsidiaries (excluding Oxbow Holdings Inc. and Golar
        Maritime (Asia) Inc.) and the audited consolidated  financial statements
        of the  Lessee  Group  in  respect  of the  financial  year  ended on 31
        December  2001 and the  financial  statements  of the Golar Gas Group in
        respect of the nine (9) months ended as of 30 September  2002  (prepared
        on a pro-forma  consolidated  and  combined  basis) as  delivered to the
        Lessor have been prepared in accordance with Relevant GAAP  consistently
        applied and present fairly and accurately the  consolidated and combined
        financial  position of the Lessee and its Subsidiaries  (excluding Oxbow
        Holdings Inc. and Golar  Maritime  (Asia) Inc.) and the Lessee Group and
        the consolidated and combined  financial position of the Golar Gas Group
        as at the relevant date and the  consolidated  results of the operations
        of the Lessee and its  Subsidiaries  (excluding  Oxbow Holdings Inc. and
        Golar Maritime  (Asia) Inc.) and the Lessee Group for the financial year
        ended as at the relevant date and the  consolidated and combined results
        of the operations of the Golar Gas Group  respectively  for the nine (9)
        months ended as at the  relevant  date,  and, as at the  relevant  date,
        neither the Lessee nor any of its Subsidiaries (excluding Oxbow Holdings
        Inc. and Golar Maritime (Asia) Inc.) nor any of the Lessee Group nor any
        of the Golar Gas Group had any  significant  liabilities  (contingent or
        otherwise)  which are not  disclosed  by, or  reserved  against in, such
        financial  statements and neither the Lessee nor any of its Subsidiaries
        (excluding  Oxbow Holdings Inc. and Golar Maritime  (Asia) Inc.) nor any
        of the Lessee Group nor any of the Golar Gas Group had any unrealised or
        anticipated  losses which are not disclosed  by, or reserved  against or
        provided for in, such financial statements; and

2.1.8   Tax residence

        the Sub-Lessee is resident in the United Kingdom and is not resident for
        Tax purposes in any jurisdiction other than the United Kingdom.

2.2     Initial representations and warranties

        The Lessee further represents and warrants to the Lessor that:

2.2.1   Consents obtained

        every consent,  authorisation,  licence or approval of, or  registration
        with or declaration to,  governmental or public bodies or authorities or
        courts required by each Relevant Party to authorise, or required by such
        Relevant Party in connection  with, the execution,  delivery,  validity,
        enforceability or admissibility in evidence of the Relevant Documents to
        which it is a party or the  performance  by each  Relevant  Party of its
        obligations under the Relevant Documents to which it is a party has been
        obtained  or made and is in full  force and effect and there has been no
        default in the observance of any of the conditions or  restrictions  (if
        any) imposed in, or in connection with, any of the same;

2.2.2   Pari passu

        the obligations of each Relevant Party under the Relevant  Documents are
        direct, general and unconditional obligations of such Relevant Party and
        rank at least pari passu with all other present and future unsecured and
        unsubordinated  Indebtedness of each Relevant Party save for obligations
        mandatorily preferred by law and not by contract;

2.2.3   No default under other Indebtedness

        no Relevant Party is (nor would be with the giving of notice or lapse of
        time or the  satisfaction of any other condition or combination  thereof
        be) in material breach of or in default under any agreement  relating to
        (a) Borrowed Money or (b)  Indebtedness in respect of amounts  exceeding
        one million Dollars ($1,000,000),  to which it is a party or by which it
        may be bound;

2.2.4   Information

        the  information,  exhibits  and reports  furnished by the Lessee to the
        Lessor in  connection  with the  matters  contemplated  by the  Relevant
        Documents or in connection  with the  negotiation and preparation of the
        Relevant  Documents  are true and accurate in all material  respects and
        not misleading,  do not omit material facts and all reasonable enquiries
        have been made to verify the facts and statements contained therein;

2.2.5   No withholding taxes

        (a)     no Taxes are imposed by  withholding or otherwise on any payment
                to be made  by any  Relevant  Party  under  any of the  Relevant
                Documents  or are  imposed on or by virtue of the  execution  or
                delivery by any Relevant Party of the Relevant  Documents or any
                other  document or instrument to be executed or delivered  under
                any of the Relevant Documents;

        (b)     the Lessee is exempt from tax in the Republic of Liberia;

        (c)     neither the Lessee nor any of its  Subsidiaries or affiliates is
                a division,  bureau,  office, agency,  department,  committee or
                political  subdivisions  of the  Government  of the  Republic of
                Liberia or another sovereign jurisdiction;

        (d)     the Lessee is not regularly engaged in the conduct of activities
                pursuant  to  contractual  arrangements  with  the  Republic  of
                Liberia or any division,  bureau,  office,  agency,  department,
                committee or political subdivisions thereof;

        (e)     the Lessee is not:

                (i)     regularly  engaged in the ownership,  use or disposition
                        of real  property  located in the Republic of Liberia or
                        agricultural or mineral products derived therefrom; nor

                (ii)    regularly engaged in the conduct of activities  pursuant
                        to  a  contractual  arrangement  with  the  Republic  of
                        Liberia or any agency or political subdivision thereof;

                (iii)   a corporation  in respect of which more than twenty five
                        percent  (25%) of the total  combined  voting  power and
                        more than twenty five  percent  (25%) of the total value
                        of  outstanding   equity  stock  is  owned  directly  or
                        indirectly by Liberian resident persons; nor

                (iv)    carrying  on  business  operations  in the  Republic  of
                        Liberia;

2.2.6   No Relevant Event

        no Relevant Event has occurred and is continuing;

2.2.7   The Ship

        the Ship on the Delivery Date will:

        (a)     be in the absolute ownership of the Lessor;

        (b)     maintain  the  Classification   free  of  all  requirements  and
                recommendations of the  Classification  Society that are overdue
                or have not been complied with in accordance with their relevant
                terms; and

        (c)     save in respect of or  pursuant  to the  Sub-Lease  and the Time
                Charter,  not be  subject  to any  lease or  contract  or to any
                agreement  to enter  into any  charter  or  contract  which,  if
                entered  into by the Lessee  after the date of any or all of the
                Lease Documents, would have required the consent of the Lessor;

2.2.8   Freedom from Encumbrances

        neither  the  Lessee's  interest  in the  Ship,  the  Insurances  or any
        Requisition  Compensation  nor any part  thereof will be on the Delivery
        Date subject to any Encumbrances save for any Permitted Encumbrances;

2.2.9   Environmental matters

        to the best of the knowledge and belief of the Lessee and its officers:

        (a)     all Environmental Laws applicable to the Ship have been complied
                with and all  consents,  licences and approvals  required  under
                such Environmental Laws have been obtained and complied with;

        (b)     no Environmental Claim has been made, or is pending, against the
                Lessee or the Ship and not fully satisfied;

        (c)     no Environmental Claim has been made, or is pending, against any
                Relevant  Party  (other  than the Lessee) or any  Relevant  Ship
                (other than the Ship) and not fully satisfied which  constitutes
                or may give rise to a Termination Event of the type specified in
                clause 26.1.18; and

        (d)     there has been no Environmental Incident;

2.2.10  Share ownership

        (a)     Gotaas  Larsen  is the sole  legal and  beneficial  owner of the
                whole of the issued  share  capital of the Lessee as at the date
                of this Lease;

        (b)     the Lessee Parent is the sole, legal and beneficial owner of the
                whole of the issued  share  capital  of Gotaas  Larsen as at the
                date of this Lease; and

        (c)     not less  than  twenty  five  percent  (25%) of the  issued  and
                outstanding  share  capital of the Lessee  Parent is directly or
                indirectly,   legally  and   beneficially   owned  by  Mr.  John
                Fredriksen (the "Relevant Shareholder");

2.2.11  Copies true and complete

        the  copies  of the  Management  Agreement  and such of the  Transaction
        Documents to which the Lessor is not a party  delivered by the Lessee to
        the Lessor are true and complete copies of such documents,  each of such
        documents   constitutes  the  valid,  legally  binding  and  enforceable
        obligations of the Relevant  Parties which are parties  thereto,  are in
        full  force and effect and there  have been no  material  amendments  or
        variations thereof or defaults thereunder;

2.2.12  No litigation

        no litigation, arbitration or administrative proceeding is taking place,
        pending or, to the  knowledge of the officers of the Lessee,  threatened
        against any Relevant Party which could, if adversely determined,  have a
        material adverse effect on the business,  assets or financial  condition
        of the Lessee Group taken as a whole; and

2.2.13  No filings required

        save for the filing of the Third  Priority  Three Party Deed,  the Third
        Standby  Purchaser Share Security,  the Third Sub-Lessee Share Security,
        the Standby Rental Assignment and the Third Standby Purchaser Assignment
        and the Third Earnings Account  Security with the Companies  Registry in
        England and Wales and the filing of the Third  Standby  Purchaser  Share
        Security,  the Standby Rental Assignment and the Third Standby Purchaser
        Assignment with the Companies Registry in the Cayman Islands,  it is not
        necessary  to  ensure  the   legality,   validity,   enforceability   or
        admissibility in evidence of the Relevant  Documents that any of them or
        any other  instrument  be  notarised,  filed,  recorded,  registered  or
        enrolled  in any  court,  public  office or  elsewhere  in any  Relevant
        Jurisdiction or that any stamp, registration or similar tax or charge be
        paid in any  Relevant  Jurisdiction  on or in relation  to the  Relevant
        Documents  and the  Relevant  Documents  are,  or will,  upon  execution
        thereof by any Relevant Party,  be in proper form for their  enforcement
        in the courts of each Relevant Jurisdiction.

2.3     Repetition of representations and warranties

        On  and  as of  the  Delivery  Date  and  (except  in  relation  to  the
        representations  and  warranties  in clause 2.2) on each Primary  Rental
        Date the  Lessee  shall be  deemed  to repeat  the  representations  and
        warranties in clause 2.1 (and so that the representation and warranty in
        clause  2.1.7 shall for this  purpose  refer to the then latest  audited
        financial   statements  of  the  Lessee,   the  Sub-Lessee,   the  Other
        Sub-Lessees  and  the  Manager,  the  audited   consolidated   financial
        statements  of the  Lessee  Group  and  the  consolidated  and  combined
        financial  statements  of the Golar Gas Group  delivered  to the  Lessor
        under  clause  11.1.4)  as if  made  with  reference  to the  facts  and
        circumstances existing on such day.

2.4     Not prejudiced by Lessor's investigation

        The   rights  and   remedies   of  the   Lessor  in   relation   to  any
        misrepresentation  or breach of warranty on the part of the Lessee shall
        not be  prejudiced  by any  investigation  by or on behalf of the Lessor
        into the affairs of any person  (other than the Lessor) being a party to
        any of the Relevant Documents, by the performance of any of the Relevant
        Documents,  or by any other act or thing which may be done or omitted to
        be done by the Lessor under any of the Relevant Documents which would or
        might, but for this clause 2.4, prejudice such rights and remedies.

3       Term of Lease

3.1     Primary Period

        The Lessor shall let and demise to the Lessee and the Lessee shall lease
        the Ship,  subject to the terms and  conditions  of this Lease,  for the
        Primary Period.

3.2     Secondary Period

        The  Lessee  shall be  entitled,  provided  that no  Relevant  Event has
        occurred  and is  continuing,  on giving  to the  Lessor  notice  (which
        notice, when given, shall be irrevocable) not less than thirty (30) days
        prior  to the  end  of (a)  the  Primary  Period  and  (b)  (subject  as
        hereinafter  provided) each succeeding period of twelve (12) months from
        the end of the Primary  Period,  to extend the Lease Period for a period
        of twelve (12) months or, if less, up to a maximum period  equivalent to
        any  remaining  useful life of the Ship.  The  Lessee's  entitlement  to
        extend the Lease  Period in the manner  referred  to above is subject to
        the Lessee providing evidence reasonably satisfactory to the Lessor that
        the Ship remains  seaworthy and has a remaining useful life equal to the
        term for which  the Lease  Period  is to be  extended  pursuant  to this
        clause 3.2.

3.3     Voluntary termination and expiry

3.3.1   Notice of termination

        The Lessee  shall,  subject to clause 25.5, be entitled to terminate the
        Lease Period on any date provided that:

        (a)     the Lessee shall have given to the Lessor notice of the proposed
                date of  termination  not less than thirty (30) days before such
                date; or

        (b)     if the Lessee  becomes liable to make a payment in respect of an
                increased  cost to the Lessor under clause 31.1 or if the Lessee
                certifies  in  writing  that it  wishes to  terminate  the Lease
                Period because it has become Economically Burdensome, the Lessee
                shall be entitled to give to the Lessor  notice of the  proposed
                termination  not less than five (5)  Banking  Days  before  such
                date.

                A voluntary termination under this clause 3.3 will also occur in
                the  circumstances  contemplated  by clauses  3.8,  25, 27.3 and
                31.3.  For the purpose of this clause 3.3, the date specified as
                the proposed date of any  termination  in any notices  delivered
                pursuant  to  sub-clauses  (a) and (b)  above or the date of any
                notices given pursuant to clause 3.8, 25 or, as the case may be,
                the date five (5) Banking Days  following  the issue of a notice
                of  termination  pursuant  to  clauses  27.3 or  31.3,  shall be
                referred to as the "Notified Termination Date".

3.3.2   Continuation of Lease Period

        Notwithstanding  anything to the  contrary in this Lease where the Lease
        Period  expires by  effluxion  of time or if the Lessee  gives notice to
        terminate the Lease Period pursuant to this clause 3.3, the Lease Period
        shall  continue on the terms set out in clause 18.3 until and end on the
        date on  which  the Ship  shall  be  delivered  to a  purchaser  thereof
        pursuant to a sale of the Ship as contemplated  by clause 3.4,  whenever
        such delivery shall take place.

3.3.3   Termination payments

        On the Notified  Termination  Date the Lessee shall pay to the Lessor an
        amount  equal to the  Termination  Sum on such  date  together  with all
        amounts of Rental and other  moneys  then due and owing by the Lessee to
        the Lessor under this Lease or any of the other Lease Documents.

3.3.4   Mitigation

        Where the Lease Period is terminated because it has become  Economically
        Burdensome  to the  Lessee,  the Lessor  and the Lessee  agree that they
        shall,  at the cost of the  Lessee,  use all  reasonable  endeavours  to
        arrange for a termination of the Lease Period in an efficient  manner so
        as to try and minimise  the  after-tax  cost to the Lessee  arising from
        such  termination.  It is  acknowledged  and agreed,  however,  that the
        Lessor  shall not be  obliged  to agree to any  arrangement  or take any
        action in connection with the above mitigation  arrangements if to do so
        would give rise to any  additional  cost or liabilities to the Lessor in
        respect of any such termination of the Lease Period unless the Lessor is
        indemnified or otherwise secured in a manner  satisfactory to it, in its
        absolute  discretion,  in  respect  of  any  such  additional  costs  or
        liabilities.

3.4     Sale of Ship on expiry or voluntary termination

        During the period commencing ninety (90) days before the last day of the
        Lease Period (or, as the case may be,  commencing  on the date of notice
        being  given  under  clause  3.3) and  ending  on the date on which  the
        completion  of the sale or  disposal  of the Ship takes place the Lessor
        shall,  subject to the  provisions  of the Proceeds Deed relating to the
        sale or other transfer or disposal of the Ship and provided it shall not
        be prevented from so doing for any reason whatsoever which is beyond its
        reasonable  control,  endeavour  to sell all of its  rights,  title  and
        interest in and to the Ship with an intended  delivery or completion on,
        or as soon as practicable  after,  the Notified  Termination Date or, as
        the case may be, the date of expiry of the Lease  Period by effluxion of
        time.  The Net Sale  Proceeds  arising  in  respect of any sale shall be
        applied,  subject to clause 10.4 and the  provisions  of clauses 3.1 and
        3.3 of the Proceeds Deed, as follows:

3.4.1   first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the amount of the Net Sale Proceeds;

3.4.2   secondly,  in or towards  retention  by the Lessor of an amount equal to
        all or any part of the Termination Sum which the Lessee shall not, on or
        before the date of application  of the Net Sale  Proceeds,  have paid to
        the Lessor in accordance with clause 3.3;

3.4.3   thirdly,  in or towards  settlement  of any other  amounts  owing by the
        Lessee  to the  Lessor  under  this  Lease  or any  of the  other  Lease
        Documents (including any interest due in respect thereof);

3.4.4   fourthly,  in or  towards  refunding  to the  Lessee by way of rebate of
        Rental  an  amount  not   exceeding  all  Rental   (including,   without
        limitation,  any Termination Sum) paid to the Lessor by the Lessee under
        this Lease; and

3.4.5   fifthly,  to the  Lessee,  by  way of  sales  commission  determined  in
        accordance   with  the  provisions  of  clause  3.6.4  or  otherwise  as
        appropriate.

3.5     Redelivery voyage

        Should the Ship be upon a voyage (other than under requisition for hire)
        at the time the  Lease  Period  would  (but for the  provisions  of this
        clause 3.5) have  terminated  the Lease Period shall (if required by the
        Lessee)  continue for such  additional  time as may be necessary for the
        completion of such voyage. The Lease Period shall also continue for such
        additional time as may be necessary in order to bring the Ship to a port
        of  re-delivery  as  provided  in clause  18.1 The Lessee  shall use all
        reasonable  endeavours to bring the Ship to such port of  re-delivery as
        soon as practicable following completion of the relevant voyage. Nothing
        in this clause 3.5 shall, where the Lease Period is terminated following
        the issue of a Termination Notice,  operate to modify the dates on which
        the Lessee is required to make any payments  (whether of any Termination
        Sum or otherwise) under this Lease.

3.6     Sales agency

        In respect of any sale of the Ship in  accordance  with clause 3.4,  the
        Lessor hereby appoints the Lessee (and such appointment  shall,  without
        prejudice to clause 3.4.5,  constitute a full discharge by the Lessor of
        its obligation under clause 3.4 to endeavour to sell the Ship) to act as
        the  sole  and  exclusive  agent  of  the  Lessor  for  the  purpose  of
        negotiating the sale of the Ship on the following terms:

3.6.1   the Lessee will (if and to the extent it is permitted to do so under the
        Proceeds  Deed)  endeavour  to  arrange  the sale of the Ship for a cash
        consideration  payable by the  purchaser in full on  completion  of such
        sale in Pounds, Dollars or such other currency as the Lessor may approve
        (such  approval  not to be withheld  in the case of a currency  which is
        then freely convertible into Pounds) on the best terms (including price)
        reasonably  obtainable  on the open market (and in any event for no less
        than the Tax Written Down Value of the Ship as at the date of such sale)
        provided that the Ship shall not be sold to:

        (a)     the Lessee or the Sub-Lessee; or

        (b)     any person  acting in trust for,  as  nominee  of, as agent,  or
                otherwise  as  representative  of,  or on  behalf  of any of the
                persons referred to in (a) above,

        and the Lessee  will keep the Lessor  informed  from time to time of its
        progress;

3.6.2   the Lessee's  authority will not extend to concluding a contract for the
        sale of the Ship for which the Lessor's  specific written authority will
        be required (which  authority shall not be withheld or delayed where (a)
        the sale complies with the other  provisions of this clause 3.6, (b) the
        resulting  Net Sale  Proceeds  will equal or exceed the Tax Written Down
        Value as at the proposed  date of sale and (c) the  aggregate of the Net
        Sale  Proceeds  which can be retained by the Lessor  pursuant to clauses
        3.1 and 3.3 of the Proceeds Deed and the Applicable  Security  Amount as
        at the  proposed  date of sale will exceed the  aggregate  amount of the
        Termination  Sum and all other amounts owing by the Lessee to the Lessor
        under this Lease and any amounts  due but unpaid  under any of the other
        Lease  Documents  (including any interest due in respect  thereof) as at
        the proposed  date of sale or that, to the extent that either (b) or (c)
        above do not apply,  the Lessee has satisfied the Lessor that the Lessee
        and/or  the  Lessee  Parent  will  have  adequate  financial   resources
        available  to enable  the Lessee to pay the  balance  of such  aggregate
        amount to the Lessor in accordance with clause 3.4));

3.6.3   the Ship shall be offered  for sale on an "as is where is" basis and for
        delivery on, or as soon as practical after, termination or expiry of the
        Lease Period and any contract  for its sale shall  include  terms to the
        following effect:

        (a)     that  all  terms,  conditions,  representations  or  warranties,
                expressed or implied by statute or otherwise,  whether as to the
                state or quality of the Ship or as to  description,  fitness for
                purpose,   merchantable   quality,   satisfactory   quality   or
                otherwise,  are,  so  far  as is  permitted  by  law,  expressly
                excluded  as between the Lessor and the buyer save in respect of
                the warranty  that the Lessor shall be passing such title to the
                Ship as the Lessor received from Golar Freeze Inc. free from any
                Lessor's Encumbrances;

        (b)     that, if the proposed sale contract provides for delivery of the
                Ship by the Lessor, such obligation is conditional upon the Ship
                first being redelivered to the Lessor;

        (c)     that the purchase  moneys shall be paid to the Lessor in full in
                cash on completion of the sale to the relevant  Lessor  Proceeds
                Account and otherwise, where applicable, in accordance with, the
                provisions of the Proceeds Deed;

3.6.4   if the Net Sale Proceeds exceed the aggregate of:

        (a)     any  sums  which  the  Lessor  may  be  entitled  to  retain  in
                accordance with clauses 3.4.1, 3.4.2 and 3.4.3; and

        (b)     any sums which the Lessor  shall be obliged to pay to the Lessee
                by way of rebate of Rental in  accordance  with clause 3.4.4 and
                as determined pursuant to clause 3.4 then,

        subject to clause 10.4 the Lessor  shall  promptly  pay to the Lessee by
        way of sales commission, an amount equal to such excess;

3.6.5   the Lessee  shall be entitled to  delegate  its rights and duties  under
        this clause 3.6 to any member of the Lessee Group or to any other person
        as  the  Lessor  may  approve,  such  approval  not  to be  unreasonably
        withheld; and

3.6.6   the sales  agency  rights  under this clause shall not apply or shall be
        terminated if at the time the sales agency appointment would arise or at
        any time thereafter a Termination Event occurs and is continuing and the
        Lessor has served a Termination Notice.

3.7     Credit review

        The Lessor shall be entitled during the period between the dates falling
        one  hundred  and eighty  (180) and ninety (90) days prior to the Credit
        Review Date (in this clause 3.7 the "Credit Review Period") to carry out
        a  review  of the  security  arrangements  constituted  by the  Relevant
        Documents and the  creditworthiness  of the Lessee and the Lessee Parent
        (taking into  account the  exposure of the Lessee and the Lessee  Parent
        under  the  Relevant  Documents  having  regard  to  any  Relevant  Bank
        Documents  which will continue in full force and effect after the Credit
        Review  Date,  any new  valuations  of the  Ships  and the  Other  Ships
        provided to the Lessor at such time and any surplus amounts available in
        respect of the Ships and the Other  Ships as  security to the Lessor and
        the Other  Lessors at that time) and, at the absolute  discretion of the
        Lessor,   to  determine  whether  such  security   arrangements   and/or
        creditworthiness  are adequate to secure the Strip Liability  Amount and
        any other  unsecured  obligations of the Lessee under this Lease and the
        other Lease  Documents in respect of the period falling after the Credit
        Review  Date.  The Lessor  agrees that it shall  consult with the Lessee
        during the Credit  Review  Period  when  considering  the  matters to be
        considered by the Lessor pursuant to this clause.  Following such review
        the Lessor  shall  notify the  Lessee of its  decision  on or before the
        expiry of the  Credit  Review  Period  and,  if it  considers  that such
        security arrangements and/or creditworthiness are inadequate, the Lessor
        will  initially  notify the Lessee in writing and during the period from
        the date of such  notification  up to the date  falling  forty five (45)
        days prior to the Credit Review Date and if the Lessee so requests,  the
        Lessor  and  the  Lessee  shall   discuss  in  good  faith   alternative
        arrangements  which,  if  implemented,  would  cause  the  Lessor  to be
        comfortable with the security  arrangements  and/or  creditworthiness of
        the Lessee and the Lessee  Parent and if agreement  in principle  can be
        reached  on  such   alternative   arrangements   then  such  alternative
        arrangements  shall be documented  on terms and in a form  acceptable to
        the Lessor on or prior to the Credit Review Date.

        If, notwithstanding the said good faith discussions, the Lessor is still
        not satisfied that the security arrangements and/or  creditworthiness of
        the  Lessee  and the  Lessee  Parent,  even  on a  modified  basis,  are
        adequate, the Lessee will be entitled at the Lessee's option to either:

3.7.1   issue a notice of the type  referred to in clause 3.8 under  clause 3.8;
        or

3.7.2   constitute to the  satisfaction of the Lessor prior to the Credit Review
        Date, such additional  security as shall be acceptable to the Lessor and
        having a value for security  purposes (as  determined  by the Lessor) at
        the date upon which such further  security  shall be  constituted as the
        Lessor  shall in its  absolute  discretion  require  to secure the Strip
        Liability Amount and any other unsecured obligations of the Lessee under
        this  Lease  and  the  other  Lease  Documents   having  regard  to  the
        circumstances  in which  such  additional  security  is  required  to be
        provided under this clause.

        The Lessor  agrees that for the purpose of clause 3.7.2 the provision by
        the  Lessee of a letter of credit or bank  guarantee  from a  Qualifying
        Replacement Bank on terms acceptable to the Lessor in an amount equal to
        the amount of the Strip  Liability  Amount and/or such other  additional
        security   requirement  to  be  provided  under  this  clause  shall  be
        acceptable  additional  security for the relevant amount secured for the
        purpose of this clause.

3.8     Credit review notice

        If the Lessee  shall,  pursuant  to clause 3.7 elect to give a notice of
        the type referred to in this clause 3.8, the Lessee shall be immediately
        obliged to give a notice pursuant to clause 3.3 (other than with respect
        to the  period of such  notice)  to  terminate  the Lease  Period on the
        Credit  Review Date.  The  provisions  of clauses 3.4, 3.5 and 3.6 shall
        apply to such termination of the Lease Period.

4       Conditions

        4.1 Lessee's conditions precedent

        The obligation of the Lessor (in each case as between the Lessor and the
        Lessee  pursuant to clause 4.5) to pay the  Transaction  Fees and to let
        and  demise  the Ship to the  Lessee  under this Lease is subject to the
        condition  that on the Delivery  Date the Lessor shall have received the
        documents  and evidence  specified in Schedule 1, in each case,  in form
        and substance  satisfactory  to the Lessor (and that,  unless  otherwise
        agreed by the Lessor and the Lessee, Delivery shall occur on or prior to
        11 April 2003).

4.2     Further conditions

        The obligation of the Lessor to pay the  Transaction  Fees and to demise
        the Ship to the Lessee  under this Lease shall be subject to the further
        condition that the Lessor shall have received a Delivery  Request Notice
        not less than two (2) Banking Days (or such shorter period as the Lessor
        and the Lessee may agree) prior to the required  date for payment of the
        Transaction  Fees and the  proposed  date of delivery of the Ship to the
        Lessee under this Lease and to the further  conditions  that at the time
        of the giving of the Delivery  Request Notice and  immediately  prior to
        the time when Delivery is to take place:

        (a)     the  representations  and  warranties set out in clauses 2.1 and
                2.2 (and so that the representation and warranty in clause 2.1.7
                shall  for  this  purpose  refer  to  the  then  latest  audited
                financial  statements delivered to the Lessor under clause 11.1)
                and the  representations  and  warranties set out in clauses 4.1
                and  4.2 of  the  Lessee  Parent  Guarantee  (and  so  that  the
                representation and warranty in clause 4.1.6 of the Lessee Parent
                Guarantee  shall  for this  purpose  refer  to the  then  latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause  5.1.4  of the  Lessee  Parent  Guarantee)  are  true and
                correct  as if each was  made  with  respect  to the  facts  and
                circumstances existing at such time;

        (b)     no Relevant Event shall have occurred and be continuing or would
                arise by reason of payment of the Transaction  Fees or by reason
                of Delivery taking place; and

        (c)     no  Relevant  Bank Event,  Relevant  Bank Change of Law Event or
                Relevant  Bank  Illegality  Event  shall  have  occurred  and be
                continuing.

4.3     Temporary waivers

        The  conditions  specified  in clauses 4.1 and 4.2 are  inserted for the
        sole  benefit  of the  Lessor  and may be waived in whole or in part and
        with or without  conditions by the Lessor provided always that if any of
        the said  conditions are  outstanding  after  Delivery then,  unless the
        Lessor shall have given a specific written waiver or deferral in respect
        thereof, the Lessee shall ensure that each such outstanding condition is
        fulfilled  within  thirty (30) days of the  Delivery  Date and  provided
        further  that the Lessor  shall be  entitled to treat the failure of the
        Lessee to perform  such  outstanding  conditions  within  such period of
        thirty (30) days as a Termination  Event and as a repudiatory  breach of
        this Lease by the Lessee.

4.4     Payment of Transaction Fees

4.4.1   Subject to  satisfaction  of the conditions  precedent to the payment of
        the  Transaction  Fees referred to in clause 4, the Lessor agrees to pay
        the Arrangement Fee to the Arranger,  the Lease Fee to Sovereign Finance
        Plc and the Legal Fee to Messrs Norton Rose.

4.4.2   The  Lessor  shall  not be  entitled  to set off or  withhold  from  the
        Transaction  Fees payable by the Lessor  pursuant to this clause 4.4 any
        amounts due or expressed  to be due from any  Relevant  Party under this
        Lease or any of the Relevant Documents.

4.5     Lessor's conditions precedent

        The obligations of the Lessee under this Lease are conditional  upon the
        Lessee  having  received on or prior to the Delivery  Date the following
        documents and evidence to its satisfaction:

4.5.1   a copy,  certified by a director of the Lessor,  of  resolutions  of the
        board of directors of the Lessor approving the transactions contemplated
        by the Relevant Documents and the execution of the Relevant Documents to
        which the Lessor is a party; and

4.5.2   the  Proceeds  Deed,  the  WDA  Letter,  the  Tax  Contest  Letter,  the
        Indexation  Relief  Letter,  the Lessor  Mortgage,  the Lessor  Proceeds
        Accounts  Assignment and the Quiet Enjoyment Letter duly executed by the
        Lessor,  the Lessor  Support  Letters duly executed by the Lessor Parent
        and the  Supplemental  Agreement  and the Quiet  Enjoyment  Letter  duly
        executed by the Lessor Agent.

5       Delivery and acceptance

5.1     Commencement of Lease Period

        On or before the date  falling  three (3) Banking Days after the service
        of the Delivery Request Notice,  the Lessor  confirming its satisfaction
        with the  conditions  set out in clauses 4.1 and 4.2, the Lessor  shall,
        subject to the  provisions  of clauses 4.1 and 4.2,  deliver the Ship to
        the Lessee  under this  Lease and the Ship shall  become  subject to and
        governed by this Lease,  the Lease Period shall  commence and the Lessee
        shall be deemed to have accepted  delivery of the Ship under this Lease.
        Delivery  shall  be  conclusively  evidenced  by  the  execution  of the
        Protocol of Delivery and Acceptance by the Lessor and the Lessee.

5.2     Condition of Ship Lessee's responsibility

        The Lessee  acknowledges  that the  condition of the Ship on delivery to
        the Lessee shall be the sole responsibility of the Lessee.  Accordingly,
        the Lessee shall not be entitled for any reason  whatsoever to refuse to
        accept  delivery of the Ship under this Lease once the Delivery  Request
        Notice has been served on the Lessor and the Lessor shall have confirmed
        its satisfaction  with the conditions set out in clauses 4.1 and 4.2 and
        the Lessor  shall not be liable for any loss or expense,  or any loss of
        profit,  resulting  directly  or  indirectly  from any defect or alleged
        defect in the Ship.

5.3     Delays in Delivery

        The Lessor shall not be responsible for any loss or expense, or any loss
        of  profit,  arising  from any delay in the  delivery  of, or failure to
        deliver,  the Ship to the Lessee  under  this Lease  where such delay or
        failure is not caused by the wilful  misconduct  or gross  negligence of
        the Lessor or breach of its express obligations under this Lease.

5.4     Cancellation before Delivery

        If for any reason,  other than a default by the  Lessor,  the Ship shall
        not have been delivered to and accepted by the Lessee in accordance with
        clause 5 by 11 April 2003 then the  Lessor  may  cancel  its  obligation
        under this Lease to lease the Ship to the Lessee by giving notice to the
        Lessee to that effect.

5.5     Indemnity for delay and non-delivery

        The Lessee shall (in addition to any other  obligation  it may then have
        under  clause 9 to  indemnify  and hold  harmless  the Lessor as therein
        provided)  indemnify  the Lessor in respect of any  liabilities,  losses
        (other than the loss of profit which, had such delivery occurred without
        delay or at all,  would have accrued to the Lessor as a  consequence  of
        the payment by the Lessee of the Rentals  payable  hereunder),  costs or
        expenses reasonably incurred by the Lessor as a consequence of any delay
        in the  delivery or  non-delivery  of the Ship to the Lessee  under this
        Lease  following  the  Lessor   confirming  its  satisfaction  with  the
        conditions  set  out in  clauses  4.1 and 4.2  (including,  but  without
        prejudice to the generality of the foregoing,  any amounts of principal,
        interest,  fees or other sums  whatsoever  paid or payable on account of
        any funds borrowed and any loss,  premium,  penalty or expense which may
        be incurred in  liquidating  or employing  funds acquired to purchase or
        finance any or all of the Ship and to maintain or fund such  amounts (or
        any part  thereof)  or any other  amount due or to become due under this
        Lease)   save  and  to  the  extent  that  such  delay  in  delivery  or
        non-delivery  arises as a direct consequence of the wilful misconduct or
        gross  negligence  of the  Lessor or breach of its  express  obligations
        under this Lease.

6       Extent of Lessor's liability

6.1     Quiet enjoyment

        The Lessor:

6.1.1   warrants and  undertakes  to the Lessee that,  subject to clauses 17 and
        27, the Lessor shall not interfere during the Lease Period with the use,
        possession and quiet enjoyment of the Ship by the Lessee on the terms of
        this Lease,  provided  that the Lessor shall not be liable to the Lessee
        for or in respect of any interruption to the Lessee's use, possession or
        quiet enjoyment of the Ship which results directly or indirectly, wholly
        or partly,  from any act or omission of any person other than the Lessor
        and which does not,  subject to clause 29, arise in  consequence  of any
        acts of Lessor or any member of the Lessor  Group and which are not acts
        of the  Lessee  acting as agent on behalf of the Lessor or any member of
        the Lessor Group); and

6.1.2   the Lessor further undertakes,  if reasonably  requested to do so by the
        Lessee and at the Lessee's expense,  to take such action as is available
        to it to protect the use,  possession  and quiet  enjoyment  of the Ship
        during  the  Lease  Period  by the  Lessee  from  interference  by third
        parties.

6.2     Limitation of Lessor's liability

        The Lessee expressly agrees and acknowledges that, save only as provided
        in clause 6.1, no condition,  warranty or  representation of any kind is
        or has been  given by or shall be deemed to be or to have been  given by
        or on behalf of the Lessor in respect of the Ship, and  accordingly  the
        Lessee confirms that it has not, in entering into this Lease,  relied on
        any condition, warranty, representation or covenant by or deemed to have
        been made by the Lessor or any person on the  Lessor's  behalf  (whether
        authorised or not), express or implied,  whether arising by law, statute
        or otherwise  in relation to the Ship,  including,  without  limitation,
        warranties  or  representations  as to the  description,  seaworthiness,
        quality,  construction,   suitability,   merchantability,   satisfactory
        quality,  fitness for any purpose, value, state, condition,  appearance,
        finish, safety, durability, design or operation of any kind or nature of
        the  Ship,  and  the  benefit  of  any  such   condition,   warranty  or
        representation by the Lessor is hereby  irrevocably and  unconditionally
        waived by the Lessee.  To the extent  permissible  under applicable law,
        the Lessee also waives any rights which it may have in tort or otherwise
        (including,  without  limitation,  negligence)  in respect of any of the
        matters  referred to above and irrevocably  agrees that the Lessor shall
        have no  greater  liability  in tort or  otherwise  (including,  without
        limitation, negligence) in respect of any such matter than it would have
        in contract  after taking  account of all the foregoing  exclusions.  No
        third party making any  representation  or warranty relating to the Ship
        or any part of the  Ship is the  agent  of the  Lessor  nor has any such
        third party authority to bind the Lessor thereby.

6.3     Unfair Contract Terms Act 1977

        Notwithstanding  the foregoing  provisions of this clause 6 (but without
        prejudice to the indemnities contained in this Lease and the other Lease
        Documents),  nothing  herein  shall  afford  to  the  Lessor  any  wider
        exclusion of any  liability  of the Lessor for death or personal  injury
        than the Lessor may effectively  exclude having regard to the provisions
        of the Unfair Contract Terms Act 1977.

7       Rental

7.1     Rental amounts

        During the Primary  Period the Lessee shall pay  instalments  of Primary
        Rental to the Lessor on each Primary Rental Date and, where  applicable,
        during the Secondary Period instalments of Secondary Rental for the Ship
        and,  throughout the Lease Period, any other Rental in each such case in
        the amounts,  at the times and in the manner  provided in the  Financial
        Schedule.

7.2     Unconditional payment obligations

        The  Lessee's  obligation  to pay  Rental  and make  other  payments  in
        accordance  with any of the Lease  Documents  shall,  subject  to clause
        22.3,  be absolute and  unconditional  irrespective  of any  contingency
        whatsoever  including  (but not  limited  to) (a) any right of  set-off,
        counterclaim,  recoupment,  defence or other  right which  either  party
        hereto may have against the other,  (b) any  unavailability  of the Ship
        for any reason, including, but not limited to, any lack or invalidity of
        title or any other defect in the title, seaworthiness,  merchantability,
        satisfactory  quality,  fitness for any purpose,  condition,  design, or
        operation of any kind or nature of the Ship, or the ineligibility of the
        Ship  for  any  particular  use  or  trade,   or  for   registration  or
        documentation under the laws of any relevant jurisdiction,  or the Total
        Loss of, or any  damage to,  the Ship,  (c) any  failure or delay on the
        part of either party hereto,  whether with or without fault on its part,
        in performing  or complying  with any of the terms or conditions of this
        Lease,  (d) any  insolvency,  bankruptcy,  winding  up,  administration,
        reorganisation,   arrangement,   readjustment   of  debt,   dissolution,
        liquidation  or  similar  proceedings  by or  against  the Lessor or the
        Lessee or (e) any lack of due authorisation of, or other defect in, this
        Lease or any of the other Lease Documents.

7.3     Rental adjustments

        The  calculation  and payment of Rental  during the  Primary  Period are
        subject to adjustment in accordance with the provisions of the Financial
        Schedule.

7.4     Advance payments

        No Rental paid in advance shall (except as expressly contemplated by the
        provisions of this Lease or the  Financial  Schedule) be repayable by or
        recoverable from the Lessor.

7.5     Extent of restriction of Lessee's rights

        Nothing  contained in clause 7.2 shall constitute a waiver by the Lessee
        of any  right  giving  rise to a claim  by the  Lessee  for  damages  or
        specific  performance or any other injunctive  relief against the Lessor
        arising  out of a breach by the  Lessor of its  obligations  under  this
        Lease.

8       Payments, interest and calculations

8.1     Manner of payment

        All  payments  to be made by the  Lessee  under this Lease or any of the
        other  Lease  Documents  shall be made  (unless  specifically  otherwise
        provided  in this  Lease or any of the other  Lease  Documents)  without
        prior demand and in full, without any set-off or counterclaim whatsoever
        and,  subject  as  provided  in  clause  10.3,  free  and  clear  of any
        deductions  or  withholdings  in Sterling  (or, in the case of indemnity
        payments,  in the  currency  in which the cost or  expense  which is the
        subject of the  indemnity  payment is incurred)  for value on the day on
        which  payment is due to the bank  account of the Lessor at Girobank Plc
        of Bridle Road,  Bootle,  Merseyside GIR 0AA,  Account Number  01007246,
        reference Sovereign Finance plc - Payments Account or to such other bank
        account as the Lessor may from time to time have  notified to the Lessee
        in writing not less than five (5) Banking Days prior to the due date for
        payment.

8.2     Payments on Banking Days

        When any payment  under this Lease or any of the other  Lease  Documents
        would otherwise be due on a day which is not a Banking Day, the due date
        for payment shall be extended to the next  following  Banking Day unless
        such Banking Day falls in the next calendar  month in which case payment
        shall be made on the immediately preceding Banking Day.

8.3     Interest on delayed payments

        If the Lessee fails to pay any sum (including,  without limitation,  any
        sum  payable  pursuant  to this  clause 8.3) on its due date for payment
        under this Lease or any of the other Lease  Documents,  the Lessee shall
        pay to the Lessor on demand interest on such sum from the due date up to
        the  date of  actual  payment  (after  as well as  before  any  relevant
        judgment) at the Default Rate.

8.4     Calculation of interest

        All interest and other  payments of an annual nature under this Lease or
        any of the other Lease  Documents shall accrue from day to day and shall
        be  calculated  on the  basis of the  actual  days  elapsed  and a three
        hundred and sixty-five  (365) day year in the case of a Sterling payment
        and  payments  in other  currencies  where that is the normal  basis for
        interest  calculations  by banks in such  currencies and a three hundred
        and  sixty  (360)  day  year  in the  case  of  payments  in  all  other
        currencies.

8.5     Certificates

        Any  certificate  or  determination  of the  Lessor  as to any  rate  of
        interest or any other amount  payable  under any of the Lease  Documents
        shall,  in the absence of manifest  error,  be conclusive and binding on
        the Lessee but such certificate or determination  shall not override the
        express provisions of the Financial  Schedule.  The Lessor shall provide
        the  Lessee  with such  information  pertaining  to any  certificate  or
        determination referred to in this clause 8.5 (including any calculations
        set out therein and the basis upon which  those  calculations  have been
        prepared)  as  it  considers,  acting  reasonably,  appropriate  in  the
        circumstances existing at such time.

8.6     Currency indemnity

        If any sum due from the  Lessee  under  this  Lease or any of the  other
        Lease Documents or under any order or judgment given or made in relation
        thereto has to be converted from the currency (the "first  currency") in
        which  the  same is  payable  under  this  Lease or the  relevant  Lease
        Documents  or under such order or judgment  into another  currency  (the
        "second  currency")  for the  purpose of (a) making or filing a claim or
        proof  against the  Lessee,  (b)  obtaining  an order or judgment in any
        court or other  tribunal or (c) enforcing any order or judgment given or
        made in  relation  to such Lease  Document,  the Lessee  shall on demand
        indemnify  and  hold  harmless  the  Lessor  from and  against  any loss
        suffered as a result of any difference  between (i) the rate of exchange
        used for such  purpose to  convert  the sum in  question  from the first
        currency into the second currency and (ii) the rate or rates of exchange
        at which the Lessor may in the ordinary course of business  purchase the
        first currency with the second currency upon receipt of a sum paid to it
        in satisfaction, in whole or in part, of any such order, judgment, claim
        or proof.  Any amount due from the Lessee under this clause 8.6 shall be
        due as a  separate  debt and shall not be  affected  by  judgment  being
        obtained for any other sums due under or in respect of this Lease or any
        of the other Lease  Documents  and the term "rate of exchange"  includes
        any  premium  and  costs of  exchange  payable  in  connection  with the
        purchase of the first currency with the second currency.

8.7     Double recovery

        Notwithstanding anything to the contrary contained in this Lease and any
        of the Lease Documents,  to the extent that the Lessor has recovered any
        liability from the Lessee pursuant to the terms of any particular  Lease
        Document  the same  liability  shall not also be  recoverable  under the
        provisions of any of the other Lease Documents.

9       Costs and indemnities

        9.1 Ship and corporate administration related expenses

        Subject to clause 9.10,  the Lessee shall  promptly pay and discharge or
        cause to be paid or  discharged,  as soon as the same become payable and
        indemnify and keep the Lessor fully  indemnified  at all times on a full
        indemnity  basis from and against all costs or expenses  (other than the
        payment to the  Arranger of the  Arrangement  Fee,  payment to Sovereign
        Finance  Plc of the Lease Fee,  payment of the Legal Fee and Taxes which
        are  otherwise the subject of clause 10 or which would be so subject but
        for the operation of clause 10.8)  reasonably  incurred by the Lessor in
        respect of, or arising from:

9.1.1   the delivery, import, export, registration,  classification,  ownership,
        possession,   control,  use,  management,   manning,   victualling,  the
        provision  of  bunkers  and  lubricating   oils,   leasing,   insurance,
        maintenance,  repair,  dry-docking,   survey,  refurbishment,   service,
        overhaul,  modification,  change,  alteration,  loss,  damage,  storage,
        laying-up,   removal,   redelivery,   transfer  to  required  redelivery
        location,  sale or  disposal  of,  in or to the  Ship,  and all costs or
        expenses which are reasonably incurred by the Lessor and which otherwise
        arise in  connection  with the Ship or the  performance  of the Lessee's
        obligations under this Lease or any of the other Lease Documents; and

9.1.2   the corporate administration in Bermuda of the Lessor including, without
        limitation,  any amounts payable by the Lessor to Codan Services Limited
        pursuant to the  administration  agreement executed on or about the date
        hereof between Cedar Services Limited, the Lessor and the Lessor Agent.

9.2     Transaction related expenses

        Whether  or not the Ship is  delivered  to the Lessee  pursuant  to this
        Lease,  the Lessee shall (to the extent that the same has not been taken
        into account in accordance with the Financial  Schedule in computing the
        amount of any Rental or any  adjustments  thereto or would be taken into
        account  but for  paragraph  10 of the  Financial  Schedule)  pay to the
        Lessor on demand:

9.2.1   all expenses  (including  legal,  advisory,  printing and  out-of-pocket
        expenses)  reasonably  incurred  by the  Lessor in  connection  with the
        negotiation, preparation and execution of the Transaction Documents (but
        provided  that  Delivery  does  occur,  excluding  such  amount  of such
        expenses paid by the Lessor as referred to in Variable Assumption 1.19.3
        in the Financial Schedule);

9.2.2   all expenses (including the Cost of Lessor's Management Time) reasonably
        incurred by the Lessor in respect of any  amendment or extension  of, or
        the  granting  of any  waiver  or  consent  under,  any of the  Relevant
        Documents  and/or in accordance with any action required to be taken, or
        documents  required to be provided,  pursuant to clauses 3.3.4, 3.6, 12,
        14.2 or 32 (it being agreed  that,  for the purpose of  determining  the
        entitlement  of the Lessor to recover  the Cost of  Lessor's  Management
        Time,  such  entitlement   shall  arise  in  respect  of  any  event  or
        circumstance  which is not  contemplated  by the  Relevant  Documents or
        which arises  otherwise than in the ordinary  course of managing a lease
        transaction  of the  type  contemplated  by  this  Lease  (and,  for the
        avoidance of doubt,  actions required to be taken, or documents required
        to be produced  pursuant to clauses 3.3.4, 3.6, 12, 14.2 or 32 shall not
        be treated as having  arisen in the ordinary  course of managing  such a
        lease transaction)); and

9.2.3   all expenses  (including the Cost of Lessor's  Management  Time,  legal,
        survey and other costs)  properly  incurred by the Lessor  following the
        occurrence and during the continuance of a Termination Event or Relevant
        Event or in  contemplation  of, or otherwise  in  connection  with,  the
        enforcement  of, or  preservation  of any  rights  under,  the  Relevant
        Documents,  or in respect of a breach  (other  than by the Lessor or the
        Lessor  Agent)  of any  representation,  warranty,  consent,  agreement,
        condition  or  stipulation  therein  contained,  or in  respect  of  the
        repossession of the Ship.

        The Lessor shall notify the Lessee as soon as practicable after any Cost
        of Lessor's  Management  Time has started to accrue in  accordance  with
        this Lease and the other  Relevant  Documents  (advising the Lessee,  if
        practicable,  which of its  personnel  are  senior  officers  and junior
        officers) and the Lessor agrees that it shall not invoice the Lessee for
        the first two  thousand  Pounds  ((pound)2,000)  of the Cost of Lessor's
        Management Time.

        All expenses  payable pursuant to this clause 9.2 shall be paid together
        with any  Irrecoverable  VAT,  and in the currency in which the same are
        incurred by the Lessor.

9.3     Indemnity for non-payment by Lessee

        The Lessee  shall on demand  indemnify  and hold  harmless  the  Lessor,
        without  prejudice to any of the Lessor's  other rights under any of the
        Relevant Documents,  from and against (other than to the extent that the
        Financial  Schedule  specifically  provides,  or would  provide  but for
        paragraph 10 thereof, for there to be a corresponding  payment of Rental
        or to the extent  that the Lessor has not been  compensated  pursuant to
        the provisions of clause 8.3):

9.3.1   any costs or expenses which the Lessee has agreed to pay and which shall
        be claimed  from or  assessed  against or paid by the Lessor and against
        any  liability  incurred by the Lessor by reason of any delay or failure
        of the Lessee to pay any such costs or expenses; and

9.3.2   any  Taxes   which  the  Lessee  has  agreed  to  pay  and  which  shall
        nevertheless  be claimed from or assessed  against or paid by the Lessor
        and against any liability  incurred by the Lessor by reason of any delay
        or  failure  of the  Lessee  to pay any such  Taxes  including,  without
        limitation,  any  delay  or  failure  of the  Lessee  to make  any  such
        deduction or  withholding  as is referred to in clause 10.3 or by reason
        of any increased payment as is referred to in clause 10.3 not being made
        on the due date for such payment.

9.4     Indemnities relating to the Ship

        Subject  to  clause  9.10,   but  without   prejudice  to  the  Lessee's
        obligations under clauses 9.1 to 9.3 inclusive, the Lessee agrees at all
        times,  whether  before,  during or after the Lease Period (but if after
        the Lease  Period to the extent  that the same arise by matters  arising
        out of or in  respect  of the  Lease  Period),  to  indemnify  and  hold
        harmless the Lessor and each of the other  Indemnified  Persons from and
        against  all costs,  expenses,  payments  (other than the payment to the
        Arranger of the Arrangement Fee, payment to Sovereign Finance Plc of the
        Lease Fee and  payment  of the Legal  Fee),  charges,  losses,  demands,
        liabilities,  claims, actions,  proceedings (whether civil or criminal),
        penalties,  fines, damages, judgments, orders or other sanctions, liens,
        salvage and general  average  (other than Taxes which are  otherwise the
        subject of clause 10 (or which would be so subject but for the operation
        of clause  10.6 or 10.8))  (in this  clause 9  together  referred  to as
        "Indemnity  Losses")  which  may be  incurred  by,  or made or  asserted
        against, the Lessor or any other Indemnified Person at any time:

9.4.1   relating to, or arising  directly or indirectly in any manner or for any
        cause or reason  whatsoever  out of, the  design,  nature,  description,
        manufacture,   construction,   testing,  delivery,  acceptance,  import,
        export, registration,  flag, classification,  certification,  ownership,
        possession,  control,  use,  management,  operation,  manning,  crewing,
        navigation,  victualling,  supply or servicing  (whether at sea or not),
        provision  of  bunkers  and  lubricating  oils,  leasing,   sub-leasing,
        insurance,   maintenance,   repair,  overhaul,   dry-docking,   surveys,
        refurbishment,  condition,  service,  modification,  change, alteration,
        loss, damage,  storage, laying up, removal,  repossession,  re-delivery,
        return,  sale  or  disposal  of,  in or to the  Ship,  or  otherwise  in
        connection  with the Ship or which arise out of the use or  operation of
        any other  vessel  owned by or  chartered  to the Lessee or any  company
        associated  with,  the Lessee or which arise out of any other  claims of
        whatsoever  nature made  against the Lessee,  or any company  associated
        with the Lessee,  or relating to loss or destruction of or damage to any
        property,  or death or injury  of, or other  loss of  whatsoever  nature
        suffered by, any person  caused by,  relating to, or arising from or out
        of (in each case whether  directly or  indirectly)  any of the foregoing
        matters;

9.4.2   which may at any time be made or brought on the ground  that any design,
        article  or  material  in the  Ship  or  the  operation  or use  thereof
        constitutes an  infringement of patent,  intellectual  property right or
        any other right whatsoever;

9.4.3   in  preventing  or  attempting  to  prevent  the  arrest,  confiscation,
        seizure, taking in execution, impounding, forfeiture or detention of the
        Ship,  or in securing or  attempting  to secure the release of the Ship;
        and

9.4.4   as a  consequence  of any  default  in  payment by the Lessee of any sum
        under any of the Lease  Documents  when due or any other  default by the
        Lessee in the due and punctual  performance of its obligations under any
        of the Lease  Documents  (to the extent  that the Lessor has not already
        been compensated  pursuant to any of the other provisions of this Lease)
        including,  without limitation, any exercise by the Lessor of its rights
        under the Standby  Documents and any action  required to be taken by the
        Lessor  in  connection  with the  exercise  of any such  rights  and the
        Standby Loan (as defined in the Proceeds  Deed)  required to be provided
        to the  Standby  Purchaser  in  connection  with the  Standby Put Option
        Agreement.

9.5     Conduct of claims

        Unless  and until a Relevant  Event  shall have  occurred,  and  without
        prejudice to, or constituting a pre-condition  to, the Lessor's right to
        be indemnified pursuant to, this Lease:

9.5.1   the Lessor shall notify the Lessee upon  receiving a claim in respect of
        which the Lessor is or may become  entitled to an indemnity under clause
        9.4 as soon as practicable following receipt of such claim;

9.5.2   subject to the prior written  approval of the Lessor (such  approval not
        to be unreasonably withheld or unreasonably  delayed),  the Lessee shall
        be  entitled  to take,  in the name of the  Lessor,  such  action as the
        Lessee shall see fit to defend or avoid any such Indemnity Losses as are
        referred to in clauses  9.4.1,  9.4.2,  9.4.3 or 9.4.4 or to recover the
        same from any third party, subject to the Lessee first ensuring that the
        Lessor is  indemnified  and, if the Lessor so  requires,  secured to its
        reasonable satisfaction against all Indemnity Losses thereby incurred or
        to be incurred and all Taxes incurred or to be incurred as a consequence
        thereof; and

9.5.3   the Lessor shall,  to the extent that it is practical so to do,  consult
        with the Lessee before making any payment to a third party in respect of
        such Indemnity Losses as are referred to in clauses 9.4.1,  9.4.2, 9.4.3
        or 9.4.4 and,  to the extent  that the Lessee is entitled to take action
        to avoid such  Indemnity  Losses in  accordance  with  clause  9.5.2 and
        subject to the Lessee first ensuring that the Lessor is indemnified  and
        secured to the Lessor's  reasonable  satisfaction  against all Indemnity
        Losses  thereby  incurred or to be incurred and all Taxes incurred or to
        be incurred as a consequence  thereof,  the Lessor shall at the Lessee's
        request co-operate with the Lessee in taking such action.

        Notwithstanding  the above,  the Lessor shall not be obliged to take any
        such action  where the Lessor  notifies  the Lessee that it considers in
        its  conclusive  opinion but acting in good faith that it is or would be
        materially  prejudicial  to the  interests  of the  Lessor  Group or any
        member  thereof  for such  action to be taken.  The Lessor  shall not be
        obliged to give any reasons for such  notification  but, when  providing
        the Lessee with such  notification,  the Lessor will  provide the Lessee
        with  written  confirmation  from a board member of (a) the Lessor Agent
        where the claim  referred  to in clause  9.5.1 shall be in respect of an
        amount less than or equal to five million Pounds  ((pound)5,000,000)  or
        (b) the Lessor Parent where the claim  referred to in clause 9.5.1 shall
        be  in  respect  of  an  amount  in  excess  of  five   million   Pounds
        ((pound)5,000,000),  that the  decision  not to take any such action was
        taken after  consideration by the senior  management of the Lessor Agent
        or, as the case may be, the Lessor Parent. Any amount or any increase in
        any amount  payable  by the  Lessor as a result of any delay  consequent
        upon the operation of clauses  9.5.2 and 9.5.3 shall,  for the avoidance
        of doubt, be for the account of the Lessee.

9.6     VAT and indemnity claims

        Any amounts  payable  pursuant to clause 9.4 and/or  clause 9.5 shall be
        paid together with any  Irrecoverable  VAT, and in the currency in which
        the same are incurred by the Lessor.

9.7     Environmental Indemnity

        Subject to clauses 9.5 and 9.10,  the Lessee shall  indemnify the Lessor
        on demand in respect of all costs, claims,  expenses,  losses,  demands,
        liabilities,  penalties and fines of whatever nature (including, without
        limitation,  those  arising  under  Environmental  Laws)  which  may  be
        incurred or made against the Lessor) at any time relating to, or arising
        directly  or  indirectly  in any  manner  or for  any  cause  or  reason
        whatsoever out of an  Environmental  Claim made or asserted  against the
        Lessor  which would or could not have been brought if the Lessor had not
        entered into this Lease or any of the other Relevant Documents.

9.8     Survival of indemnities

        Notwithstanding  anything to the contrary contained in this Lease or any
        of the other  Lease  Documents  and  without  prejudice  to any right to
        damages or other claim which the Lessee may have at any time against the
        Lessor under this Lease,  the indemnities by the Lessee in favour of the
        Lessor and the other Indemnified Persons contained in this Lease and the
        other  Lease   Documents   shall  continue  in  full  force  and  effect
        notwithstanding  any  breach  of the  terms of this  Lease or any of the
        other Lease Documents  (including any fundamental or repudiatory breach)
        by the Lessor or the Lessee,  the termination of the leasing of the Ship
        to the Lessee  under this Lease,  the  repudiation  by the Lessor or the
        Lessee of this Lease,  or the  expiration  or  termination  of the Lease
        Period by effluxion of time or otherwise.

9.9     Interest on indemnity payments

        Moneys  becoming due by the Lessee to the Lessor  under the  indemnities
        contained  in this  clause 9 or  elsewhere  in this  Lease or any of the
        other  Lease  Documents  shall be paid on demand  made by the Lessor and
        shall be paid  together  with  interest  thereon at the Default  Rate in
        respect of the  period  from the date on which the  Lessor  suffered  or
        incurred the  Indemnity  Loss until the date of payment by the Lessee to
        the Lessor (after as well as before judgment) and the Lessor agrees that
        it will issue a demand hereunder as soon as reasonably practicable after
        determining  that it has suffered or incurred any such  Indemnity  Loss,
        and will make such determination as soon as reasonably practicable after
        becoming aware that it may have suffered or incurred an Indemnity Loss.

9.10    Exclusions from general indemnity

        The  indemnities  contained in clauses 9.1, 9.4 and 9.7 shall not extend
        to any costs, expenses,  payments,  charges, losses, demands,  statutes,
        claims, actions, proceedings (whether and or criminal) penalties, fines,
        damages,  judgments,  orders  or other  sanctions,  liens,  salvage  and
        general average:

9.10.1  to the  extent  that the same  arises  from any act or  omission  of the
        Lessor or any  other  Indemnified  Person  which  constitutes  the gross
        negligence or wilful  misconduct of the Lessor or such other Indemnified
        Person;

9.10.2  to the  extent it is caused by any  failure on the part of the Lessor to
        comply with any of its express  obligations under any of the Transaction
        Documents to which the Lessor is a party Provided that any breach by the
        Lessor of its obligations  under any of the Transaction  Documents shall
        not be  included  within the ambit of this  clause  9.10.2 to the extent
        that such breach is itself  caused by, or arises by means of, any act or
        omission  of the Lessee or any other  member of the Lessee  Group of any
        Transaction Document;

9.10.3  in respect of which the Lessor  and/or any other  Indemnified  Person is
        expressly  indemnified  under any other Lease  Document or to the extent
        that the Lessor  and/or any other  Indemnified  Person has actually been
        indemnified by any other person;

9.10.4  to the extent that the Lessor or any  Indemnified  Person has  recovered
        such liability pursuant to clause 10; or

9.10.5  to  the  extent  that  such  liability  is  taken  into  account  in the
        calculations contained in the Financial Schedule in computing the Rental
        payable under this Lease.

9.11    Mitigation

        If the Lessee shall become  liable to indemnify  the Lessor or any other
        Indemnified  Person pursuant to this clause 9, the Lessor and the Lessee
        shall,  provided  no  Relevant  Event has  occurred  and is  continuing,
        consult in good faith for a period not  exceeding  the earlier of thirty
        (30)  days and the date the  Lessor  or such  other  Indemnified  Person
        is/are  obliged  to satisfy or  discharge  such  losses and each of them
        shall, at the cost of the Lessee, use all reasonable endeavours to avoid
        (or  reduce   the   amount)   of  the   losses   giving   rise  to  such
        indemnification.

9.12    Lessor as trustee

        The Lessor shall, to the extent that clause 9.13 is not  applicable,  be
        the agent and trustee of each of the other  Indemnified  Persons for the
        purpose of the  indemnities  given in their  favour under this Lease and
        any amounts  received by the Lessor in such  capacity  shall be held for
        the other Indemnified Persons severally.

9.13    Pass through of indemnity benefits

        Without  duplicating  the  liabilities  of the Lessee  under this Lease,
        where in this clause 9 an  indemnity  is expressed to be for the benefit
        of any  Indemnified  Person,  the Lessor  shall be entitled to indemnify
        such  Indemnified  Person  on the same  terms  mutatis  mutandis  as the
        indemnities  expressed to be for the benefit of such Indemnified  Person
        in this clause 9 and the Lessee shall  indemnify the Lessor and hold the
        Lessor  harmless on a full indemnity  basis from and against each amount
        paid or payable by the Lessor to such Indemnified  Person under any such
        indemnity.

10      Taxation

10.1    General

        The Lessee shall on demand  indemnify the Lessor from and against all or
        any Taxes  imposed on or  payable by the Lessor  arising by reason or in
        consequence  (whether alone or in  conjunction  with any other reason or
        circumstance) of this Lease or any of the other Relevant  Documents,  or
        in respect of  instruments  delivered  hereunder or  thereunder,  or the
        manufacture,  purchase, sale, disposal,  supply,  delivery,  management,
        control,  possession,  ownership,  leasing,  use, operation,  existence,
        design,  condition,  construction,   testing,  alteration,  maintenance,
        service,  repair,  overhaul,  import or export from any country or area,
        return,  recovery,  storage  or sale of the  Ship  or  upon  receipt  of
        earnings  arising  therefrom  or on or in respect of any  profits of any
        other party to any of the  Relevant  Documents  or which arise or become
        payable  as a result  (whether  alone or in  conjunction  with any other
        matter or  circumstance)  of anything done in response to any request by
        the Lessee.

10.2    Gross-up of indemnity payments

10.2.1  Sums payable to the Lessor under this Lease or any of the other Relevant
        Documents by way of indemnity or reimbursement shall be calculated on an
        after-tax  basis.  Accordingly,  if and to the extent  that any such sum
        payable to the Lessor is determined by the Lessor, acting in good faith,
        to be taxable  in the hands of the  Lessor,  such sum  shall,  where the
        payment is to be made by the Lessee,  be increased  to, or where payment
        is to be made by any other  person,  the Lessee shall pay to the Lessor,
        such amount which (after subtracting any Taxation suffered by the Lessor
        on the  increased  payment  or, as the case may be,  the  payment by the
        Lessee,  and after  taking  into  account  any  deduction  for  Taxation
        purposes available to the Lessor and the timing of any such deduction in
        respect of the discharge by the Lessor of any corresponding liability to
        a third  party)  shall  equal the  amount  which the  Lessor  would have
        received had the sum payable by the Lessee or such other person not been
        taxable in the hands of the Lessor.  If any sum payable to the Lessor is
        initially  paid on the basis that it is not  taxable in the hands of the
        Lessor and it is  subsequently  determined  to be taxable or vice versa,
        such  adjustment  and payment  shall be made  between the Lessor and the
        Lessee as the  Lessor  shall  certify  as  appropriate  to  restore  the
        after-tax  position  of the  Lessor to that which it would have been had
        the adjustment not been necessary.

10.2.2  If and to the extent  that any sum (the  "indemnity  sum")  constituting
        (directly  or  indirectly)  an  indemnity  to the Lessor but paid by the
        Lessee to any person other than the Lessor,  shall be treated as taxable
        in the hands of the Lessor,  the Lessee shall pay to the Lessor such sum
        (the "compensating  sum") as (after subtracting any Taxation suffered by
        the Lessor on the  compensating  sum and after  taking into  account any
        deductions  for Taxation  purposes  which in the  Lessor's  sole opinion
        acting  reasonably  in good faith are available to the Lessor in respect
        of any  corresponding  payment  treated  as made by the  Lessor  to such
        person) shall  reimburse  the Lessor for any Taxation  suffered by it in
        respect of the indemnity sum.

10.2.3  For the purposes of this clause 10.2 a sum shall be deemed to be taxable
        in the  hands of the  Lessor  if it falls to be taken  into  account  in
        computing  the  profits  or  gains of the  Lessor  for the  purposes  of
        Taxation and if so the Lessor shall be deemed to have suffered  Taxation
        thereon at the rate of Taxation  applicable  to the Lessor's  profits or
        gains for the period in which the payment falls to be taken into account
        for the purposes of such Taxation.

10.3    Withholding Taxes

10.3.1  If at any time any applicable law, regulation or regulatory requirement,
        (whether  or not  having  the  force  of law  but in  respect  of  which
        compliance by banks or other financial institutions or institutions of a
        similar nature to the Lessor in the relevant  jurisdiction  is generally
        customary) or any  governmental  authority,  monetary  agency or central
        bank requires any deduction or  withholding in respect of Taxes from any
        payment  due to the Lessor or any other  Indemnified  Person  under this
        Lease or any of the other  Relevant  Documents  the Lessee shall (unless
        otherwise agreed under or pursuant to any Relevant Document):

        (a)     if the payment is to be made by the Lessee, increase the payment
                in respect of which the deduction or  withholding is required to
                the extent  necessary to ensure  that,  after the making of such
                deduction or  withholding,  the Lessor  receives on the due date
                for such  payment a net sum equal to the sum which it would have
                received had no such deduction or  withholding  been required to
                be made;

        (b)     if the  payment  is to be  made by any  person  other  than  the
                Lessee,  pay  directly  to the  Lessor  such sum as will,  after
                taking  into  account  any  deduction  or  withholding  which is
                required to be made in respect of such sum, enable the Lessor to
                receive  on the due date for  payment a net sum equal to the sum
                which the  Lessor  would  have  received  in the  absence of any
                obligation to make a deduction or withholding;

        (c)     if  paragraph  (a) applies the Lessee  shall pay to the relevant
                authority within the period for payment  permitted by applicable
                law the full amount of the deduction or withholding  (including,
                but without  prejudice to the generality of the  foregoing,  the
                full amount of any deduction or  withholding  from any increased
                amount paid pursuant to this clause 10.3); and

        (d)     if paragraph  (a) applies the Lessee shall furnish to the Lessor
                within the period  for  payment  permitted  by  applicable  law,
                appropriate   receipts   evidencing   payment  to  the  relevant
                authority of all amounts deducted or withheld as aforesaid.

10.3.2  If the Lessor  determines  acting  reasonably and in good faith that the
        Lessor or a member of the Lessor  Group has  retained and utilised a tax
        benefit by reason of any deduction or  withholding as aforesaid (and the
        Lessor shall endeavour to realise or receive such a tax benefit provided
        it is not otherwise  disadvantaged  by doing so), which, in the Lessor's
        determination  acting  reasonably  and in good faith is referable to any
        deduction or  withholding  as  aforesaid,  subject to the Lessee  having
        complied  with clause  10.3.1,  the Lessor will,  as soon as  reasonably
        practicable  thereafter,  reimburse to the Lessee the  payment,  or such
        part of the payment as will leave the Lessor or such Indemnified  Person
        (after such  reimbursement)  in no better and no worse  position than it
        would have been in if no such deduction or withholding had been required
        to be made, provided always that:

        (a)     the  Lessor  shall be sole judge  (acting in good  faith) of the
                amount of any such benefit and of the date on which such benefit
                is received or realised and it shall give a certificate  setting
                out  the  basis  of the  computation  of the  amount  of any tax
                benefit referred to in clause 10.3.2;

        (b)     the  Lessor  and each  such  Indemnified  Person  shall  have an
                absolute  discretion  as to  the  arrangement  of  its  Taxation
                affairs  and,  in  particular,  the order in which it employs or
                claims credits, refunds and allowances available to it;

        (c)     if,  following  any such  reimbursement  by the Lessor,  the tax
                benefit  in  respect  of which  such  reimbursement  was made is
                disallowed in whole or in part by any applicable taxing or other
                authority,  the Lessee shall, upon demand, pay to the Lessor the
                amount necessary to restore the after tax position of the Lessor
                or such Indemnified  Person to that which it would have been had
                no adjustment under this proviso (c) been necessary; and

        (d)     the Lessor  shall not be obliged to make any such  reimbursement
                if, by doing so, it would contravene the terms of any applicable
                notice, direction or requirement (having the force of law).

        Provided that if the Lessee requests the Indemnified Person, in writing,
        to make an  application  for  relief  (whether  in  whole or in part) in
        respect of any deduction or withholding  required by law pursuant to the
        provisions of a double tax treaty,  the Indemnified Person shall (at the
        cost of the  Lessee)  take such  action as the Lessee  shall  reasonably
        request  to  make  such  application  to an  applicable  Tax  Authority.
        Provided that in  determining  whether any request under this proviso is
        reasonable,  the Lessor, in its capacity as an Indemnified Person, shall
        be entitled to take into account the interests of the other customers of
        the Lessor Group, in its absolute  discretion  acting in good faith, and
        the future  liability to Tax of the members of the Lessor Group.  If the
        Indemnified Person subsequently obtains a repayment (whether in whole or
        in part) of such  deduction or  withholding  from that Tax  Authority in
        circumstances  where the Lessee has made an increased  payment or paid a
        compensating  sum under this clause 10.3 the  Indemnified  Person shall,
        provided that the Indemnified  Person has received all amounts which are
        then due and  payable  to it under any  provisions  of this Lease or the
        other Relevant Documents pay to the Lessee such amount as will leave the
        Indemnified  Person  in no  better  and in no  worse  position  than the
        Indemnified  Person would have been in if the  deduction or  withholding
        had not been required.

10.4    Non-deductibility

        If the Lessor is  required to pay any sum under this Lease or any of the
        other Relevant  Documents and such sum is payable out of or represents a
        reimbursement  of an amount  which is brought  into account in computing
        the profits or gains of the Lessor for the  purposes of Taxation and the
        Lessor  Determines  acting in good faith that such  payment  will not be
        allowed to the Lessor as a deductible trading expense or as a basis for,
        or otherwise  as, a deduction  or off-set for  Taxation  purposes in the
        Accounting  Period of the Lessor in which it is required to be paid, the
        Lessee  shall  (without  prejudice  to the  generality  of clause  1.7),
        subject to any  restrictions  set out in the Proceeds  Deed,  pay to the
        Lessor  such  amount  as shall  put the  Lessor  in the  same  after-tax
        position as the Lessor  would have been in had the payment  been allowed
        as a deductible  trading  expense or as a basis for, or otherwise  as, a
        deduction or off-set as aforesaid. If any such payment is initially made
        on the basis that it is a deductible trading expense, or that it will be
        allowed as a basis for, or  otherwise  as, a deduction or off-set of the
        Lessor for Taxation  purposes in the Accounting  Period of the Lessor in
        which it is incurred and it is subsequently determined that it is not so
        deductible or allowed, or vice versa, such adjustments and payments,  if
        any,  shall be made  between the Lessor and the Lessee as the Lessor may
        certify as appropriate in order to restore the after-tax position of the
        Lessor  to that  which it would  have been had the  adjustment  not been
        necessary.

10.5    Undertakings concerning Taxation

        The Lessee  undertakes that it will,  taking into account any time limit
        for the production of information imposed by any Tax Authority,  furnish
        when the Lessor shall so require, such information as may be required to
        be so  furnished  by the  Lessor to the Board of  Inland  Revenue  or an
        Inspector of Taxes regarding the leasing of the Ship or the use to which
        it is being or has been put,  and  promptly  upon request by the Lessor,
        furnish  to  the  Lessor  such  information,  books,  records  or  other
        documents  in the  possession  of or under the control of the Lessee (or
        photocopies  thereof)  as the Lessor may  request in order to enable the
        Lessor to comply with the provisions of sections 118, 119 and 120 CAA or
        to  respond  to a request  for  information  given to the  Lessor by the
        Inland Revenue.

10.6    No double counting

        Notwithstanding  the  preceding  provisions  of  this  clause  10,  if a
        liability to Taxation of the Lessor arises (or would have arisen but for
        an  insufficiency  of taxable profits) or an event giving rise to such a
        liability  occurs  (which would not have been,  or given rise to, such a
        liability had all of the Variable  Assumptions  proved to be correct) by
        reason of which the  Lessee is (or  would,  but for this  provision  be)
        liable to make a payment under the  preceding  provisions of this clause
        10 and, in consequence of any such Variable  Assumptions  proving not to
        be correct,  the amount of Rental  payable  under this Lease is adjusted
        upwards (or would be so adjusted but for the  provisions of paragraph 10
        of  the  Financial   Schedule)   then  the  Lessee  shall  not  in  such
        circumstances  be liable to make any payments to the Lessor or otherwise
        in respect of Taxes  under this  clause 10 to the extent that the Lessor
        is (or, as the case may be, would be) fully  compensated (or would be so
        compensated  but for the  provisions  of paragraph  10 of the  Financial
        Schedule)  in  respect  of  such  liability  or  event  by  such  upward
        adjustment to the amount of such Rental.

10.7    Duties and other taxes

        The Lessee shall pay all stamp, documentary,  registration or other like
        duties or Taxes (including any such Taxes payable by the Lessor) imposed
        on or in  connection  with  any  of the  Relevant  Documents  and  shall
        indemnify  the Lessor  against  any  liability  arising by reason of any
        delay or omission by the Lessee to pay such duties or Taxes.  The Lessor
        by way of covenant but not as a condition  precedent to the liability of
        the Lessee  hereunder  shall,  except to the extent that its business or
        taxation  interests  are  otherwise   prejudiced,   use  its  reasonable
        endeavours to avoid unnecessarily rendering the Lessee liable under this
        clause.

10.8    Exclusion from tax indemnities

        The Lessee  shall not be obliged to  indemnify  the Lessor  under clause
        10.1 in respect of any Taxes in respect of the following  (including any
        interest, penalties or fines thereon):

10.8.1  any Tax  liability  which is imposed by way of deduction or  withholding
        from any  payment  due from the  Lessee  under  this Lease or any of the
        other Relevant Documents to the Lessor in circumstances where the Lessee
        is required to make any payment or increased  payment in respect thereof
        under  clause  10.3 (the  Lessee's  liability  for which shall be as set
        forth in clause 10.3); or

10.8.2  Taxes  which are  imposed  by reason of the wilful  misconduct  or gross
        negligence of the Lessor, or any affiliate thereof or to the extent they
        result  from any  breach  of, or a failure  on the part of the Lessor to
        comply with, any of the terms of this Lease or any of the other Relevant
        Documents to which the Lessor is a party; or

10.8.3  any Taxes  assessed  against  the  Lessor by  reference  to its  overall
        income,  profits or gains  attributable to any Rental or Termination Sum
        or any adjustment thereto actually  receivable  hereunder or its overall
        income,  profits  or gains,  if any,  realised  in  connection  with the
        ultimate  disposal of the Ship or arising out of a Total Loss.  Provided
        that, for the avoidance of doubt,  the interest (if any) accruing by the
        Lessor in  respect  of  amounts  held from time to time in the  Lessor's
        Proceeds  Accounts  and/or any foreign  exchange  gain  relating to such
        amounts shall not be treated as realised in connection with the ultimate
        disposal of the Ship or arising out of a Total Loss; or

10.8.4  any Taxes to the  extent  that they  would not have  arisen  but for the
        reasonably avoidable delay or failure by the Lessor in the filing of tax
        returns or any other  documents  or the payment of Taxes  assessed on or
        payable by the Lessor in the United  Kingdom  which delay or failure has
        not been  expressly  consented  to, or requested by the Lessee or unless
        such a failure  or delay by the  Lessor  results  from a failure  by the
        Lessee  promptly  to  provide  the Lessor  with  correct,  suitable  and
        adequate  information  to enable  the  Lessor to file the  relevant  tax
        return or pay such Taxes or other amounts; or

10.8.5  where the  Lessee is liable to  compensate  the Lessor in respect of the
        liability under any other provision of this Lease and has discharged its
        obligation in respect thereof; or

10.8.6  any Taxes  which  would not have been  imposed but for, or to the extent
        increased  by reason of an  assignment  or  transfer  by an  Indemnified
        Person of its rights or  obligations  under  this Lease or any  Relevant
        Document or by reason of the  bankruptcy or insolvency of an Indemnified
        Person; or

10.8.7  any Taxes or Tax Liability to the extent that the same has resulted in a
        change of Assumption  for the purposes of the Financial  Schedule  which
        has  either   resulted  in  an  adjustment  to  any  Primary  Rental  or
        Termination  such or which  would have given rise to such an  adjustment
        but for the  limitations on adjustment  contained in paragraph 10 of the
        Financial Schedule. 10.9 VAT

10.9.1  If the  Lessor  makes any  supply  to the  Lessee  for  Value  Added Tax
        purposes  pursuant  to or in  connection  with this  Lease or any of the
        other Relevant  Documents or any  transaction  or document  contemplated
        herein or therein, the Lessee shall promptly upon receipt of a valid VAT
        invoice (or other  evidence  that the Lessor has been obliged to account
        for VAT in respect of that supply in accordance with applicable law) pay
        to the Lessor an amount equal to any Value Added Tax which is payable in
        respect of that supply.

10.9.2  If and to the extent that any payment or other  consideration to be made
        or  furnished  by the  Lessor  to any  person,  other  than the  Lessee,
        pursuant  to or in  connection  with  this  Lease  or any  of the  other
        Relevant Documents or any transaction or document contemplated herein or
        therein may be  increased or added to by reference to (or as a result of
        any  increase in the rate of) any Value Added Tax,  the Lessee shall pay
        to the  Lessor  within  ten (10) days of  demand an amount  equal to any
        Value Added Tax in relation thereto that proves to be Irrecoverable VAT.

10.9.3  No payment or other  consideration to be made or furnished by the Lessor
        to the Lessee pursuant to or in connection with this Lease or any of the
        other Relevant  Documents or any  transaction  or document  contemplated
        herein or therein may be  increased  or added to by  reference to (or as
        the  result of any  increase  in the rate of) any Value  Added Tax which
        shall be or may become  chargeable  in respect of the taxable  supply in
        question  provided that if the Lessor  determines in good faith that any
        amount  of such  Value  Added  Tax is not  Irrecoverable  VAT it  shall,
        promptly following such determination, pay to the Lessee an amount equal
        to the amount of that Value Added Tax determined not to be Irrecoverable
        VAT, and on presentation of a valid VAT invoice by the Lessee.

10.9.4  The Lessee and the Lessor agree to co-operate  with a view to minimising
        any  Irrecoverable VAT suffered by either party under any transaction or
        document contemplated by any Relevant Document but so that neither party
        shall be  required  to do  anything  which  would  not be good  business
        practice and legal or which would  involve any adverse  consequences  to
        it.

10.10   Tonnage Tax

10.10.1 The Lessee  undertakes  that it has not,  as at the date of this  Lease,
        made a tonnage tax election or been  included in a tonnage tax group for
        the  purposes  of Section 82 and  Schedule 22 of the Finance Act 2000 (a
        "Tonnage Tax Election").

10.10.2 If any member of the Lessee Group, or any Time  Charterer,  or any other
        charterer  makes a Tonnage Tax Election or becomes a member of a tonnage
        tax group then the Lessee  will give the  Lessor  written  notice of the
        making of that election or its membership of a tonnage tax group and the
        date from which that election is effective or such membership  commenced
        within thirty (30) Banking Days after the making of that election or the
        commencement of such membership.

10.10.3 The Lessee will enter into the joint certificate required to be provided
        by the Lessor and the Lessee  under  paragraph  93 of Schedule 22 to the
        Finance Act 2000.

10.10.4 The Lessee  agrees that it will  provide the Lessor on an ongoing  basis
        with such information as may be properly required to be furnished by the
        Lessor to any Tax Authority  regarding the  transaction  contemplated by
        the  Transaction  Documents as may be required to be furnished under the
        provisions  of Schedule 22 to the Finance Act 2000,  including,  without
        limitation,  any information to be provided by the Lessor and the Lessee
        to the Inland  Revenue  pursuant to  paragraph  93 of Schedule 22 to the
        Finance Act 2000.

11      General undertakings

11.1    Information and compliance undertakings

        The Lessee  undertakes  with the Lessor that from the date of this Lease
        and  thereafter  so long as any moneys are owing under this Lease or any
        of the other Lease Documents it will:

11.1.1  Notification of Relevant Event

        promptly  inform the Lessor of any  occurrence of which it becomes aware
        which would or is  reasonably  likely to  adversely  affect any Relevant
        Party's  ability to perform its  obligations  under any of the  Relevant
        Documents and,  without  limiting the generality of the foregoing,  will
        inform the Lessor of any Relevant  Event  promptly upon  becoming  aware
        thereof and will from time to time,  if so requested by the Lessor where
        the Lessor has good reason to believe that a Termination  Event may have
        occurred,  confirm  to the  Lessor in writing  that,  save as  otherwise
        stated in such  confirmation,  no Termination  Event has occurred and is
        continuing;

11.1.2  Consents and authorisations

        without  prejudice to clauses 2.2 and 4, obtain or cause to be obtained,
        maintain  in full force and effect and comply in all  material  respects
        with  the  conditions  and  restrictions  (if  any)  imposed  in,  or in
        connection  with, every consent,  authorisation,  licence or approval of
        governmental  or public bodies or authorities or courts and do, or cause
        to be done, all other acts and things,  which in each case may from time
        to time be necessary or desirable under applicable law for the continued
        due performance of all of any Relevant Party's obligations under each of
        the Relevant Documents;

11.1.3  Pari passu

        ensure  that its  obligations  under  this  Lease  and the  other  Lease
        Documents  shall all times rank at least pari passu with all its present
        and future  unsecured  and  unsubordinated  Indebtedness  other than any
        obligations which are mandatorily preferred by law and not by contract;

11.1.4  Financial statements

        prepare  Annual  Financial  Statements in accordance  with Relevant GAAP
        consistently  applied in respect  of each  financial  year and cause the
        same to be reported on by the Lessee's  Auditors  and prepare  Quarterly
        Financial   Statements  on  the  same  basis  as  the  Annual  Financial
        Statements  and  deliver  a copy of the  same to the  Lessor  as soon as
        practicable but not later than one hundred and eighty (180) days (in the
        case of Annual Financial  Statements) or sixty (60) days (in the case of
        Quarterly  Financial  Statements)  (or,  in any such case,  such  longer
        period as may be agreed in writing by the  Lessor)  after the end of the
        financial  period to which they relate  provided always that in the case
        of the Annual  Financial  Statements the Lessee shall deliver  unaudited
        draft Annual  Financial  Statements no later than one hundred and twenty
        (120) days after the end of the financial period to which they relate if
        the audited Annual Financial Statements are not ready at that time;

11.1.5  Delivery of reports

        deliver to the Lessor a copy of every material report, circular,  notice
        or like document  issued by the Lessee to its  shareholders or creditors
        generally, in each case at the time of issue thereof;

11.1.6  Provision of further information

        provide the Lessor with such financial and other information  concerning
        the Lessee,  the Sub-Lessee  and the Lessee Parent and their  respective
        affairs  as the  Lessor  may from  time to time  reasonably  request  in
        writing;

11.1.7  Obligations under Lease Documents

        duly and  punctually  perform  each of its  obligations  under the Lease
        Documents;

11.1.8  No merger or consolidation

        not  without  the  prior  written   consent  (such  consent  not  to  be
        unreasonably withheld) of the Lessor merge or consolidate with any other
        company  or  person  which is not a member  of the  Lessee  Group and to
        notify the Lessor of any merger or  consolidation  with another  company
        which is a member of the Lessee Group;

11.1.9  Financial Ratios

        ensure that:

        (a)     Free Available Cash

                at all times the Free  Available Cash shall not be less than the
                Minimum Free  Available  Cash at the relevant  time.  The Lessor
                agrees  that for the purpose of  satisfying  this  covenant  the
                requirement to evidence  Minimum Free Available Cash for amounts
                or Free  Available  Cash in excess of  fifteen  million  Dollars
                ($15,000,000) may be satisfied by the Lessee providing  evidence
                to the Lessor that the Lessee  Parent has made  available to the
                Lessee an  unconditional  on demand  loan in an amount  equal to
                such  excess  amounts  and which loan is capable of being  drawn
                down on an unqualified and  unrestricted  basis by the Lessee at
                any time;

        (b)     Working Capital

                as at the end of each quarterly  period during and at the end of
                each financial  year of the Lessee,  the ratio of Current Assets
                to  Current  Liabilities   (excluding  the  current  portion  of
                long-term  debt)  shall not be less than one point five (1.5) to
                (1); and

        (c)     Leverage

                as at 31  March  2003  and as at  the  end  of  each  subsequent
                quarterly period during and at the end of each financial year of
                the  Lessee,  the ratio of Net Debt as at the end of such period
                to  Annualised  EBITDA  calculated  by reference to such quarter
                shall not exceed:

                (i)     six point  five (6.5) to one (1) for  quarterly  periods
                        ending during or at the end of 2003;

                (ii)    six (6) to one (1) for quarterly  periods  ending during
                        and at the end of 2004; and

                (iii)   five  (5)  to  one  (1)  for  all  subsequent  quarterly
                        periods;

11.1.10 Dividends

        at any time  after the date  falling  five (5) days  after the  Delivery
        Date,  not without the prior written  consent of the Lessor,  declare or
        pay any  dividends  unless  the  Lessee  can  evidence  to the  Lessor's
        satisfaction  that the Free  Available Cash is not less than thirty five
        million Dollars ($35,000,000); and

11.1.11 Certificate of compliance with clause 11.1.9

        at the same time as the  Lessee  delivers  to the  Lessor,  pursuant  to
        clause 11.1.4,  a copy of the Annual  Financial  Statements or Quarterly
        Financial  Statements  (as the case may be) the Lessee  shall  provide a
        statement  signed by the  Chief  Financial  Officer  or  another  senior
        officer of the Lessee (in  substantially the form set out in Schedule 6)
        confirming:

        (a)     the respective amounts of:

                (i)     the Cash Balances and Minimum Free Available Cash;

                (ii)    Current  Assets,  Current  Liabilities  and the  current
                        portion of long-term debt;

                (iii)   Annualised EBITDA and Interest Expense; and

                (iv)    Net Debt,

                in  respect  of or,  as the  case  may be,  as at the end of the
                financial  period  expiring  on the date as at and for which the
                relevant financial  statements were prepared (or, in the case of
                Annualised  EBITDA,  calculated  by  reference  to the three (3)
                month period expiring on such date) (or, in the case of Interest
                Expense, for the twelve (12) month period expiring on such date)
                and that such amounts were  calculated in  accordance  with this
                Lease and Relevant GAAP;

        (b)     that such Annual  Financial  Statements  or Quarterly  Financial
                Statements were prepared in accordance with Relevant GAAP or, if
                not so prepared,  setting forth full details of the  adjustments
                required to be made to such statements to reflect  Relevant GAAP
                as  necessary  to  calculate  the amounts  referred to in clause
                11.1.9;

        (c)     that as at the date to which the relevant  financial  statements
                are made up, the Lessee was in compliance with the covenants and
                undertakings set out in clause 11.1.9 (or, if it was not in such
                compliance,  indicating  the  extent of the breach and the steps
                intended to be taken to remedy the same); and

        (d)     that,  as at the date not more than  seven (7) days prior to the
                delivery of the certificate,  no Relevant Event has occurred and
                is  continuing  (or,  if such is not the  case,  specifying  the
                same).

11.2    Protection of Lessor's rights

        The Lessee hereby further  undertakes with the Lessor that from the date
        of this Lease until the end of the Lease Period it will:

11.2.1  Disposal of the Ship

        not  attempt or hold  itself  out as having any power to sell,  agree to
        sell,  transfer or otherwise dispose of or (except to avoid loss of life
        or personal injury or as otherwise agreed pursuant to clause 22) abandon
        the Ship or any share or interest therein;

11.2.2  Encumbrances

        not create or agree or purport to create any Encumbrance  over the Ship,
        any  share or  interest  therein  or in the  Insurances  or  Requisition
        Compensation   or  any  part   thereof   (other   than   for   Permitted
        Encumbrances);

11.2.3  Notification of arrest

        notify the Lessor  promptly by  facsimile  of any arrest or detention of
        the Ship or any exercise or purported  exercise of a lien or other claim
        on the Ship or the Insurances or any part thereof;

11.2.4  Prevention of and release from arrest

        without  prejudice to clause 29.3  promptly pay and discharge or procure
        that  there is paid or  discharged  (by  settlement,  providing  bail or
        procuring  the  provision of security or otherwise as the  circumstances
        may allow or require)  all debts,  damages,  liabilities  and  outgoings
        whatsoever  which have given or may give rise to maritime,  statutory or
        possessory  liens  on,  or claims  enforceable  against  the Ship or the
        Insurances  or any part  thereof  and,  in the  event of a writ or libel
        being filed against the Ship or the  Insurances or any part thereof,  or
        of any of the same being  arrested,  attached or levied upon pursuant to
        legal process or purported legal process or in the event of detention of
        the Ship in exercise or purported  exercise of any such lien or claim as
        aforesaid,  procure the release of the Ship and the Insurances from such
        arrest,  detention,  attachment  or levy or,  as the  case  may be,  the
        discharge of the writ or libel  promptly  (and, in the case of an arrest
        of the Ship, within the period provided therefor in clause 26.1.17) upon
        receiving notice thereof by providing bail or procuring the provision of
        security or otherwise as the circumstances may require;

11.2.5  No pledging of Lessor's credit

        not  pledge  the  credit of the  Lessor  for any  maintenance,  service,
        repairs,  drydocking, or modifications to, or changes or alterations in,
        the Ship or for any other purpose whatsoever;

11.2.6  Protection of Lessor's rights in relation to the Ship

        not do or permit to be done any act or thing which might  jeopardise the
        title,  rights and  interest of the Lessor in the Ship or omit or permit
        to be omitted  to be done any act  within  the  control of the Lessee or
        other  member of the Lessee  Group  which might  prevent  that title and
        those rights and interest from being jeopardised; and

11.2.7  Ownership of Ship

        generally on all  occasions  when the  ownership of the Ship is relevant
        make clear to third  parties  that the same is not the  property  of the
        Lessee.

12      Sub-leasing

12.1    Restrictions on sub-leasing

        Save for the  Sub-Lease,  the Lessee will not and will  procure that the
        Sub-Lessee will not at any time without the prior written consent of the
        Lessor  (which  the  Lessor  shall have full  liberty  to  withhold  its
        consent) and, if such consent is given,  only subject to such conditions
        as the Lessor  may  require,  part with the  possession  or  operational
        control of the Ship  (except to the Manager  pursuant to the  Management
        Agreement or for the purpose of maintenance, service, repair or overhaul
        work or any modifications,  changes or alterations  permitted under this
        Lease) or sub-let the Ship.  The Lessee shall  provide the Lessor with a
        certified  copy of any  sub-lease  consented  to pursuant to this clause
        promptly following execution of the same.

12.2    Terms of sub-lease

        The Lessee will not and will procure that the Sub-Lessee will not at any
        time sub-let the Ship on a bareboat or demise  charter basis pursuant to
        any sub-lease unless:

12.2.1  the relevant  sub-lease shall contain such terms and provisions as shall
        ensure that the sub-lessee thereunder,  if complying with the said terms
        and  conditions,  will  not  do  anything  which  would  contravene  the
        provisions of this Lease (including,  without limitation, the provisions
        of clause 13.2.4  relating to qualifying  purpose  during the designated
        period as therein  referred  to and  clause  13.1) and not  prevent  the
        Lessee from complying with the provisions of this Lease;

12.2.2  any such  sub-lease  will not result in any of the Variable  Assumptions
        becoming incorrect;

12.2.3  by its terms such  sub-lease  prohibits  sub-leasing  by the  sub-lessee
        without the prior written  consent of the Lessor (which the Lessor shall
        not unreasonably withhold);

12.2.4  the  sub-lease  shall not involve or purport to involve any  transfer of
        title or  interest  in the Ship and  shall not in any way  discharge  or
        diminish any of the Lessee's obligations to the Lessor under this Lease;

12.2.5  any such  sub-lease  will not be  capable  of  expiring  after the Lease
        Period,  will be expressed to be subject and  subordinate  to this Lease
        and any  sub-lessee  will confirm  such  subordination  arrangements  in
        writing to the Lessor on terms satisfactory to the Lessor; and

12.2.6  any  sub-lessee  shall  as a  condition  to the  effectiveness  of  such
        sub-lease  agree to adhere to the  provisions  of the  Proceeds  Deed or
        otherwise  agree  to  the  provisions  of  this  Lease  relating  to the
        application of proceeds of Insurances in respect of the Ship.

12.3    Undertakings concerning the Sub-Lease

        The Lessee hereby  undertakes  with the Lessor that throughout the Lease
        Period:

12.3.1  it will not, except with the previous  written consent of the Lessor and
        save to the extent otherwise  provided in the Quiet Enjoyment Letter and
        the  Lessee's  Quiet  Enjoyment  Letter,  agree to any  variation of the
        Sub-Lease  or  release  the  Sub-Lessee  from  any of  the  Sub-Lessee's
        obligations  under the Sub-Lease or waive any breach of the Sub-Lessee's
        obligations  thereunder  or consent to any such act or  omission  of the
        Sub-Lessee as would otherwise constitute such breach;

12.3.2  it will not claim or  exercise  any lien upon  sub-freights  which might
        otherwise be available to it under the Sub-Lease;

12.3.3  it will perform its  obligations  under the  Sub-Lease  and use its best
        endeavours to procure that the Sub-Lessee  shall perform its obligations
        under the Sub-Lease;

12.3.4  the  Sub-Lease  shall not in any  circumstances  be  determined by it by
        reason of any breach or alleged  breach thereof by the Lessee unless the
        Lessor   shall   first  have  given  its  consent  in  writing  to  such
        determination provided always that any determination of the Sub-Lease by
        the Lessee after such  consent is given shall be without  responsibility
        on the part of the Lessor who shall be under no liability  whatsoever in
        event that such  determination  be  thereafter  adjudged to constitute a
        repudiation of the Sub-Lease by the Lessee; and

12.3.5  at the  request  of  the  Lessor  it  will  supply  to  the  Lessor  all
        information, accounts and records that may be reasonably necessary or of
        assistance  to enable the Lessor to verify the amount of all payments of
        charterhire and other amounts payable under the Sub-Lease.

13      Use and trade of the Ship

13.1    Permitted use

        Subject to the other  terms and  conditions  of this Lease and the other
        Lease  Documents,  the Lessee shall (save as herein  provided)  have the
        full and exclusive use, control and command of the Ship during the Lease
        Period and may operate or employ it within any lawful trade for which it
        is suitable.

13.2    Undertakings concerning use

        The Lessee hereby  undertakes  with the Lessor that throughout the Lease
        Period it will:

13.2.1  Ship's registration

        not to do or suffer to be done anything whereby the documentation of the
        Ship for the time being in accordance with the provisions of clause 14.2
        may be forfeited or imperilled;

13.2.2  Employment

        not employ the Ship or permit its  employment  in any  manner,  trade or
        business which is forbidden by  international  law, or which is unlawful
        or illicit under the law of any relevant jurisdiction,  or in any manner
        whatsoever   which  may  render  it  liable  to  destruction,   seizure,
        confiscation,  penalty or sanctions  and, in the event of hostilities in
        any part of the world  (whether  war be declared  or not),  not enter or
        trade to or  continue  to trade in any zone which is declared a war zone
        by any  Government  Entity or by the insurers  unless the prior  written
        consent of the Lessor is obtained  and such special  insurance  cover as
        the Lessor may require shall have been effected by the Lessee and at its
        expense;

13.2.3  Payment of outgoings and evidence of payments

        pay in accordance with good business  practice all tolls, dues and other
        outgoings  whatsoever in respect of the Ship and the Insurances and keep
        proper  books of account  in  respect  of the Ship and,  as and when the
        Lessor  may  so  reasonably  require,  make  such  books  available  for
        inspection  on behalf of the Lessor and  furnish  satisfactory  evidence
        that  the  wages  and   allotments   and  the   insurance   and  pension
        contributions  of the Master and crew are being  promptly and  regularly
        paid and that all  deductions  from  crew's  wages in  respect of United
        Kingdom 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;

13.2.4  Use for a qualifying purpose

        not use the Ship or permit the Ship to be used and procure that the Ship
        is not used during the designated period (as defined in section 106 CAA)
        so as to result in the  application  of sections 109, 110, 111, 112, 113
        and 117 CAA and  shall  immediately  notify  the  Lessor  if at any time
        within  such  designated  period  the  Ship is  used  for  leasing  to a
        non-resident  within the  meaning of section 105 (2) CAA and also notify
        the Lessor of any event or matter which under  sections 118, 119 and 120
        CAA ought to be notified by the Lessor to the Board of Inland Revenue or
        any  Inspector  of Taxes  in  connection  with  the Ship or the  leasing
        thereof  and shall  promptly  furnish to the Lessor  when the Lessor may
        require  such  information  as may be required to be so furnished by the
        Lessor  to the  Board  of the  Inland  Revenue  or  Inspector  of  Taxes
        regarding the leasing of the Ship or the use to which it is being put or
        has  been  put,  in  order to  enable  the  Lessor  to  comply  with the
        provisions  of  sections  118,  119 and 120 CAA or to  respond to such a
        request;

13.2.5  Anti-Drug Abuse

        without  prejudice  to clause  13.2.2,  take all  necessary  and  proper
        precautions to prevent any  infringements  of the Anti-Drug Abuse Act of
        1986  of  the  United  States  of  America  or any  similar  legislation
        applicable to the Ship in any jurisdiction in or to which the Ship shall
        be employed or trade; and

13.2.6  Bills of Lading

        except as otherwise required pursuant to the Time Charter,  procure that
        all Bills of  Lading  issued  for  carriage  of goods by the Ship  shall
        contain a Paramount  clause  incorporating  any legislation  relating to
        carrier's  liability for cargo compulsorily  applicable in the trade or,
        if  no  such  legislation  exists,  that  such  Bills  of  Lading  shall
        incorporate the British  Carriage of Goods by Sea Acts 1971 and that all
        such Bills of Lading  shall also contain the amended New Jason clause as
        approved by the Baltic International  Maritime Council from time to time
        and the  Both-to-Blame  Collision  clause and without  prejudice  to the
        provisions  of clause 33.5,  provide that the General  Average,  if any,
        shall be settled according to the York-Antwerp Rules of 1994 in London.

14      Title, registration, name and house flag

14.1    Title

        The Lessee  shall have no right,  title or interest in or to the Ship or
        any part  thereof  except  the  right to use the same upon the terms and
        conditions contained in this Lease. It is hereby expressly declared that
        the Lessee shall not have any option or right to acquire title to or any
        proprietary  interest in the Ship or any part thereof.  The Lessee shall
        not sell or purport to sell the Ship  otherwise  than in exercise of its
        rights under clause 3.6.  Subject to clauses 6.1 and 6.2, nothing herein
        contained  shall be construed as imposing any liability on the Lessor to
        the Lessee in respect of or arising out of the acts or  omissions of any
        third party  (including  any  charterer or lessee of any other vessel or
        assets of the Lessor  unless  that third party is a member of the Lessor
        Group) affecting the Lessee or the Ship or otherwise.

14.2    The  Lessee  may at any time  and from  time to time  during  the  Lease
        Period,  request the Lessor to transfer  the register of the Ship to any
        port and/or to re-document the Ship under laws of any jurisdiction other
        than  the port  and/or  jurisdiction  at which  the Ship is for the time
        being registered  and/or under whose laws the Ship is for the time being
        documented.  If the Lessor  approves of such transfer of register and/or
        re-documentation  of the Ship,  the Lessor shall,  at the request of the
        Lessee,  co-operate  with and permit  the  Lessee to take all  necessary
        steps to comply with such request and thereafter  shall during the Lease
        Period  co-operate with the Lessee to take such action as the Lessee may
        reasonably require to maintain the documentation of the Ship at the port
        to which the  register of the Ship is so  transferred  and/or  under the
        laws of the jurisdiction  under whose laws the Ship is so re-documented.
        For the  purposes of this clause 14.2,  the Lessor  shall in  accordance
        with the provisions of this Lease and the Proceeds Deed not unreasonably
        withhold its approval to the transfer of the register of the Ship to any
        port  and/or  the  re-documentation  of the Ship  under  the laws of any
        jurisdiction  and/or  under whose flag the Lessor is  entitled,  without
        breach of any applicable laws, to register and/or re-document the Ship.

        The Lessee  undertakes that if at any time it requests a transfer of the
        register and/or the  redocumenting  of the Ship following a request from
        the Time Charterer, and if the Lessor agrees to such request, the Lessee
        shall  use its best  endeavours  to  obtain  the  agreement  of the Time
        Charterer  that the consent to such  transfer is given on the basis that
        the Time  Charterer  agrees to a  subsequent  transfer  of the  register
        and/or  the  redocumenting  of  the  Ship  under  British  flag  in  the
        circumstances described below in this clause 14.2.

        If the Ship is, in accordance  with the provisions of this Lease and the
        Proceeds Deed, no longer  registered at any time under British flag and,
        in the reasonable  opinion of the Lessor acting in good faith,  it shall
        become impossible, unlawful, impracticable or undesirable for the Lessor
        to  maintain  the  documentation  of the  Ship  under  the  laws  of any
        jurisdiction  under  which the Ship is then  documented  (other than the
        United Kingdom),  the Lessor shall give notice thereof to the Lessee and
        the Lessor and the Lessee shall  forthwith  enter into  negotiations  in
        good faith with a view to agreeing upon an alternative  jurisdiction for
        the documentation of the Ship, but if no such agreement shall be reached
        within thirty (30) days after the Lessor shall have given such notice to
        the Lessee,  the Lessor  shall be at liberty to take and/or  require the
        Lessee to take such action to re-document  the Ship as a British ship in
        the United  Kingdom  and/or to transfer  the registry of the Ship to the
        United  Kingdom and in any such case the Lessee shall do all that may be
        necessary  on its part to give  effect to such  re-documentation  and/or
        transfer of register. Where the Lessee has complied with its obligations
        under the second  paragraph of this clause 14.2,  the Lessor agrees that
        it shall not  require the  reflagging  or  redocumenting  of the Ship to
        British  flag where it shall be  impracticable  or  undesirable  for the
        Lessor to  maintain  the  documentation  of the Ship under the flag of a
        particular  jurisdiction  where such reflagging or  redocumenting of the
        Ship shall  result in a breach of the Time  Charter or any  sub-charters
        entered into by the Time Charterer pursuant to the Time Charter.

        Without  prejudice to the  generality of the provisions of clause 9, the
        Lessee shall  indemnify and hold harmless the Lessor against all losses,
        costs,   expenses  and  liabilities  of  whatsoever   nature  (including
        penalties,  claims,  demands,  orders or judgments) which the Lessor may
        suffer  or incur and  which  arise  directly  or  indirectly  out of the
        re-documentation of the Ship in accordance with this clause 14.2.

14.3    Name and house flag

        The Ship shall be painted in such colours, display such insignia and fly
        such house flag as the Lessee may  require.  The Lessee shall notify the
        Lessor of any intended change in the name of the Ship.

14.4    Proceeds Deed

        The arrangements  concerning the transfer of flag or registry  contained
        in this  clause 14 shall be subject to the  provisions  of clause 8.7 of
        the Proceeds Deed.

15      Maintenance and operation

15.1    Possession and control of Ship by Lessee

        During  the  Lease  Period  the Ship  shall,  subject  to the  terms and
        conditions of this Lease, be in the full and exclusive possession and at
        the  absolute  disposal  of the  Lessee for all  purposes  and under its
        complete  control in every respect and the Master,  officers and crew of
        the Ship shall be the  servants of the Lessee,  or during the  Sub-Lease
        Period,  the  Sub-Lessee  (or any other  permitted  sub-lessee)  for all
        purposes whatsoever.

        Notwithstanding any other provision of this Lease, and without prejudice
        to any of the  obligations  of the Lessee under this Lease or any of the
        other Lease Documents  imposing any higher standard of performance  upon
        the Lessee,  the Lessee shall make,  and shall have sole  responsibility
        for making, all such arrangements as may be necessary to ensure that the
        Ship is fit to operate at sea without serious danger to human life.

15.2    Undertakings concerning maintenance and operation during Lease Period

        The Lessee further  undertakes with the Lessor that throughout the Lease
        Period and thereafter, whilst the Lessee continues to have possession of
        the Ship, until the sale of the Ship it will:

15.2.1  Maintenance of classification; compliance with regulations

        maintain the  Classification as the class of the Ship and to comply with
        and ensure that the Ship at all times  complies  with the  provisions of
        the  Merchant   Shipping  Acts  and  all  regulations  and  requirements
        (statutory  or  otherwise)  from  time to  time  applicable  to  vessels
        registered  under British flag or otherwise  applicable to the Ship, her
        Master,  officers  and crew  wherever  the Ship may proceed or trade and
        (without  prejudice  to the  generality  of the  foregoing)  at its  own
        expense maintain in force for the Ship all safety,  radio,  loadline and
        other  certificates  whatsoever  and all licences and permits  which may
        from  time to time be  prescribed  by any  legislation  in  force in the
        United Kingdom or other applicable jurisdiction;

15.2.2  Supply and crewing

        by its  own or the  Sub-Lessee's  procurement  (which  may  include  the
        engagement  of  the  Manager  to  provide  certain  services  under  the
        Management Agreement),  man, victual,  navigate,  operate, supply, fuel,
        and repair the Ship whenever required during the Lease Period;

15.2.3  Surveys

        submit  the Ship to  continuous  surveys  and such  periodical  or other
        surveys as may be required for classification purposes,  comply with all
        recommendations  and  requirements  of  the  Classification  Society  in
        accordance  with  their  terms and  supply to the  Lessor  copies of all
        survey reports issued in respect thereof;

15.2.4  Repair

        keep the  Ship and  every  part of it in a good and  efficient  state of
        repair, in efficient operating condition,  seaworthy in all respects and
        in  accordance  with  good  maintenance  practice  (fair  wear  and tear
        excepted and having  regard to the type and age of the Ship) and procure
        that all repairs to, or replacement of, any damaged,  worn or lost parts
        or equipment  are  effected in such manner (both as regards  workmanship
        and quality of materials) as not to materially diminish the value of the
        Ship without the prior written consent of the Lessor;

15.2.5  Drydocking

        drydock the Ship and clean and paint her underwater  parts in accordance
        with good  commercial  practice  for  vessels of the type and age of the
        Ship and, in any event, in accordance with the requirements from time to
        time of the Classification Society;

15.2.6  Inspection of the Ship

        permit the Lessor by surveyors or other persons appointed by it for such
        purpose to board the Ship at annual  intervals  during the Lease  Period
        and after the  occurrence of a Termination  Event which is continuing at
        such intervals as the Lessor  considers  appropriate  for the purpose of
        inspecting her and afford all proper facilities for such inspections and
        for this  purpose  give the  Lessor  reasonable  advance  notice  of any
        intended   dry  docking  of  the  Ship   (whether  for  the  purpose  of
        classification,  survey or otherwise).  The cost of such inspections and
        surveys properly  incurred by the Lessor shall be paid by the Lessee (if
        a Relevant  Event has occurred and is continuing  or if such  inspection
        reveals any  material  failure to comply with the  Lessee's  maintenance
        obligations under this Lease) or by the Lessor (if no Relevant Event has
        occurred and is continuing or no such material failure is revealed.)

        All time taken in respect of such  inspection  or survey shall form part
        of the Lease Period.  All  inspections  and surveys of the Ship prior to
        the  occurrence  of a  Termination  Event which is  continuing  shall be
        carried  out at such  times  and  places  and in such  manner  as not to
        interfere with the use,  operation,  maintenance  and repair as required
        under the Time  Charter  or other  contractual  arrangements  with third
        parties,  of the Ship but the  Lessor  shall not be obliged to carry out
        such inspections only during periods of drydocking;

15.2.7  Verification reports

        provide   to  the   Lessor   certified   copies  of  all   reports   and
        recommendations  of any safety  inspector or other  regulatory body from
        time to time issued in respect of the  compliance or otherwise  with any
        statutes and  regulations  from time to time in force regarding the safe
        operation, management, maintenance and integrity of the Ship;

15.2.8  Manuals and technical records

        maintain all such other records, logs, manuals, technical data and other
        materials and  documents  which are required to be maintained in respect
        of the Ship to comply with any applicable  laws or the  requirements  of
        the  Classification  Society and keep accurate,  complete and up to date
        logs and records of all voyages made by the Ship and of all maintenance,
        repairs,  alterations,  modifications  and additions to the Ship and, on
        reasonable  advance  notice  from the  Lessor,  permit the Lessor or its
        representatives  at any time to examine and take copies of such logs and
        records and other records;

15.2.9  Information regarding casualties

        furnish the Lessor with full  information  regarding any single casualty
        or other  accident  or damage to the Ship which  shall  involve  repairs
        costing more than the Casualty Amount;

15.2.10 Modification; removal of parts; equipment owned by third parties

        except as  required  pursuant to clause  3(e) of the Time  Charter,  not
        without  the prior  written  consent of the Lessor (and then only on and
        subject to such terms as the Lessor may agree):

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

        (b)     permanently  remove  any  material  part  of  the  Ship  or  any
                equipment  the value of which is such that its removal  from the
                Ship  would  materially  reduce  the  value of the Ship  without
                replacing the same with equivalent  parts or equipment which are
                owned by the Lessor free from Encumbrances (other than Permitted
                Encumbrances); or

        (c)     install on the Ship any  equipment  owned by a third party which
                cannot be  removed  without  causing  significant  or  permanent
                damage to the structure or fabric of the Ship;

15.2.11 Information

        promptly  furnish  the Lessor with all such  information  as it may from
        time to time  reasonably  require  regarding the Ship,  her  employment,
        position and engagements,  particulars of all towages and salvages,  and
        copies  of all  charters  and other  contracts  for her  employment  and
        related information, or otherwise howsoever concerning her;

15.2.12 Manager

        not without the previous consent in writing of the Lessor (and then only
        on and  subject  to such  terms as the  Lessor  may  agree)  permit  the
        Sub-Lessee  to replace  the  Manager or appoint a manager of the Ship or
        allow a manager of the Ship to be  appointed  (and for the  purposes  of
        this Lease  "manager"  shall  include any  shipmanager  or other  person
        providing to the Lessee or the Sub-Lessee analogous specialised services
        in respect of the Ship);

15.2.13 Notification of certain events

        notify the Lessor forthwith by facsimile  thereafter confirmed by letter
        of:

        (a)     any damage to the Ship requiring repairs the cost of which might
                exceed the Casualty Amount;

        (b)     any  occurrence  in  consequence  of  which  the Ship has or may
                become a Total Loss;

        (c)     any requisition of the Ship for hire;

        (d)     any  requirement  or  recommendation  made by any insurer or the
                Classification  Society or by any competent  authority  which is
                not, or cannot be, complied with in accordance with its terms;

        (e)     any claim in an amount in excess of the Casualty  Amount (or the
                equivalent  in any other  currency)  arising  as a result of any
                serious or  potentially  serious  injury to a third party caused
                by, or in connection with, the Ship;

        (f)     any substantial damage to property in an amount in excess of the
                Casualty Amount (or the equivalent in any other currency) caused
                by, or in connection with, the Ship;

        (g)     any  assistance  which  has been  given to the  Ship  which  has
                resulted or may result in a lien for salvage being acquired over
                the Ship;

        (h)     any other event which occurs in  connection  with the Ship which
                affects or might  materially and adversely  affect the rights of
                the Lessor or involves or might  involve  any  material  loss or
                liability;

        (i)     the making of any Environmental Claim for an amount in excess of
                the Casualty  Amount (or the  equivalent in any other  currency)
                against the Lessee or the Ship;

        (j)     the occurrence of any Environmental Incident which may give rise
                to any such  Environmental  Claim for an amount in excess of the
                Casualty Amount (or the equivalent in any other currency); or

        (k)     any drydocking of the Ship;

15.2.14 Repairer's liens

        not without the previous written consent of the Lessor put the Ship into
        the possession of any person for the purpose of work being done upon her
        in an amount  exceeding or likely to exceed the Casualty  Amount  unless
        (a)  such  person  shall  first  have  given  to  the  Lessor  in  terms
        satisfactory  to it, a written  undertaking  not to exercise any lien on
        the Ship for the cost of such work or  otherwise  or (b) no  Termination
        Event has occurred and is continuing, the cost of the work to be done on
        the Vessel is covered by insurances and the underwriters  have agreed to
        make  payment  direct to the  person who is to carry out the work or (c)
        the Lessee can demonstrate to the Lessor's reasonable  satisfaction that
        it has access to committed  funds in an amount  sufficient  to cover the
        cost of such work;

15.2.15 Health and safety

        take such steps as are  reasonably  practicable  to ensure that the Ship
        and all  constituent  parts  thereof  will be safe and  without  risk to
        health when  properly used and (without  prejudice to the  generality of
        the foregoing):

        (a)     take such steps as are reasonably practicable to ensure that any
                defects  in the Ship and all  constituent  parts  thereof  which
                could be or cause a danger  to  safety  and/or a risk to  health
                shall be made good;

        (b)     for such purpose, have a detailed inspection of the Ship carried
                out from time to time including all electrical,  fluid,  oil and
                gas connections  (being either supplies to, or discharges  from,
                the Ship) and all constituent parts thereof;

        (c)     take  such  action  as is  reasonably  practicable  to see  that
                appropriate safety measures are adopted; and

        (d)     not use or permit the Ship or any  constituent  parts thereof to
                be used beyond their limits and capacities;

15.2.16 No operational interest

        procure that the Lessor is not at any time represented as carrying goods
        or  passengers or providing any other service on or from the Ship, or as
        being in any way connected or associated with any operations or carriage
        or  other  service  which  may  be  undertaken  by  the  Lessee  or  the
        Sub-Lessee,  or as having any operational interest in, or responsibility
        for, the Ship;

15.2.17 Safe operation

        take all  reasonable  steps to  secure  that the Ship is  navigated  and
        operated  in a proper,  safe and  seaman-like  manner  and in the manner
        prescribed  by any  legislation  in force in the  United  Kingdom or any
        other applicable  jurisdiction for the time being and ensure that, where
        applicable,  the Ship is at all times  manned and  operated  by properly
        licensed  and/or  qualified  persons and that such  persons at all times
        comply with all applicable laws relating to such manning and operation;

15.2.18 Fitness to go to sea

        procure  that the Ship  shall at all  times be fit to go to sea  without
        serious  danger  to  human  life (by  reason  of the  condition,  or the
        unsuitability  for its purpose,  of either the Ship or its  machinery or
        equipment  or any  part of the Ship or its  machinery  or  equipment  or
        undermanning  or overloading or unsafe or improper  loading or any other
        matter relevant to the safety of the Ship) unless arrangements have been
        made which are appropriate to ensure that before the Ship goes to sea it
        is made fit to do so without  serious  danger to human life by reason of
        any such matters or it is  reasonable  for such  arrangements  not to be
        made at such time;

15.2.19 Compliance with oil pollution and environmental laws

        comply with,  and procure  compliance in all material  respects with all
        Environmental Laws applicable to all Relevant Ships and the terms of all
        Environmental  Approvals  including,  without  limitation,  requirements
        relating to manning and establishment of financial  responsibility  and,
        promptly  upon  receipt  of the same,  notify  the  Lessor of any claim,
        notice or other  communication  served on it in respect  of any  alleged
        breach   of  any   applicable   Environmental   Law  which   might,   if
        substantiated,  have a material  adverse effect on any Relevant  Party's
        ability  to  perform  its  respective  obligations  under  the  Relevant
        Documents and (without  prejudice to the  generality  of the  foregoing)
        procure  that  (a) no oil,  hazardous  substances  or solid  wastes  are
        disposed of, discharged or otherwise released from or in connection with
        the Ship except in compliance with Environmental  Laws, (b) no hazardous
        substance  will be released  in a quantity  equal to or  exceeding  that
        quantity   which   requires   reporting   pursuant  to  Section  103  of
        Comprehensive  Environmental  Response,  Compensation  and Liability Act
        1980, and (c) no oil or hazardous substance is discharged or released so
        as to pose an imminent and substantial  endangerment to public health or
        welfare  or the  environment  which will  result in damages  recoverable
        under the Oil Pollution Act 1990 of the United States of America;

15.2.20 ISM Code

        (a)     comply  with,  and ensure that the Ship and its  Operator at all
                times comply with the requirements of the ISM Code;

        (b)     immediately  inform  the  Lessor if there is any  threatened  or
                actual withdrawal of its or an Operator's DOC or the Ship's SMC;
                and

        (c)     promptly  inform the Lessor  upon the issue to the  Lessee,  the
                Sub-Lessee or any Operator of a DOC and to the Ship of an SMC or
                the receipt by the Lessee,  the  Sub-Lessee  or any  Operator of
                notification that its application for the same had been refused;
                and

15.2.21 Chartering

        without  prejudice to clause 12 not and will procure that the Sub-Lessee
        will not,  in either  case,  without  the prior  written  consent of the
        Lessor (a request  for which shall be  promptly  responded  to but which
        consent the Lessor shall have full liberty to withhold)  let the Ship on
        time or voyage charter except to:

        (a)     a member  of the  Lessee  Group on terms  whereby  the  relevant
                member  undertakes  that its rights and  interests in respect of
                the Ship are  subordinated  to the rights and  interests  of the
                Lessor; or

        (b)     a Rated Time Charterer; or

        (c)     any other person,

        as long as the chartering of the Ship to any of the persons specified in
        (a),  (b) and (c)  shall  not be  illegal  or  result in a breach by the
        Lessor and/or the Lessee and/or the  Sub-Lessee of any regulation in any
        Relevant   Jurisdiction   and,   where   applicable,   in  the  case  of
        sub-paragraphs  (a) and (c) above,  the  provisions  of clause 25.6 have
        been satisfied in full.

16      Insurance Undertakings: wreck removal

16.1    Insurance undertakings

        The  Lessee  hereby  covenants  with  the  Lessor  and  undertakes  that
        throughout the Lease Period and thereafter,  whilst the Lessee continues
        to have possession of the Ship, until the sale of the Ship (other than a
        sale to the Standby Purchaser), it will:

16.1.1  Insured risks, amounts and terms

        insure and keep the Ship  insured free of cost and expense to the Lessor
        and in the joint names of the Lessee, the Sub-Lessee and the Lessor (but
        without  liability  on the part of the Lessor for  premiums or calls) in
        connection  with the operation of the Ship (each as their  interests may
        appear):

        (a)     against fire and usual marine risks (including excess risks) and
                war risks, on an agreed value basis, in such amounts (but not in
                any event for an amount less than whichever shall be the greater
                of (i) the market  value of the Ship for the time being and (ii)
                such  amount  as shall  from  time to time be not less  than the
                aggregate,  from  time to time,  of (A) the  amount of the Strip
                Liability  Amount  and (B) the  aggregate  amount  of  insurance
                required  to be placed by the Lessee by  persons  other than the
                Lessor  and in whose  favour  the  Lessee  has  created  a prior
                ranking  Encumbrance  in respect of the  Insurances and which is
                determined independently of the market value of the Ship;

        (b)     against  protection  and indemnity  risks  (including  pollution
                risks) for the highest  amount  (but,  in the case of  pollution
                risks,   for  a   minimum   amount   of  one   billion   Dollars
                ($1,000,000,000)  (or such other  amount as is from time to time
                deemed to be the maximum  insurable amount of the  International
                Group of Protection and Indemnity  Associations))  in respect of
                which cover is in accordance  with  customary  insurance  market
                practice  taken out for vessels of the same type,  size, age and
                flag as the Ship) for the full  tonnage of the Ship (as approved
                in writing by the Lessor) and upon such terms as shall from time
                to time be approved in writing by the Lessor; and

        (c)     in  respect  of such  other  matters  of  whatsoever  nature and
                howsoever  arising  in  respect  of  which  insurance  would  be
                maintained by a prudent owner of the Ship,

        and that it will pay to the Lessor the cost (as  conclusively  certified
        by the Lessor) of any (aa) innocent  owner's  insurance which the Lessor
        may from time to time  effect in respect of the Ship upon such terms and
        in such amounts as shall from time to time be approved in writing by the
        Lessor and (bb) any other insurance cover which the Lessor may from time
        to time  require to be effected in respect of the Ship and/or in respect
        of its  interest or potential  liability  as owner and/or  lessor of the
        Ship as the Lessor shall deem desirable having regard to any limitations
        in respect of the amount or extent of cover  which may from time to time
        be applicable in any of the other insurances  referred to in this clause
        16.1.1 and also having regard to such insurance cover which from time to
        time it is customary for finance lessors such as the Lessor to effect in
        respect of similar  transactions to the transaction  constituted by this
        Lease and the other Relevant Documents.

        Notwithstanding  the above, if at any time the Lessor proposes to effect
        any  insurance  of the nature  referred  to at (aa) or (bb)  above,  the
        Lessor shall first notify the Lessee of the insurance  which it proposes
        to effect, the terms on which it requires it to be effected and the date
        from which it  requires  it to be so  effected.  If,  before the date on
        which the Lessor requires that insurance to be effected,  the Lessee can
        demonstrate  to the  Lessor  that a firm  of  insurance  brokers  with a
        reputation  acceptable  to the Lessor is able to arrange that  insurance
        upon those  terms,  before  that date,  for a price  lower than that for
        which any firm of insurance  brokers nominated by the Lessor is prepared
        to  arrange  that  insurance  and with  underwriters  acceptable  to the
        Lessor,  and if that firm of  insurance  brokers  will  enter  into such
        agreements with the Lessor as the Lessor may require taking into account
        the  identity of that firm of  insurance  brokers,  the Lessor shall not
        unreasonably  refuse  to  effect  that  insurance  through  that firm of
        insurance brokers so nominated by the Lessee;

16.1.2  Brokers insurers and general terms of insurance

        effect the  Insurances  aforesaid  in  Sterling or Dollars or such other
        currency as the Lessor may approve  and  through  the  Approved  Brokers
        (other than the said innocent owners and contingent  liability insurance
        which may be effected through brokers  nominated by the Lessor) and with
        such  insurance  companies  and/or  underwriters  or a mutual  insurance
        association or club as shall from time to time be approved in writing by
        the Lessor and upon such terms as shall from time to time be approved in
        writing by the Lessor, such approval not to be unreasonably withheld, it
        being agreed that, without  limitation,  it shall not be unreasonable to
        withhold such approval if withholding  such approval is consistent  with
        the insurance  report referred to in clause 16.1.12 or the advice of the
        brokers producing such report;

16.1.3  Specific terms

        each  policy or entry  with any  mutual  insurance  association  or club
        maintained  by the Lessee in  accordance  with the  provisions of clause
        16.1.1 shall:

        (a)     contain an endorsement  reflecting the interest of the Lessor in
                the Ship or  otherwise  covers  the  Lessor in respect of claims
                which may be forthcoming thereunder;

        (b)     be in the  joint  names  of  the  Lessor,  the  Lessee  and  the
                Sub-Lessee according to their respective interests;

        (c)     provide  that all moneys  payable  thereunder  shall,  after the
                giving of written  notice by the Lessor (which notice the Lessor
                agrees not to give unless a Termination Event has occurred which
                is  continuing)  (and subject to the  provisions of clauses 2.2,
                2.3 and 2.5 of the Proceeds Deed), be payable to or to the order
                of the Lessor;

        (d)     provide  that the Lessor will be given  either  thirty (30) days
                prior written notice of any intention of the Lessee or seven (7)
                days of any intention of the  insurance  company in each case to
                cancel the policy or to materially  alter its terms or not renew
                the policy on materially  the same terms;  or, in the absence of
                such terms,  the Lessee shall cause the Approved Brokers (or, if
                any premium payments in respect of Insurances are financed,  the
                relevant insurance premium finance company),  to give the notice
                required by this  clause and the Lessee  shall  provide  written
                evidence  as to the  Approved  Brokers  or,  as the case may be,
                insurance  premium finance  company's  agreement at all times to
                provide the notice required by this sub-clause;

        (e)     not have an excess or  deductible  under the policy or  policies
                referred to in clause 16.1.1(a)  exceeding two hundred and fifty
                thousand  Dollars  ($250,000)  as the same shall be escalated at
                the rate of RPI from the Delivery  Date,  per occurrence (or the
                equivalent in any other currency); and

        (f)     be in Dollars or Sterling and, if in Dollars, in a Dollar amount
                which at the  commencement  of any  policy  year  satisfies  the
                Sterling  element  of any  minimum  insurance  cover of the type
                referred to in clause  16.1.1(a)(ii)(A)  throughout  the term of
                the policy.

16.1.4  Fleet cover

        if any of the insurances  referred to in clause 16.1.1(a) form part of a
        fleet cover,  procure that the Approved  Brokers shall  undertake to the
        Lessor that they shall  neither set off against any claims in respect of
        the Ship any premiums due in respect of other vessels or equipment under
        such fleet cover or any  premiums due for other  insurances,  nor cancel
        the  insurance for reason of  non-payment  of premiums for other vessels
        under such fleet cover or of premiums for such other insurances, and, if
        the Approved  Brokers are not prepared to provide an  undertaking of the
        type referred to above,  shall  undertake to issue a separate  policy in
        respect of the Ship if and when so requested by the Lessor;

16.1.5  Payment of premiums

        punctually pay all premiums, calls,  contributions or other sums payable
        in respect of all such  insurances and to produce copies of all relevant
        receipts or other evidence of payment when so reasonably required by the
        Lessor;

16.1.6  Renewal

        at least fourteen (14) days before the relevant  policies,  contracts or
        entries expire,  notify the Lessor of the names of the brokers  proposed
        to be employed by the Lessee,  the Sub-Lessee or any other party for the
        purposes of the renewal of such  insurances  and of the amounts in which
        such  insurances  are proposed to be renewed and the risks to be covered
        and,  subject to compliance with  requirements of the Lessor pursuant to
        this clause 16.1, procure that appropriate  instructions for the renewal
        of such  insurances  on the terms so specified are given to the Approved
        Brokers at least ten (10) days (or such shorter period as the Lessor may
        from time to time agree)  before the  relevant  policies,  contracts  or
        entries expire.  In all  circumstances the Lessee shall procure that the
        Approved  Brokers  will at least  seven (7) days  before such expiry (or
        within  such  shorter  period as the Lessor may from time to time agree)
        confirm in writing  to the  Lessor as and when such  renewals  have been
        effected in accordance  with the  instructions so given and, where there
        is no change to the  identity  of the  brokers,  the level of  insurance
        cover or any  material  change  in the terms of the  relevant  policies,
        contracts or entries, confirmation that there has been no such change.

16.1.7  Guarantees

        arrange for the execution and delivery of such guarantees or indemnities
        as may from time to time be required  by any  protection  and  indemnity
        and/or war risks association;

16.1.8  Hull policy  documents,  notices,  loss  payable  clauses  and  brokers'
        undertakings

        deposit with the Approved Brokers (or procure the deposit of) all slips,
        cover notes,  policies,  certificates  of entry or other  instruments of
        insurance  from  time to time  issued  in  connection  with  such of the
        insurances  referred  to in clause  16.1.1 as are  effected  through the
        Approved  Brokers and procure  that the  interest of the Lessor shall be
        endorsed  thereon by  incorporation  of the relevant Loss Payable clause
        and that the Lessor  shall be furnished  with pro forma  copies  thereof
        and, unless insurances are placed on the terms of the Norwegian Maritime
        Insurance  Plan of 1966 as amended,  a letter or letters of  undertaking
        from the  Approved  Brokers  in such form as shall  from time to time be
        reasonably  required  by the  Lessor  having  regard to  current  market
        practice at the time of issue of any such letter of undertaking;

16.1.9  Associations' loss payable clauses, undertakings and certificates

        procure that any protection and indemnity and/or war risks  associations
        in which  the Ship is for the  time  being  entered  shall  endorse  the
        relevant  Loss Payable  clause on the relevant  certificate  of entry or
        policy and shall furnish the Lessor with a copy of such  certificate  of
        entry or policy and a letter or letters of  undertaking  in such form as
        shall from time to time be  reasonably  required  by the  Lessor  having
        regard  to  current  market  practice  at the  time of issue of any such
        letter of undertaking;

16.1.10 Extent of cover and exclusions

        take all  necessary  action and comply with all  requirements  which may
        from time to time be applicable to the  Insurances  (including,  without
        limitation,   the  making  of  all  requisite  declarations  within  any
        prescribed  time  limits and the payment of any  additional  premiums or
        calls) so as to ensure that the  Insurances  are not made subject to any
        exclusions or qualifications to which the Lessor has not given its prior
        written consent and are otherwise maintained on terms and condition from
        time to time approved in writing by the Lessor;

16.1.11 Correspondence with brokers and associations

        to provide to the Lessor, at the time of each such communication, copies
        of all written  communications  between the Lessee or the Sub-Lessee and
        the Approved Brokers and approved war risks and protection and indemnity
        associations  which  relate to  requisite  declarations  and  payment of
        additional  premiums or calls referred to in clause 16.1.10,  notices of
        renewal of the Insurances  and all material  amendments to the terms and
        conditions relating to such Insurances;

16.1.12 Independent report

        the Lessor  shall be  entitled to request the Lessee (at the cost of the
        Lessee),  to furnish  the Lessor  with a  detailed  report  signed by an
        independent  firm of insurance  brokers  appointed by the Lessor dealing
        with the  insurances  maintained  on the Ship and stating the opinion of
        such firm as to the  adequacy  thereof.  The Lessor shall be entitled to
        request  the  furnishing  of a report  under this  clause at the time of
        Delivery  and  thereafter  if  the  insurance  advisors  of  the  Lessor
        recommend  that a report be obtained  following  the annual audit of the
        shipping insurance  portfolio of the Lessor Group or, if earlier, at the
        time of any material  change in the Insurances or in the identity of the
        Approved  Brokers  or the  protection  and  indemnity  and/or  war risks
        association  responsible for such Insurances or if the Lessor reasonably
        believes  that  there has been a  material  change in  insurance  market
        practice in respect of vessels of similar type to the Ship;

16.1.13 Collection of claims

        do  all  things  necessary  and  provide  all  documents,  evidence  and
        information  to enable the Lessor to collect or recover any moneys which
        shall at any time  become  due to the Lessor  pursuant  to this Lease in
        respect of the Insurances;

16.1.14 Compliance with Insurances

        comply with the terms and conditions of the Insurances,  not do, consent
        to or  permit  any act or  omission  which  might  invalidate  or render
        unenforceable  the whole or any part of the  Insurances and not (without
        first  obtaining  the  consent of the  insurers to such  employment  and
        complying with such requirements as to extra premium or otherwise as the
        insurers  may  prescribe)  employ  the  Ship or  permit  the  Ship to be
        employed  otherwise than in conformity  with the terms of the Insurances
        (including any warranties express or implied therein);

16.1.15 Application of recoveries

        apply all sums  receivable  under the  Insurances  which are paid to the
        Lessee,  in accordance  with the Loss Payable  Clauses and clause 22, or
        procure  the  application  of such sums to the  extent  received  by the
        Sub-Lessee,  in repairing all damage and/or in discharging the liability
        in respect of which such sums shall have been received;

16.1.16  Other insurances and assureds

        not,  without  the  prior  written  consent  of  the  Lessor,  take  out
        additional  insurances for the Lessee's or, during the Sub-Lease Period,
        the Sub-Lessee's sole benefit,  or permit the Lessee or the Lessor to be
        named  insured in  insurances  with  respect to the Ship,  other than as
        required under this Lease, where such additional  insurances will or may
        prejudice  the  Insurances  or  recovery  thereunder  or will exceed the
        amount permitted by the warranties or other conditions of the Insurances
        (unless the insurers  under the Insurances  have consented  thereto) and
        will,  upon the Lessor's  request,  immediately  furnish the Lessor with
        particulars of any such additional  insurances  (including copies of any
        cover  notes or  policies)  and of the written  consent of the  insurers
        under the Insurances in any case where such consent is necessary;

16.1.17 Oil Pollution Cover

        ensure  that  the  certificate  of  entry  for the  Ship  issued  by the
        protection and indemnity  association  with which the Ship is entered is
        endorsed  with the U.S.  Oil  Pollution  Clause  20/2/91  (as amended or
        replaced  from time to time) and procure  that written  confirmation  is
        given to the Lessor that the Lessee or, during the Sub-Lease Period, the
        Sub-Lessee,  the Manager has provided all declarations and satisfied all
        other  requirements  of such  association  and  that  the  U.S.  Trading
        Exclusion  Clause  has been  deleted  from the  terms  upon  which  such
        association  covers the Ship  against  protection  and  indemnity  risks
        (including oil pollution risks);

16.1.18 Submission of Protection and Indemnity Declarations

        promptly (and within any applicable time limits)  complete and submit to
        the  protection and indemnity  association  with which the Ship shall be
        entered:

        (a)     a declaration made by or on behalf of the Lessor, the Lessee or,
                during the Sub-Lease Period, the Sub-Lessee, the Manager and any
                other demise or bareboat charterer, manager or other operator of
                the Ship who is named as an assured or  co-assured in the Ship's
                entry  with such  association  that they  will  comply  with all
                special  terms and  conditions  of the  association  (including,
                without   limitation,   payment  of   additional   premiums  for
                additional  voyages)  applying  to any  voyage  (a "US  voyage")
                involving  loading or  discharging  cargo anywhere in the United
                States of America or within the USA Exclusive  Economic Zone (as
                defined in the Oil Pollution Act of 1990 of the United States of
                America); and

        (b)     such quarterly or other  declarations  as such  association  may
                require to be made (including, without limitation,  declarations
                listing  all  voyages  of the Ship) to  ensure  that the Ship is
                covered  for  protection  and  indemnity  risks  (including  oil
                pollution risks) on any US voyage,

        and procure that all such declarations shall be in a form acceptable to,
        and contain all information required by, such association;

16.1.19 Maintenance of Oil Pollution Insurance Cover

        comply  with all other  requirements  of the  protection  and  indemnity
        association  with which the Ship is  entered to ensure  that the Ship is
        fully covered for oil pollution risks;

16.1.20 Evidence of Oil Pollution Insurance Cover

        deliver  to the  Lessor  upon  reasonable  notice at the  expense of the
        Lessee  certified true copies of all  declarations to the protection and
        indemnity  association with which the Ship is entered,  all certificates
        issued by the United  States  Coast  Guard,  all  confirmations  by such
        association of cover for oil pollution risks and such other  information
        and documents relating to oil pollution risks or insurance as the Lessor
        may from time to time reasonably request;

16.1.21 Encumbrances

        not create or permit to exist any Encumbrance over the Insurances or any
        Requisition  Compensation,  or its interest therein save as contemplated
        by this Lease; and

16.1.22 Information concerning Insurances

        supply  to the  Lessor  all  necessary  information,  documentation  and
        assistance which may be required by the Lessor in connection with making
        any claim under the Insurances.

16.2    Further requirements

        Notwithstanding the other provisions of this clause 16, the Lessee shall
        and shall procure that the Sub-Lessee  shall also,  during the Sub-Lease
        Period,  comply with such further requirements  relative to insurance as
        the Lessor  may,  based upon the  insurance  report or the advice of the
        Lessor's  insurance  brokers referred to in clause 16.1.12 and following
        discussions with the Lessee, from time to time reasonably stipulate.

16.3    Wreck removal

        In the event of the Ship  becoming  an  obstruction  to  navigation  the
        Lessee  shall (in  addition  to any other  obligation  it may have under
        clause 9)  indemnify  and hold  harmless  the Lessor  against all costs,
        expenses,  payments, charges, losses, demands, any liabilities,  claims,
        actions,  proceedings  (whether  civil or  criminal)  penalties,  fines,
        damages, judgments, orders or other sanctions which may be incurred, by,
        or made or  asserted  against  the Lessor by reason  that the Ship shall
        have become an obstruction to navigation (including, without limitation)
        in  respect of the  removal  or  destruction  of the  obstruction  under
        statutory powers but only to the extent that such has not been recovered
        from the Ship's insurers.

17      Powers of Lessor to remedy defaults

17.1    Failure to perform insurance undertakings

        If the Lessee fails to comply with any of the provisions of clause 16.1,
        the  Lessor  may,  without  being  in  any  way  obliged  so to  do,  or
        responsible  for so doing,  and without  prejudice to the ability of the
        Lessor to treat that  non-compliance as a Termination Event,  effect and
        thereafter  maintain  all  such  insurances  upon  the  Ship  as in  its
        discretion it may think fit in order to procure the compliance with such
        provisions or alternatively,  require the Ship (at the Lessee's risk) to
        remain in, or to proceed  to and  remain  in, a port  designated  by the
        Lessor until such provisions are fully complied with.

17.2    Failure to perform maintenance undertakings

        If the  Lessee  fails to comply  with any of the  provisions  of clauses
        15.2.1,  15.2.3.  15.2.4 or 15.2.5, the Lessor may, without being in any
        way obliged so to do, or responsible for so doing, and without prejudice
        to  the  ability  of  the  Lessor  to  treat  that  non-compliance  as a
        Termination Event, arrange for the carrying out of such repairs, changes
        or surveys as it may deem expedient or necessary in order to procure the
        compliance with such provisions.

17.3    Failure to prevent or release from arrest

        If the Lessee fails to comply with the  provisions  of clause 11.2.4 the
        Lessor may,  without  being in any way obliged so to do, or  responsible
        for so doing,  and  without  prejudice  to the  ability of the Lessor to
        treat that  non-compliance as a Termination Event, pay and discharge all
        such debts, damages,  liabilities and outgoings as are therein mentioned
        and/or take any such measures as it may deem  expedient or necessary for
        the purpose of securing  the release of the Ship in order to procure the
        compliance with such provisions.

17.4    Failure to comply with other obligations

        If the Lessee  fails to comply with any of its other  obligations  under
        this Lease any of the other Lease  Documents,  the Lessor  may,  without
        being in any way  obliged  to do so or  responsible  for so  doing,  and
        without   prejudice   to  the  ability  of  the  Lessor  to  treat  that
        non-compliance  as a Termination  Event, take such action as it may deem
        expedient  or  necessary  in order to procure the  compliance  with such
        provisions.

17.5    Costs of remedying defaults

        Without  prejudice  to clause  27.1,  all  losses,  liabilities,  costs,
        charges,   expenses,   damages  and  outgoings  of   whatsoever   nature
        (including,  without limitation,  Taxes, repair costs, registration fees
        and  insurance  premiums)  suffered,  incurred  or paid by the Lessor in
        connection  with the  exercise by the Lessor of any of its powers  under
        clauses  17.1,  17.2,  17.3 and 17.4 and  interest  on all such  losses,
        liabilities,  costs, charges,  expenses,  damages and outgoings from the
        date on which the same were  suffered,  incurred  or paid by the  Lessor
        until the date of receipt or recovery thereof (both before and after any
        relevant  judgment) at the Default Rate shall be repayable by the Lessee
        to the  Lessor on demand  and the  Lessor  agrees  that it will  issue a
        demand hereunder  within a reasonable  period of determining that it has
        suffered or incurred any such amounts.

17.6    Rental still payable

        Notwithstanding  any  exercise  by the  Lessor  of  any  of  the  powers
        contained in this clause 17, Rental shall continue to accrue during such
        time.

18      Redelivery

18.1    Redelivery procedure and condition

        Except  in the  event of a Total  Loss of the Ship  and  subject  to the
        provisions  of clause  24.6,  the  Lessee  shall at the end of the Lease
        Period in relation to the Ship  redeliver the Ship to the Lessor free of
        all Encumbrances (other than Permitted  Encumbrances,  but excluding for
        this  purpose  Permitted  Liens),  and  the  Lessor  shall  accept  such
        redelivery,   and  save  where  different  arrangements  are  agreed  in
        connection  with any sale of the Ship  pursuant to clause 3.6, at a safe
        port to be  mutually  agreed  between  the parties or, in the absence of
        such  agreement,  at such nearby  safe port as the Lessor may  designate
        acting  reasonably  and having regard to the location of the Ship at the
        time of any required  redelivery.  Subject to the  provisions  of clause
        24.5,  the Lessee shall at its expense before such  redelivery  make all
        such  repairs and do all such work as may be  necessary so that the Ship
        at the date of redelivery  shall have  installed the machinery and other
        equipment installed on the Ship at Delivery or replacements for the same
        made in accordance with the provisions of this Lease, shall maintain the
        Classification  unexpired,  shall  otherwise be in  compliance  with any
        applicable rules of the  Classification  Society and shall be in as good
        structure,  state and  condition as at Delivery,  fair wear and tear and
        changes and  alterations  properly made by the Lessee as permitted under
        this Lease excepted and shall be with all required trading and operating
        (and if trading,  appropriate trading related) certificates belonging to
        the Ship in full force and effect for a minimum period of six (6) months
        from the date of redelivery.

18.2    Redelivery survey

        At or about the time of redelivery thereof a survey shall, if the Lessor
        so requires,  be made to determine  the state and condition of the Ship,
        her machinery and  equipment.  In that event,  the Lessee and the Lessor
        shall  each  appoint  surveyors  to be  present  at such  survey and the
        surveyors  present  shall  determine  the  condition  of the  Ship,  her
        machinery and equipment and shall state the repairs or work necessary to
        place  the  Ship  at the  date of  redelivery  in the  structure  state,
        condition  and  classification  referred to in clause 18.1.  If the said
        surveyors  disagree they shall refer the matter to a senior  surveyor of
        the relevant  Classification  Society whose  decision shall be final and
        binding on the parties hereto.  All reasonable  costs  occasioned by any
        such survey  including the costs of the said surveyors  appointed by the
        Lessee  and the  Lessor  and,  if  appointed,  the  costs of the  senior
        surveyor of the  Classification  Society  shall be payable by the Lessee
        but if the Ship is found to be in the condition  provided for in clauses
        18.1, fair wear and tear alone and changes and alterations properly made
        by the Lessee as permitted under this Lease excepted, such cost shall be
        payable by the Lessor.

18.3    Storage until sale

        From the end of the Lease  Period  until the Ship  shall have been sold,
        the Lessee shall, at no cost to the Lessor:

18.3.1  continue to perform all its obligations  under this Lease other than its
        obligations to pay periodic Rental and, in particular, it shall continue
        (a) to perform its undertakings under clauses 11 to 14 (both inclusive),
        (b) to procure that the Ship is maintained in accordance  with clause 15
        (save  that  the  Lessee  shall  not be  required  to  procure  that any
        maintenance  and  repairs are  carried  out other than as  necessary  to
        ensure that, until the sale of the Ship, the Ship complies and continues
        to comply in all material  respects with the  provisions of clause 18.1)
        and (c) to procure  that the Ship is insured in  accordance  with clause
        16.1 or clause 16.2; and

18.3.2  unless the Lessor otherwise directs, store or procure the storing of the
        Ship at a place and under conditions  reasonably  approved by the Lessor
        and the  Relevant  Security  Agent until the sale of the Ship shall have
        been completed.

19      Consumable stores

19.1    Upon Delivery

        It is  acknowledged  that  all  consumable  stores,  unused  diesel  and
        lubricating  oils,  bunkers,  duty free stocks and other  merchandise on
        board the Ship at Delivery belong to the Sub-Lessee.

19.2    Upon redelivery

        All consumable stores, unused diesel and lubricating oils and bunkers on
        board the Ship  which are owned by the Lessee or the  Sub-Lessee  at the
        time of re-delivery  shall be sold by the Lessee or, as the case may be,
        the Sub-Lessee to the purchaser of the Ship.

20      Use of equipment and replacement

20.1    Use of equipment and Manuals and Technical Records

        The Lessee shall have the use of all outfit, equipment (including cabin,
        crew and galley equipment),  furnishings,  furniture and fittings, spare
        and replacement  parts which are the property of the Lessor on board the
        Ship at the time of Delivery and the Manuals and  Technical  Records and
        the same or their substantial equivalent shall be returned to the Lessor
        on re-delivery in good order and condition, fair wear and tear alone and
        changes and  alterations  properly made by the Lessee as permitted under
        this Lease excepted.

20.2    Renewal of equipment

        The Lessee  shall at its own expense  from time to time during the Lease
        Period  replace,  renew  or  obtain  substitutions  for  such  items  of
        equipment as shall be so damaged or worn as to be unfit for use provided
        always that in any such case the Lessee shall  procure that title to the
        part replaced,  renewed or substituted shall promptly vest in the Lessor
        and title to any part replaced, renewed or substituted shall remain with
        the Lessor  until the part which  replaced it or the new or  substituted
        part  becomes  the  property  of the Lessor or is  replaced,  renewed or
        substituted by a part which thereupon becomes the property of the Lessor
        and the Lessee agrees that if any replaced,  renewed or substituted part
        is not the property of the Lessor it will as soon as practicable replace
        the same with a part which thereupon becomes the property of the Lessor.

20.3    Alteration of equipment; additional equipment

        The Lessee may at any time alter or remove all or any items of equipment
        or may  fit  any  additional  equipment  required  to  render  the  Ship
        available for any purpose for which the Lessee may require to use her in
        accordance  with the  provisions  of clause 13 provided  that the Lessee
        shall  first  have  obtained  the prior  written  consent  of the Lessor
        thereto if and to the extent such  consent  may be required  pursuant to
        clause 15.2.10.  Any additional  equipment so fitted by the Lessee shall
        be considered the property of the Lessee or relevant  sub-lessee who may
        remove such  additional  equipment at any time before the  expiration of
        the Lease Period. The cost of fitting or removing any equipment together
        with the cost of  making  good any  damage  caused  by such  fitting  or
        removal shall be payable in full by the Lessee who shall  re-deliver the
        Ship's  equipment to the Lessor in  accordance  with the  provisions  of
        clause 20.1  unless it is agreed  between the Lessor and the Lessee that
        any extra  fittings or equipment  which have been supplied by the Lessee
        during the Lease Period shall  remain on the Ship after  redelivery,  in
        which event such fittings or equipment shall as from  redelivery  become
        the property of the Lessor.

21      Encumbrances: Lessor's undertakings

        The  Lessor  warrants  that the Ship and the  Lessor's  interest  in the
        Insurances or any Requisition  Compensation will at the Delivery Date be
        free of any Lessor's  Encumbrances  created by it and undertakes that it
        will not during the Lease Period,  without the prior written  consent of
        the Lessee, create or, by its own acts or omissions, permit to arise any
        Lessor's  Encumbrance over the Ship, or any share or interest therein or
        the Lessor's interest in the Insurances or any Requisition Compensation.

        If,  notwithstanding the Lessor's  undertaking set out above, a Lessor's
        Encumbrance shall arise, the Lessor hereby agrees to discharge  promptly
        such Lessor's Encumbrance. If the Lessor does not promptly discharge the
        Lessor's Encumbrance the Lessee shall be entitled to act as the agent of
        the Lessor for the purpose of procuring such discharge (and for no other
        purpose)  and the Lessor  shall  reimburse  the Lessee in respect of any
        costs reasonably and properly incurred by the Lessee, in its capacity as
        agent, in connection with such discharge.

22      Loss and damage

22.1    Risk

        The Ship shall  throughout  the Lease Period be in every  respect at the
        risk of the Lessee who shall bear all risks howsoever arising whether of
        navigation,  operation  and  maintenance  of the Ship or otherwise  and,
        subject to clause 6.1, of any other  occurrence  of whatever  kind which
        shall deprive the Lessee of the use, possession or enjoyment thereof.

22.2    Total Loss

22.2.1  If the Ship shall  become a Total  Loss  during  the Lease  Period,  all
        insurance  proceeds in respect  thereof  shall be applied in  accordance
        with clause  22.5 and the Lessee  shall on the Total Loss  Payment  Date
        become  liable to pay to the Lessor an amount  equal to the  Termination
        Sum for the Ship as at that date together with all amounts of Rental and
        any other  amounts  then due and payable  under this Lease or any of the
        other  Lease  Documents.  If the  Lessor  serves a notice on the  Lessee
        pursuant to clause 27.1 the provisions of clause 27.1 shall prevail over
        this  clause  and the  Lessee  shall be  obliged  to make  the  payments
        required  to be made under  clause 27.1 in  accordance  with such clause
        notwithstanding  that the date for payment of such  amounts may be prior
        to the Total Loss Payment Date.

22.2.2  For the  purposes  of this  Lease,  a Total Loss shall be deemed to have
        occurred:

        (a)     in the case of an actual  total  loss of the Ship on the  actual
                date and at the time the Ship was lost or,  if such  date is not
                known, on the day on which the Ship was last reported;

        (b)     in the case of a constructive  total loss of the Ship,  upon the
                date and at the time notice of  abandonment of the Ship is given
                to the insurers of the Ship for the time being (provided a claim
                for such  constructive  total loss is admitted by the  insurers)
                or, if the  insurers do not admit such a claim,  at the date and
                at the time at either a total loss is  subsequently  admitted by
                the  insurers  or a total  loss is  subsequently  adjudged  by a
                competent court of law or arbitration panel to have occurred or,
                if earlier,  the date  falling one hundred and eighty (180) days
                after  notice  of  abandonment  of the  Ship  was  given  to the
                insurers;

        (c)     in the case of a compromised or arranged total loss, on the date
                upon  which  a  binding  agreement  as to  such  compromised  or
                arranged total loss has been entered into by the insurers of the
                Ship;

        (d)     in the case of  Compulsory  Acquisition,  on the date upon which
                the   relevant   requisition   of  title  or  other   compulsory
                acquisition occurs;

        (e)     in the case of  hijacking,  theft,  condemnation,  confiscation,
                capture,  detention,  seizure of the Ship  (other than where the
                same  amounts  to  Compulsory  Acquisition  of the  Ship) by any
                persons  which  deprives  the  Lessee of the use of the Ship for
                more than  thirty  (30)  days,  upon the expiry of the period of
                sixty  (60)  days  after  the  date  upon  which  the   relevant
                hijacking, theft, condemnation, confiscation, capture, detention
                or seizure occurred; and

        (f)     in the case of any of the events described in sub-paragraph  (d)
                of the  definition of Total Loss,  upon the expiry of the period
                of one  hundred  and  eighty  (180)  days  referred  to in  such
                sub-paragraph (d).

22.2.3  The Lessee agrees that it will, in the event that,  upon a Total Loss of
        the Ship, the Lessor is disabled from recovering under the Insurances or
        any of them or the amount of the recovery  thereunder is diminished  and
        such disablement or diminution  results from any breach by the Lessee of
        any of its  obligations  under  this Lease or in respect of the terms of
        the  relevant  Insurances,  pay  to  the  Lessor  on  demand  by  way of
        compensation  for the loss of the Ship a  capital  sum  (which  shall be
        applied  in  accordance  with  clause  22.5 as if the  same  had  been a
        recovery  under the  Insurances  in respect of such Total Loss) equal to
        the amount which would but for such  disablement  have been  recoverable
        under the  Insurances  or (as the case may be) a sum equal to the amount
        by which the insurance  recovery has been  diminished or, in either case
        and if greater,  an amount  equal to the Tax  Written  Date Value of the
        Ship.

22.3    Continuation of Lease Period

        The Lessee  shall  continue to pay Rental on the days and in the amounts
        required under this Lease  notwithstanding  that the Ship shall become a
        Total  Loss,  or if for any  reason  the  Lessee  shall  be  permanently
        deprived  of her use  prior  to the end of the  Lease  Period,  provided
        always  that no  further  instalments  of Rental  shall  become  due and
        payable  after the date on which all sums due under clause  22.2.1 shall
        have been paid in full and the Lease Period shall  terminate on the date
        of such final payment.

22.4    Application of Requisition Compensation

        In the event of the Compulsory  Acquisition of the Ship after  Delivery,
        all Requisition  Compensation received by the Lessor shall be applied by
        the Lessor (or, if received by the Lessee, shall be held in trust by the
        Lessee for application) in accordance with clause 22.5.

22.5    Application of Net Total Loss Proceeds and Requisition Compensation

        All Net Total Loss Proceeds and Requisition Compensation received by the
        Lessor shall be applied by the Lessor, subject to clause 10.4 and to the
        provisions of clause 2.1 of the Proceeds Deed, as follows:

22.5.1  first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the amount of the Net Total Loss Proceeds;

22.5.2  secondly,  in or towards  settlement  of any other  amounts owing by the
        Lessee  to the  Lessor  under  this  Lease  or any  of the  other  Lease
        Documents (including any interest due in respect thereof);

22.5.3  thirdly,  by way of rebate of Rental,  in or towards  settlement  of any
        amounts owing to the Other Lessors under the Other Ship Leases or any of
        the Other Ship Relevant Documents, such amounts to be paid to the Lessor
        Agent for  application  in accordance  with clause 4.3 of the Agency and
        Trust  Deed and  clauses  27.2.2  and  27.2.3 of each of the Other  Ship
        Leases;

22.5.4  fourthly,  if the Lessee shall on or before the date of  application  of
        such  moneys have paid the  Termination  Sum in  accordance  with clause
        22.2.1 or a part  thereof  in or towards  refunding  by way of rebate of
        Rental  to the  Lessee an amount  equal to the  Termination  Sum or part
        thereof so paid by the Lessee under this Lease; and

22.5.5  fifthly,  the  balance  to the  Lessee  by way of  rebate  of  Rental or
        otherwise as appropriate.

22.6    Damage claims

        In the event of repairable damage to the Ship, the Lessor shall, subject
        to clause 2.2.1 of the Proceeds Deed, pay any insurance  moneys received
        by it to the Lessee or, during the Sub-Lease Period, the Sub-Lessee upon
        the Lessee or, during the Sub-Lease  Period,  the Sub-Lessee  furnishing
        evidence  satisfactory  to the Lessor that such damage has been properly
        made good or repaired and that all repair accounts and other liabilities
        whatsoever  in  connection  with the  damage  have been paid in full and
        discharged  by  the  Lessee  or,  during  the  Sub-Lease   Period,   the
        Sub-Lessee, provided always that if a Relevant Event has occurred and is
        continuing,  the Lessor shall be entitled to apply such insurance moneys
        in or towards  settlement  of any amounts due and owing by the Lessee to
        the Lessor under this Lease or any of the other Lease Documents.  If the
        insurers with whom the fire and marine risks insurances are effected are
        prepared  to make  payment  on account of repairs in the course of being
        effected  then such  payment  may only be  requested  by the  Lessee or,
        during the Sub-Lease  Period,  the  Sub-Lessee if no Relevant  Event has
        occurred and is  continuing  and if, in the case of a claim in excess of
        the Casualty  Amount,  the Lessor has first  consented in writing  (such
        consent not to be unreasonably withheld or unreasonably delayed).

22.7    Third party claims

        Any insurance moneys paid under the insurances taken out or entries made
        referred to in clause  16.1.1(b)  shall,  subject to clause 2.2.2 of the
        Proceeds  Deed,  be paid to the person to whom the liability (or alleged
        liability)  covered by such  insurances or entry was incurred or, if the
        liability  (or alleged  liability)  to such person has  previously  been
        discharged by the Lessee or, during the Sub-Lease Period, the Sub-Lessee
        such moneys shall be paid to the Lessee or, during the Sub-Lease Period,
        the  Sub-Lessee  in  reimbursement  of the moneys so  expended  by it in
        satisfaction  of such liability or alleged  liability and, in such case,
        the Lessor shall pay any insurance  moneys  received by it in respect of
        such  liability  or  alleged  liability  to the  Lessee  or,  during the
        Sub-Lease  Period,  the  Sub-Lessee  upon  the  Lessee  or,  during  the
        Sub-Lease Period, the Sub-Lessee  furnishing evidence to the Lessor that
        such  liability or alleged  liability has  previously  been  discharged,
        provided  always that if a Relevant Event has occurred and is continuing
        the  Lessor  shall  be  entitled  to apply  such  moneys  in or  towards
        settlement  of any  amounts  due and owing by the  Lessee to the  Lessor
        under this Lease or any of the other Lease Documents.

22.8    Insufficient insurance recovery

        In the event of repairable  damage to the Ship or a liability or alleged
        liability  covered by the insurances  taken out or entries made referred
        to in clause  16.1.1  being  incurred or alleged,  and if the  insurance
        moneys  paid in  respect  thereof  are  insufficient  to pay the cost or
        estimated  cost of making good or repairing  such damage or  discharging
        the liability or alleged  liability,  the Lessee will pay the deficiency
        or, during the Sub-Lease  Period,  will procure that the Sub-Lessee will
        pay the deficiency.

22.9    Payment of claims

        Notwithstanding  anything to the  contrary  herein,  any moneys  payable
        under the  Insurances  shall be payable in accordance  with the terms of
        the relevant Loss Payable clause and, where relevant, the Proceeds Deed.

22.10   Sale of Ship following Total Loss

        If the  insurers  of the Ship have  satisfied  or admitted in full their
        obligations  under the Insurances  and have expressly  waived any rights
        they may have, or would or might acquire,  in the Ship the Lessor shall,
        as soon as practicable after the Total Loss date,  endeavour to sell the
        Ship. Any such sale shall comply with clauses 3.4 and 3.6.

22.11   Notice of abandonment

        Provided no Relevant  Event shall have  occurred and be  continuing  the
        Lessee shall have the sole right to determine  whether or not a case has
        arisen for the giving of notice of  abandonment  to abandon  the Ship to
        the insurers  and/or claim a  constructive  total loss and the Lessee is
        hereby  irrevocably  authorised  by the Lessor to give the same if it so
        determines.

        The Lessor  shall,  upon the  written  request of the  Lessee,  promptly
        execute such  documents as may be required to enable the Lessee  and/or,
        during the Sub-Lease  Period,  the Sub-Lessee to abandon the Ship to the
        insurers  and/or  claim a  constructive  total loss and the Lessor shall
        give the Lessee and/or,  during the Sub-Lease Period, the Sub-Lessee all
        appropriate assistance in pursuing the said claim.

23      Salvage

        All salvage and towage and all proceeds from derelicts shall, subject to
        the  Lessor's  prior right to retain  thereout any sums which may be due
        from the Lessee to the Lessor under this Lease or any of the other Lease
        Documents,  be for the Lessee's benefit and the cost of repairing damage
        occasioned thereby shall be borne by the Lessee.

24      Requisition for hire

24.1    Effect of requisition for hire

        If the Ship is requisitioned  for hire by any Government Entity or other
        competent  authority during the Lease Period then,  unless and until the
        Ship  becomes a Total Loss  following  such  requisition  and the Lessee
        shall have made payment of all sums due pursuant to clause 22.2.1,  this
        Lease  shall  continue in full force and effect  (subject  always to the
        provisions of clauses 26 and 31.3) for the remainder of the Lease Period
        and the Lessee  shall remain fully  responsible  for the due  compliance
        with all its obligations  under this Lease and the other Lease Documents
        other than such  obligations  which the Lessee is unable to comply  with
        solely by virtue of such requisition.

24.2    Payment of requisition hire

        If the Lessee  shall duly comply with its  obligations  under this Lease
        and the other Lease  Documents  during the Lease Period the Lessee shall
        be entitled to all requisition  hire paid to the Lessor or to the Lessee
        by such  Government  Entity or other  competent  authority on account of
        such requisition.

24.3    Lessor to account for requisition hire

        The Lessor shall,  subject to clause 33.7, pay any  requisition  hire to
        the Lessee promptly upon receipt.

24.4    Reinstatement of Ship

        The  Lessee  shall,  as  soon  as  practicable  after  the  end  of  any
        requisition  for  hire,  cause  the Ship to be put  into  the  condition
        required by this Lease, and where that  requisition  shall end after the
        expiry or termination of the Lease Period,  the Lessee shall, as soon as
        practicable,  cause  the Ship to be put into  the  redelivery  condition
        required  by clause 18,  allowance  being made for fair wear and tear in
        respect  of the  period  from the  expiry  or  termination  of the Lease
        Period.

24.5    Compensation for reinstatement

        The Lessor shall be entitled to all  compensation  payable in respect of
        any change in the  structure,  state or  condition  of the Ship  arising
        during the period of  requisition  for hire. The Lessor shall apply such
        compensation  in  reimbursing  the Lessee for its cost of complying with
        its  obligations  under clause 24.4,  provided always that if a Relevant
        Event has  occurred and is  continuing,  the Lessor shall be entitled to
        apply such compensation in or towards settlement of any amounts owing by
        the Lessee under this Lease or any of the other Lease  Documents and the
        balance, if any, shall be paid to the Lessee.

24.6    Continuing requisition for hire

        Should  the Ship be under  requisition  for hire at the end of the Lease
        Period:

24.6.1  the leasing of the Ship under this Lease shall (unless  otherwise agreed
        between the parties  hereto)  nevertheless be terminated at such end but
        without  prejudice  to the  accrued  rights  of the  parties  including,
        without prejudice to the generality of the foregoing,  the obligation of
        the Lessee contained in clause 24.4, and the Lessor shall be entitled to
        receive and retain any requisition hire payable in respect of the period
        from the expiry or termination of the Lease Period;

24.6.2  the Lessee shall, if and for so long as it is prevented by reason of the
        requisition  for hire from  re-delivering  the Ship under  clause 18, be
        relieved  from its  obligations  so to do,  but shall  consult  with the
        Lessor as to the most convenient method of enabling the Lessor to obtain
        redelivery of the Ship when the Ship is released from such  requisition;
        and

24.6.3  after such release the Lessee shall be given a reasonable opportunity of
        removing any such additional  equipment as is referred to in clause 20.3
        on the terms referred to in such clause.

        Provided  that  nothing in this clause  24.6  shall,  where the Lease is
        terminated  following  the issue of a  Termination  Notice,  operate  to
        modify the dates on which the Lessee is  required  to make any  payments
        (whether of any Termination Sum or otherwise) under this Lease.

24.7    Insurance claims during requisition

        If the Ship shall be  requisitioned  for hire,  insurance  recoveries in
        respect of all claims  whatsoever  (otherwise than in respect of a Total
        Loss) arising during the period of  requisition  shall (to the extent to
        which such recoveries have not been expended by the Lessee in repairs to
        the Ship and to the extent the Ship is still  requisitioned  for hire at
        the end of the Lease Period) be paid to the Lessor and in respect of any
        amount so paid the  Lessee  shall to that  extent be  relieved  from its
        repair  obligations  under the last  sentence  of clause  18.1 and under
        clause 20.3.

25      Security Provisions

25.1    LC Bank credit review

25.1.1  If at any time  during the  Primary  Period the Credit  Rating of the LC
        Bank is  less  than  the  Minimum  LC Bank  Credit  Rating  (other  than
        following the occurrence of a Relevant Bank Event in relation to such LC
        Bank),  the  Lessor  shall be  entitled  to notify the Lessee in writing
        advising the Lessee that either:

        (a)     notwithstanding  the  failure  of the LC  Bank  to  satisfy  the
                Minimum  LC Bank  Credit  Rating,  the  Lessor is  willing,  but
                without  prejudice  to its rights to  exercise  its  entitlement
                under this  clause  upon a further  deterioration  in the Credit
                Rating or under clause 25.1, to allow the LC Bank to continue as
                the "LC Bank" for the  purpose  of this  Lease and the Letter of
                Credit; or

        (b)     the Lessee is required  to replace  the  existing LC Bank with a
                Qualifying Replacement Bank acceptable to the Lessor and procure
                that  such  bank  executes  a new  letter  of credit on the same
                terms, mutatis mutandis, as the existing Letter of Credit.

                Upon  receipt of the notice  from the  Lessor  pursuant  to this
                clause  advising the Lessee that clause  25.1.1(b) is applicable
                the Lessee shall procure that within thirty (30) days of receipt
                of  such  notice  the  Lessee  shall  have   complied  with  the
                obligations imposed on the Lessee by clause 25.1.1(b).

        If the Lessor  determines  that the Lessee has failed to comply with the
        obligations  imposed  on the Lessee by such  sub-clause  within the said
        thirty (30) day period, the Lessee shall become  immediately  obliged on
        such date to give an irrevocable  notice to the Lessor  terminating  the
        Lease Period in accordance with the provisions of clause 3.3 (other than
        with  respect to the period by such  notice) and the Lease  Period shall
        terminate  upon the giving of such  notice.  Save as set out above,  the
        provisions  of clauses 3.3, 3.4 and 3.5 shall apply to such  termination
        of the Lease Period.

25.1.2  If at any time  during the  Primary  Period a Relevant  Bank Event shall
        occur in respect of a Relevant Bank,  the Lessee shall,  if so requested
        by the Lessor by notice in writing and at the  Lessor's  cost (and at no
        cost  to the  Lessee),  consult  with  the  Lessor  in  relation  to the
        replacement of that Relevant Bank and generally  assist the Lessor,  and
        take such steps as the Lessee may  lawfully  and  reasonably  be able to
        take at such  time,  to replace  that  Relevant  Bank with a  Qualifying
        Replacement  Bank acceptable to the Lessor and to provide  assistance in
        respect  of the issue of a new  letter of credit by the  replacement  LC
        bank or,  as the case may be,  the  issue of a new  additional  security
        document on the same terms, mutatis mutandis,  as the existing Letter of
        Credit or, as the case may be, the Additional  Security  Document issued
        by such Relevant Bank.

25.1.3  The credit rating  provisions of clause 25.1.1 shall apply in respect of
        the LC Bank until  such time as the  Lessee is able to provide  evidence
        satisfactory  to the  Lessor  that  the  obligations  of the LC Bank are
        guaranteed  by the German  Government  or any state or  division  of the
        German  Government in which case the minimum credit rating provisions of
        clause  25.1.1  shall  only apply with  effect  from any  renewal of the
        Letter of Credit in  accordance  with the  provisions  of clause 25.7 or
        following  any  replacement  of the LC Bank pursuant to any of the other
        provisions of this clause 25.

25.2    Additional Security re: Strip Liability

25.2.1  Where a new Additional  Security Table is required to be prepared by the
        Lessor after the Delivery  Date in  accordance  with  paragraph 9 of the
        Financial  Schedule and the Required  Security  Amount shown in that new
        Additional  Security Table is a negative  figure and in consequence  the
        Total  Security  Amount for and during such Security  Period as shown in
        the new  Additional  Security Table is greater than the aggregate of the
        Letter of Credit Amount, any Additional  Security Amount and the Maximum
        Unsecured Strip Liability Amount for and during any such Security Period
        (including,  without  limitation,  by  virtue  of the fact  that VAT has
        become payable on the amount of any  Termination  Sum payable under this
        Lease), the Lessee shall,  within thirty (30) days of receipt of written
        notice from the Lessor  (which  notice shall attach new such  Additional
        Security Table) either:

        (a)     procure  that,  subject to the approval of the Lessor,  the face
                amount of the Letter of Credit is  increased  by an amount equal
                to the Required  Security  Amount so that, with effect from said
                increase, the Total Security Amount for and during each Security
                Period shown in such new  Additional  Security Table is equal to
                or less than and will  continue  to be equal to or less than the
                aggregate of the Letter of Credit Amount (as so increased),  the
                Maximum  Unsecured  Strip  Liability  Amount and any  Additional
                Security  Amount in each case for and during each such  Security
                Period and thereafter; or

        (b)     constitute  to the  satisfaction  of the Lessor such  additional
                security as shall be acceptable to the Lessor and having a value
                for security  purposes (as determined by the Lessor) at the date
                upon which such additional  security shall be constituted  which
                is equal to the amount of the Required  Security Amount so that,
                when  aggregated with the amount of the Letter of Credit Amount,
                the Maximum  Unsecured Strip Liability Amount and any Additional
                Security Amount for and during any such Security Period shown in
                such new Additional  Security Table,  shall be at such time, and
                will continue to be thereafter, not less than the Total Security
                Amount for and during each such Security  Period and thereafter;
                or

        (c)     prepay the amount of Primary  Rental  notified  by the Lessor to
                the  Lessee,  following  receipt  by the  Lessor of the  written
                notice from the Lessee  referred to below,  in  accordance  with
                paragraph 8 of the  Financial  Schedule and being in such amount
                as will  result,  taking  into  account  such  prepayment,  in a
                reduction in the Total Security  Amount for each Security Period
                shown in such new Applicable  Security Table such that the Total
                Security  Amount for and during each  Security  Period  shown in
                such new  Applicable  Security  Table is equal or less  than and
                will  continue to be equal to or less than the  aggregate of the
                Letter of Credit Amount,  the Maximum  Unsecured Strip Liability
                Amount and any Additional  Security  Amount in each case for and
                during each such Security Period and thereafter.

        If the  Lessee  wishes to  exercise  the  option  referred  to in clause
        25.2.1(c) it shall notify the Lessor  within five (5) days of receipt of
        the notice  from the Lessor  pursuant  to this clause so that the Lessor
        can provide the Lessee  with a  Prepayment  Cash Flow (as defined in the
        Financial  Schedule)  for the purpose of  paragraph  8 of the  Financial
        Schedule;

        The Lessor agrees that for the purpose of clause 25.2.1(b) the provision
        by the Lessee of a letter of credit or bank  guarantee from a Qualifying
        Replacement Bank on terms acceptable to the Lessor in an amount equal to
        the amount of the additional security required to be provided under this
        clause shall be acceptable  additional  security for the purpose of this
        clause.

        If the  action  required  to be taken by the Lessee  under  this  clause
        25.2.1 is not taken  within the time period and  otherwise  on the terms
        contained in this clause the Lessor shall have the option to require the
        Lessee to terminate  the leasing of the Ship under this Lease and if the
        Lessor  wishes to  exercise  this  option it shall  notify the Lessee in
        writing whereupon the Lessee shall become immediately obliged to give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

25.2.2  Where either an increase in the amount of the Letter of Credit has taken
        place or any  additional  security  of the type  referred  to in  clause
        25.2.1 has been provided by the Lessee,  in each case in accordance with
        clause  25.2.1 and has not been released in full by the Lessor and a new
        Additional  Security  Table is  required to be prepared by the Lessor in
        accordance  with paragraph 9 of the Financial  Schedule and the Required
        Security  Amount  shown  in that  new  Additional  Security  Table  is a
        positive  figure and in consequence  the Total  Security  Amount for and
        during such Security Period shown in such new Additional  Security Table
        is less than the aggregate of the Letter of Credit  Amount,  the Maximum
        Unsecured Strip Liability Amount and any Additional  Security Amount for
        and during such Security Period (taking into account any VAT that may be
        payable in respect of the  Termination  Sum under this  Lease)  then the
        Lessor shall notify the Lessee (with such notice attaching a copy of the
        new Additional  Security  Table) and on the next Adjustment Date falling
        at least ten (10)  Banking  Days after the  delivery of such  Additional
        Security  Table,  the Lessor  shall  either  agree to a reduction in the
        Letter of Credit Amount and/or, depending on the action previously taken
        by the Lessee pursuant to clause 25.2.1, shall release (whether in whole
        or in  part  and to  the  extent  applicable)  any  additional  security
        provided  pursuant to clause  25.2.1 in an amount equal to the amount of
        the Required Security Amount shown in the new Additional  Security Table
        such that  following such  reduction,  amendment or, as the case may be,
        release the Total Security Amount for and during such Security Period as
        shown  in such  new  Additional  Security  Table  is at such  time,  and
        thereafter  will  continue to be, equal to or less than the aggregate of
        the Letter of Credit  Amount,  the  Maximum  Unsecured  Strip  Liability
        Amount and any  Additional  Security  Amount  for and  during  each such
        Security Period and, as the case may be,  thereafter.  It is agreed that
        any such reduction,  amendment or release pursuant to this clause 25.2.2
        shall be without  prejudice  to the rights of the Lessor to require  the
        provision of additional security in the manner contemplated,  and to the
        extent required, by clause 25.2.1.

25.3    Relevant Bank Change of Law Event

        Upon the occurrence of a Relevant Bank Change of Law Event in respect of
        any Relevant  Bank then the Lessee  shall,  within the  Relevant  Period
        applicable to such Relevant Bank Change of Law Event, either:

25.3.1  change the Relevant Bank Security provided by such Relevant Bank and/or,
        as the  case  may be,  replace  such  Relevant  Bank  with a  Qualifying
        Replacement  Bank,  such  that  the  circumstances  constituted  by such
        Relevant Bank Change of Law Event no longer apply and  thereafter  enter
        into either (a) such  supplemental  documentation  to the Relevant  Bank
        Security as such  Relevant  Bank and the Lessor may consider  reasonably
        necessary or, as the case may be, (b) replacement bank security with any
        such  replacement  bank on the  same  terms,  mutatis  mutandis,  as the
        Relevant Bank Security or with such amendments thereto as the Lessor may
        approve;

25.3.2  provide  such other  security  to replace  the  Relevant  Bank  Security
        provided by such Relevant Bank as the Lessor may approve; or

25.3.3  provide such other  additional  security as the Lessor may approve which
        will result in the Lessor  being  satisfied  that the  aggregate  of the
        payments  to be made by such  Relevant  Bank  under  the  Relevant  Bank
        Security  and the payments  receivable  by the Lessor in respect of such
        additional  security  will be equal,  after the  making of the  required
        deduction or withholding  in respect of the Relevant Bank  Security,  to
        the  amounts  which  would have been made by such  Relevant  Bank to the
        Lessor pursuant to such Relevant Bank Security had no such Relevant Bank
        Change of Law Event occurred in relation to such Relevant Bank.

        If the  Lessee  fails to take any of the steps  referred  to in  clauses
        25.3.1,  25.3.2 or 25.3.3 within such  Relevant  Period and otherwise on
        the terms  contained  in this clause the Lessor shall have the option to
        require the Lessee to terminate the leasing of the Ship under this Lease
        and if the Lessor  wishes to exercise  this  option it shall  notify the
        Lessee in writing whereupon the Lessee shall become immediately  obliged
        to give an irrevocable notice to the Lessor terminating the Lease Period
        in accordance with the provisions of clause 3.3 (other than with respect
        to the period of such notice) and the Lease Period shall  terminate upon
        the giving of such  notice.  Save as set out above,  the  provisions  of
        clauses  3.3, 3.4 and 3.5 shall apply to such  termination  of the Lease
        Period.

        The  provisions of this clause 25.3 are subject to the issue of a notice
        by the Lessor pursuant to the provisions of clause 25.10.

25.4    Relevant Bank Illegality Event

        Upon the  occurrence of a Relevant Bank  Illegality  Event in respect of
        any Relevant  Bank then the Lessee  shall,  within the  Relevant  Period
        applicable to such Relevant Bank Illegality Event, either:

25.4.1  change the Relevant Bank Security provided by such Relevant Bank and/or,
        as the  case  may be,  replace  such  Relevant  Bank  with a  Qualifying
        Replacement  Bank,  such  that  the  circumstances  constituted  by such
        Relevant Bank Illegality Event no longer apply and thereafter enter into
        either (a) such supplemental documentation to the Relevant Bank Security
        as such Relevant Bank and the Lessor may consider  reasonably  necessary
        or, as the case may be,  (b)  replacement  bank  security  with any such
        replacement bank on the same terms,  mutatis  mutandis,  as the Relevant
        Bank Security or with such amendments thereto as the Lessor may approve;
        or

25.4.2  provide  such other  security  to replace  the  Relevant  Bank  Security
        provided by such Relevant Bank as the Lessor may approve.

        If the  Lessee  fails to take any of the steps  referred  to in  clauses
        25.4.1 or 25.4.2 within such Relevant  Period and otherwise on the terms
        contained in this clause the Lessor shall have the option to require the
        Lessee to terminate  the leasing of the Ship under this Lease and if the
        Lessor  wishes to  exercise  this  option it shall  notify the Lessee in
        writing whereupon the Lessee shall become immediately obliged to give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period by such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

        The  provisions of this clause 25.4 are subject to the issue of a notice
        by the Lessor pursuant to the provisions of clause 25.10.

25.5    Termination security requirements

25.5.1  If at any  time  after  Delivery  the  leasing  of  the  Ship  shall  be
        terminated,  whether  pursuant  to clauses  3.3,  3.4,  3.7, 22 or 27 or
        otherwise, and at the time of such termination the Lessor shall not have
        finally agreed with the Board of Inland Revenue the Lessor's Corporation
        Tax  computations  regarding any  liabilities  to  Corporation  Tax (the
        "Potential  Liabilities")  which it may have with respect to the leasing
        of the Ship to the Lessee  under this Lease or the  termination  of such
        leasing  and the sale of the Ship (and which will be taken into  account
        under  the  Financial  Schedule)  or if  there  shall be a  dispute  (of
        whatsoever  nature)  between the Lessor and the Board of Inland  Revenue
        regarding the Lessor's  Corporation  Tax  computations  of the Potential
        Liabilities,  the Lessee  shall ensure and (when such  termination  is a
        voluntary  termination)  as a condition  to the consent of the Lessor to
        such voluntary  termination  that all the existing  security  including,
        without  limitation,  the Letter of Credit and any  Additional  Security
        held by the Lessor at the time of such termination  shall remain in full
        force and effect  until such time as the Board of Inland  Revenue  shall
        have finally agreed the Lessor's said Corporation Tax computations.

25.5.2  If the  Lessor  is of the  opinion  that  the  amount  of such  existing
        security shall not be sufficient to secure the Potential Liabilities the
        Lessee shall and (where such termination is a voluntary  termination) as
        a condition to the consent of the Lessor to such voluntary  termination,
        constitute to the satisfaction of the Lessor such additional security as
        shall be  acceptable  to the  Lessor and  having a value,  for  security
        purposes  (as  calculated  by the  Lessor),  at the date upon which such
        further  security shall be  constituted  as the Lessor,  in its opinion,
        calculates will, when aggregated with any existing security,  secure the
        Potential   Liabilities   (after   taking  into   account  the  relevant
        circumstances  in which the termination has arisen and the  arrangements
        relating to the Ship which have taken place or are  proposed  shall take
        place in respect  of the  disposal  of the Ship at such time  including,
        without  limitation,  the amount of any Net Sale  Proceeds  or Net Total
        Loss Proceeds  received or  receivable by the Lessor at such time).  For
        the  purpose  of this  clause,  the Lessor  agrees to  discuss  any such
        voluntary  termination with the Lessee and agrees to accommodate,  where
        possible,  any  requests  that  the  Lessee  may  make to  increase  the
        efficiency  of the said  voluntary  termination  and thereby  reduce any
        Potential Liabilities.

25.5.3  For the  purposes of this clause 25.5,  the Lessor's and Lessor  Agent's
        Corporation Tax computations  for an Accounting  Period shall be treated
        as having been agreed with the Board of Inland Revenue on the later of:

        (a)     the seventh (7th) anniversary of the Final Date; or

        (b)     the date on which the Lessor and Lessor Agent determine,  acting
                reasonably  and in good  faith,  and  certify  in writing to the
                Lessee,  as being the date on which they are satisfied  that the
                Corporation Tax computations  for all Accounting  Periods of the
                Lessor and Lessor  Agent have become  conclusive  and the Inland
                Revenue  shall  have no  powers  to  reopen  assessment  of such
                Corporation  Tax  computations in the absence of fraud or wilful
                neglect on the part of the Lessor or Lessor Agent.

25.5.4  If the Lessor is of the opinion that the amount of the security required
        to be provided to secure the  Potential  Liabilities  (and after  taking
        into account the relevant  circumstances  in which the  termination  has
        arisen  including,  without  limitation,  the  amount  of any Net  Sales
        Proceeds  or Net Total  Loss  Proceeds  received  or  receivable  by the
        Lessor)  is in fact less than the  amount  of the  security  held by the
        Lessor at the time of  termination  of the  leasing of the Ship then the
        Lessor  shall,  at the time of  termination  and, to the extent that the
        relevant  security  held by the  Lessor  at such  time  permits  partial
        release or reductions, release the amount of the surplus security to the
        Lessee. Notwithstanding the generality of the foregoing, if security has
        been provided in respect of a Potential  Liability which is attributable
        to an accounting period and the Lessor's and Lessor Agent's  Corporation
        Tax  computation  for that period is treated as agreed or  determined in
        accordance  with the  provisions  of this clause 25.5,  the Lessor shall
        release  such  security  to  the  extent  that  it  exceeds  the  actual
        Corporation Tax, as so determined or agreed, relating to that accounting
        period.

25.5.5  If any  security is  required  to be retained by the Lessor  pursuant to
        this clause then the Lessee  shall be entitled to send a written  notice
        to the Lessor  requesting  that any or all of the  existing  security be
        replaced  by  alternative  security  acceptable  to the Lessor and in an
        amount sufficient to secure the relevant  Potential  Liabilities and the
        Lessor  agrees to consider and discuss  with the Lessee,  in good faith,
        any such alternative security proposals.

25.5.6  Where any opinion or  accommodation  is to be  exercised or given by the
        Lessor  pursuant to this clause 25.5 it shall be  exercised  or given by
        the Lessor in its sole and absolute  discretion  but in so exercising or
        giving that opinion the Lessor shall act reasonably and in good faith.

25.6    Termination of Time Charter

        If the  chartering  of the Ship under the Time Charter shall at any time
        be terminated (including,  without limitation, by effluxion of time) and
        within ninety (90) days of such termination either:

25.6.1  the Time Charter is not  replaced by a new time charter  entered into by
        the Sub-Lessee with the Time Charterer on  substantially  the same terms
        (except as to term) as the Time Charter (including,  without limitation,
        in relation to the amount of charterhire); or

25.6.2  a new time  charter is not entered  into by the  Sub-Lessee  with a time
        charterer  who has a minimum  credit rating of BBB+ by Standard & Poor's
        or Baa1 with Moody's (a "Rated Time Charterer") or with another major or
        national  company  approved by the Lessor (in its  absolute  discretion)
        pursuant to clause  15.2.21  notwithstanding  that such company is not a
        Rated Time Charterer,

        the Lessee shall, within ten (10) Banking Days of its receipt of written
        notice from the Lessor constitute to the satisfaction of the Lessor such
        additional  security as shall be  acceptable  to the Lessor and having a
        value for security  purposes (as  determined  by the Lessor) at the date
        upon which such  additional  security shall be constituted  equal to the
        Strip  Liability  Amount at such time and during  each  Security  Period
        falling  thereafter  and any other  unsecured  obligations of the Lessee
        under this Lease and the other Lease Documents.

        Where the Lessee is required to provide  security to the Lessor pursuant
        to this clause 25.6, the Lessor agrees that it will consider, but in its
        absolute  discretion and without  obligation,  a request from the Lessee
        that the Lessor  accept  additional  security of an amount less than the
        Strip Liability Amount and any other unsecured obligations of the Lessee
        under  this  Lease  and the  other  Lease  Documents  to  recognise  any
        available security value in the Ship at that time.

        The Lessor  agrees that for the purpose of clause 25.6 the  provision by
        the  Lessee of a letter of credit or bank  guarantee  from a  Qualifying
        Replacement  Bank acceptable to the Lessor,  on terms  acceptable to the
        Lessor and in an amount equal to the amount of the  additional  security
        required to be provided under this clause shall be acceptable additional
        security for the purpose of this clause.

        If the action  required to be taken by the Lessee under this clause 25.6
        is not taken within the time period and otherwise on the terms contained
        in this clause the Lessor shall have the option to require the Lessee to
        terminate  the  leasing  of the Ship  under this Lease and if the Lessor
        wishes to  exercise  this  option it shall  notify the Lessee in writing
        whereupon  the  Lessee  shall  become  immediately  obliged  to  give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

        Where the Time Charter is replaced in accordance  with clauses 25.6.1 or
        25.6.2  then the  provisions  of this clause 25.6 shall apply with equal
        effect to any subsequent termination of the chartering of the Ship under
        such replacement Time Charter.

25.7    Letter of Credit Renewal

25.7.1  Where the  Letter of Credit  Expiry  Date is earlier  than the  Required
        Letter of Credit  Expiry  Date,  not later than thirty (30) Banking Days
        prior to the Letter of Credit  Expiry Date,  the Lessee shall provide to
        the Lessor in writing  proposals  for a further bank letter of credit to
        replace the Letter of Credit from the Letter of Credit Expiry Date for a
        period  up to the  Required  Letter  of  Credit  Expiry  Date.  Any such
        replacement bank letter of credit shall be from a Qualifying Replacement
        Bank  acceptable  to the Lessor and shall be on the same terms,  mutatis
        mutandis,  as the then existing Letter of Credit.  The Lessor shall have
        an absolute  discretion to determine whether the Lessee's  proposals are
        acceptable including,  without limitation,  the identity of the existing
        LC Bank (save that if at such time the existing LC Bank is in compliance
        with the Minimum LC Bank Credit Rating then it shall be an acceptable LC
        Bank for the purpose of this clause) or any proposed new LC Bank and the
        terms of any proposed new Letter of Credit if those terms are  different
        from the then  existing  Letter of Credit  which is to be  replaced  and
        shall  notify  the Lessee in writing  of its  response  to the  Lessee's
        written  proposals  within  ten  (10)  Banking  Days of  receipt  of the
        Lessee's written proposals.

25.7.2  If the Lessee has failed to provide a replacement or extended  letter of
        credit  on terms  and from a  Qualifying  Replacement  Bank  having  the
        Minimum LC Bank Credit  Rating  acceptable  to the Lessor in  accordance
        with  clause  25.7.1 not later than ten (10) days prior to the Letter of
        Credit  Expiry  Date (and which  letter of credit  may, if the Lessee so
        wishes,  be expressed to become effective on the Letter of Credit Expiry
        Date), then the Lessee shall become immediately  obliged on such date to
        give an irrevocable notice to the Lessor terminating the Lease Period in
        accordance with the provisions of clause  3.3(other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4and 3.5 shall apply to such termination of the Lease Period.

25.8    Required Security Amount

25.8.1  On the first day of each Adjustment  Period, the Lessor shall notify the
        Lessee in  writing  and shall  advise  the  Lessee  of the  amount  (the
        "Applicable  LC  Increased  Amount") by which the amount of the security
        required to be  provided by the Lessee  pursuant to the Letter of Credit
        Amount  for the  Security  Period  commencing  on the  first  day of the
        relevant  Adjustment Period needs to increase so that during each day of
        that  Security  Period  the  Letter  of  Credit  Amount  is equal to the
        Required LC Amount during each day of that Security  Period.  The Lessor
        shall, as  contemplated by paragraph 2(a) of the Letter of Credit,  copy
        to the LC Bank any such notice  delivered to the Lessee pursuant to this
        sub-clause at the same time such notice is delivered to the Lessee.

25.8.2  Following  receipt of any  written  notice  from the Lessor  pursuant to
        clause 25.8.1, if the Applicable LC Increased Amount for each day of the
        relevant Security Period exceeds the Variable Liability Amount of the LC
        Bank for each  corresponding  day of that Security Period as notified by
        the LC Bank to the Lessor  pursuant to  paragraph  2(b) of the Letter of
        Credit, the Lessee shall, on or before the date falling five (5) Banking
        Days after the commencement of the relevant  Adjustment  Period referred
        to in clause  25.8.1,  procure that the LC Bank agrees,  by means of the
        issue of a notice pursuant to paragraph 2(c) of the Letter of Credit, to
        increase the Letter of Credit  Amount by an amount equal to the relevant
        shortfall such that the  Applicable LC Increased  Amount set out in that
        written notice for each day falling during that Security Period is equal
        to or less  than the  Variable  Liability  Amount  for each day  falling
        during that Security Period.

25.8.3  In addition to the  obligations  contained in clause  25.8.2,  if at any
        time the  Fixed  Liability  Amount  shall be less than the  Required  LC
        Amount  during any  Security  Period,  the Lessor  shall be  entitled to
        notify the Lessee in writing not less than  fifteen  (15)  Banking  Days
        prior to the commencement of the relevant  Security Period in which such
        shortfall  shall arise and,  upon  receipt of that written  notice,  the
        Lessee  shall,  not  later  than  ten  (10)  Banking  Days  prior to the
        commencement of the relevant  Security Period,  procure that the LC Bank
        agrees to increase the Letter of Credit Amount by an amount equal to the
        relevant shortfall and with effect from the commencement of the relevant
        Security  Period  such that with  effect  from the  commencement  of the
        relevant  Security Period,  the Fixed Liability Amount shall,  following
        the  relevant  increase,  be equal to the  Required  LC Amount  for that
        Security Period and thereafter.

25.8.4  The  provisions  of  this  clause  25.8  set out  the  primary  security
        requirements of the Lessor and apply independently of clause 25.2.

25.9    General

        For the purpose of this clause 25, the value of any additional  security
        provided  or to be  provided to the Lessor  shall be  determined  by the
        Lessor  without any  necessity  for the Lessor  giving to the Lessee any
        reason for that determination save that:

25.9.1  where such  additional  security is  constituted  by security  over cash
        deposits,  the value of such  additional  security shall be equal to the
        amount of such cash deposit at any relevant time; and

25.9.2  where such  additional  security  comprises a letter of credit or demand
        guarantee  issued by a Qualifying  Replacement  Bank,  the value of such
        additional  security shall be the face value of such letter of credit or
        demand guarantee.

        In connection with any Additional Security provided,  or any replacement
        of the LC Bank effected,  in accordance  with this clause 25, the Lessor
        shall be entitled to receive  such  evidence  and  documents of the kind
        referred to in Schedule 1 as may in the Lessor's  opinion be appropriate
        and such favourable legal opinions as the Lessor shall in its reasonable
        discretion  require  and the  Lessor and the Lessee  shall  agree,  as a
        condition precedent to the implementation of such security arrangements,
        such reasonable  changes to the terms of this Lease and any of the other
        Relevant  Documents as the Lessor  considers  necessary having regard to
        the   proposed   nature  of  the  change  or  changes  to  the  security
        arrangements  in respect of this Lease.  Any Additional  Security shall,
        unless otherwise agreed by the Lessor, be free from  Encumbrances  other
        than any Encumbrance in favour of the Lessor.

25.9.3  If either  party  becomes  aware of the  occurrence  of a Relevant  Bank
        Change of Law Event or a Relevant Bank Illegality  Event,  then it shall
        promptly notify the other in writing.

25.9.4  Where any  replacement  security is to be  provided  by a Relevant  Bank
        (other  than the  Initial LC Bank) the Lessor  shall be  entitled,  as a
        condition to the Lessor's  acceptance  of such Relevant Bank and without
        prejudice  to any other  conditions  which may be imposed in  connection
        with such replacement  security, to require that a minimum Credit Rating
        test be applied in respect of such Relevant Bank.

25.10   Letter of Credit Adverse Event and liability reduction notice

25.10.1 If the Lessor  receives an Adverse Event Notice pursuant to paragraph 11
        of the Letter of Credit then,  without  prejudice to the  provisions  of
        clauses  25.3 and 25.4,  the Lessor  agrees to consult with the LC Bank,
        the Lessee and the Lessee Parent in accordance  with paragraph  11(b) of
        the Letter of Credit where such consultation is contemplated by the said
        paragraph 11(b). If,  notwithstanding  any such applicable  consultation
        (where  consultation  is to take place  pursuant  to the said  paragraph
        11(b)),  the LC Bank serves a notice on the Lessor pursuant to paragraph
        11(c) of the Letter of Credit  and,  at the time that  notice is served,
        the Lessee has not complied with its  obligations  under clauses 25.3.1,
        25.3.2 or 25.3.3 or, as applicable,  clauses 25.4.1 or 25.4.2 in respect
        of that  Adverse  Event,  then the Lessor  shall be  entitled to serve a
        written notice on the Lessee and in such circumstances the issue of that
        notice  shall  give  rise to a  Termination  Event  pursuant  to  clause
        26.1.3(d).

25.10.2 If the Lessor  receives a notice from the LC Bank  pursuant to paragraph
        2(e) of the  Letter  of  Credit  advising  the  Lessor  that  the  Fixed
        Liability Amount shall decrease in accordance with the provisions of the
        said paragraph 2(e) then,  without prejudice to the provisions of clause
        25.8.3,  the Lessor  shall be entitled to serve a written  notice on the
        Lessee and in such  circumstances  the issue of that  notice  shall give
        rise to a Termination pursuant to clause 26.1.3(d).

25.11   Demands under the Letter of Credit

        The Lessor  will not make a demand  under a Letter of Credit  unless and
        until:

25.11.1 the  Termination Sum has become due and payable (having regard to clause
        27.4.1(a) for this purpose); and

25.11.2 the  Termination  Sum has not  been  paid  in full on the due  date  for
        payment.

26      Termination Events

26.1    Termination Events

        The  Lessor  and the  Lessee  agree  that it is a  fundamental  term and
        condition  of this Lease that none of the  following  events shall occur
        during the Lease Period and that the  occurrence of any of the following
        events  shall  constitute  a  repudiatory  breach  of this  Lease by the
        Lessee:

26.1.1  Non-payment: any Relevant Party fails to pay any sum payable by it under
        any of the Relevant  Documents  at the time,  in the currency and in the
        manner  stipulated  in the  Relevant  Documents  (and so that,  for this
        purpose,  sums payable on demand shall be treated as having been paid at
        the stipulated time if paid within three (3) Banking Days of demand); or

26.1.2  Breach of Insurance and certain other obligations:

        (a)     the Lessee fails to obtain and/or  maintain the Insurances or if
                any insurer in respect of the Insurances  cancels the Insurances
                or  disclaims  liability  by  reason  of  mis-statement  in  any
                proposal for the  Insurances or for any other failure or default
                on the part of the Lessee,  the  Sub-Lessee,  the Manager or any
                other member of the Golar Gas Group; or

        (b)     the Lessee fails to comply with its  obligations  under  clauses
                11.1.9 or 11.1.10; or

26.1.3  Security provision: the Lessee:

        (a)     fails to comply with any  obligation  on its part  contained  in
                clause 25 to provide  Additional  Security  for its  obligations
                hereunder within the time provided in that clause; or

        (b)     fails to give any  notice of  termination  required  to be given
                under,  and within the time period  specified  in, the  relevant
                sub-clauses of clause 25; or

        (c)     fails to perform its obligations under clauses 25.8.2 and 25.8.3
                within the time period provided in those clauses; or

        (d)     the Lessor  services a notice on the Lessee  pursuant to clauses
                25.10.1 or 25.10.2;

26.1.4  Breach of other obligations: any Relevant Party commits any breach of or
        omits to observe any of the obligations or undertakings  expressed to be
        assumed  by it under any of the  Relevant  Documents  (other  than those
        referred  to in  clauses  15.2.19,  26.1.1,  26.1.2 and  26.1.3)  and in
        respect  of any such  breach or  omission  which is  capable  of remedy,
        within ten (10) Banking Days of the Lessor notifying such Relevant Party
        of such  breach or  omission,  the  Lessee has not  demonstrated  to the
        reasonable  satisfaction  of the Lessor that such breach or omission has
        been remedied; or

26.1.5  Misrepresentation:  any  representation or warranty made or deemed to be
        made or  repeated  by any  Relevant  Party in or  pursuant to any of the
        Relevant  Documents  or in any  document  or  certificate  or  statement
        referred to in or delivered  under any of the  Relevant  Documents is or
        proves to have  been  incorrect  in any  material  respect  when made or
        deemed to be made or repeated  unless the  circumstances  giving rise to
        the incorrectness are, in the reasonable opinion of the Lessor,  capable
        of remedy and are  remedied  within ten (10)  Banking Days of the Lessor
        notifying the Relevant Party of the requirement to remedy; or

26.1.6  Cross-default:

        (a)     at any time the aggregate amount at such time of:

                (i)     any Borrowed  Money or Swap  Liabilities of any Relevant
                        Party or any other  member of the Lessee  Group which is
                        not paid when due and remains unpaid;

                (ii)    any Borrowed  Money of any  Relevant  Party or any other
                        member of the Lessee Group which has become  (whether by
                        declaration  or  automatically  in  accordance  with the
                        relevant agreement or instrument constituting the same),
                        or is capable of being declared due and payable prior to
                        the date when it would otherwise have become due (unless
                        as a result of the exercise by the relevant  person of a
                        voluntary   right  of  prepayment   or  upon   mandatory
                        prepayment  as a  result  of a  change  of law or  other
                        circumstances  not  constituting  an  event  of  default
                        under,  or breach of, any  agreement  regulating  and/or
                        securing the relevant Borrowed Money);

                (iii)   any  facility or  commitment  available  to any Relevant
                        Party or any other member of the Lessee  Group  relating
                        to Borrowed Money which has been withdrawn, suspended or
                        cancelled by reason of any default  (however  described)
                        of the person concerned;

                (iv)    the amount of Swap  Liabilities of any Relevant Party or
                        any other  member of the Lessee  Group  which are due or
                        capable of being declared due upon early  termination of
                        the relevant  transaction by the relevant  counterparty;
                        and

                (v)     any  amounts  demanded  of,  but not  paid  when due and
                        remaining  unpaid  by any  Relevant  Party or any  other
                        member  of the  Lessee  Group  under  any  guarantee  in
                        respect of Borrowed Money or Swap Liabilities,

                exceeds five million Dollars ($5,000,000); or

        (b)     any event set out in clause 26 of any Other  Ship  Lease  occurs
                and is continuing;

26.1.7  Legal process:  any judgment or order made against any Relevant Party is
        not stayed or complied with within seven (7) days or a creditor attaches
        or takes possession of, or a distress, execution, sequestration or other
        process is levied or enforced  upon or sued out  against,  any  material
        part (in the  reasonable  opinion of the  Lessor)  of the  undertakings,
        assets,  rights or revenues of any Relevant  Party and is not discharged
        within seven (7) days; or

26.1.8  Insolvency:  the  Sub-Lessee  or the Manager is deemed unable to pay its
        debts  within the meaning of section  123(1)(a),  (b), (c) or (2) of the
        Insolvency Act 1986 or any other Relevant Party becomes  insolvent under
        the applicable  insolvency  laws of the place of  incorporation  of such
        Relevant  Party  or  stops  or  suspends  making  payments  (whether  of
        principal or interest)  with respect to all or any class of its debts or
        announces an intention to do so; or

26.1.9  Reduction or loss of capital:  a meeting is convened  (without the prior
        written approval of the Lessor) by any Relevant Party for the purpose of
        passing any  resolution  to purchase,  reduce or redeem any of its share
        capital; or

26.1.10 Winding  up: any  petition is  presented  or other step is taken for the
        purpose of winding up any Relevant Party (not being a petition which the
        Lessee or such other Relevant Party can demonstrate to the  satisfaction
        of the  Lessor,  by  providing  an opinion  of  leading  counsel to that
        effect, is frivolous,  vexatious or an abuse of the process of the court
        or relates to a claim to which such  Relevant  Party has a good  defence
        and which is being  vigorously  contested by such Relevant  Party and in
        respect of which reserves acceptable to the Lessor have been made) or an
        order is made or  resolution  passed for the winding up of any  Relevant
        Party or a notice  is issued  convening  a meeting  for the  purpose  of
        passing any such resolution; or

26.1.11 Administration: any petition is presented or other step is taken for the
        purpose of the appointment of an  administrator of any Relevant Party or
        the Lessor  believes that any such petition or other step is imminent or
        an administration order is made in relation to any Relevant Party; or

26.1.12 Appointment  of receivers  and  managers:  any  administrative  or other
        receiver is appointed of any Relevant Party or any material part (in the
        reasonable  opinion of the Lessor) of its assets and/or  undertaking  or
        any other  steps are taken to enforce  any  Encumbrance  over all or any
        material part (in the reasonable opinion of the Lessor) of the assets of
        any Relevant Party; or

26.1.13 Compositions:  any steps are taken,  or negotiations  commenced,  by any
        Relevant  Party or by any of its  creditors  with a view to the  general
        readjustment or  rescheduling  of all or part of its  Indebtedness or to
        proposing any kind of composition,  compromise or arrangement  involving
        such company and any of its creditors; or

26.1.14 Analogous  proceedings:  there occurs, in relation to any Relevant Party
        in any country or  territory in which any of them carries on business or
        to the jurisdiction of whose courts any part of their assets is subject,
        any event which,  in the  reasonable  opinion of the Lessor,  appears in
        that  country  or  territory  to  correspond  with,  or have  an  effect
        equivalent  or similar to, any of those  mentioned in clauses  26.1.8 to
        26.1.12  (inclusive) or any Relevant Party otherwise becomes subject, in
        any such country or  territory,  to the operation of any law relating to
        insolvency, bankruptcy or liquidation; or

26.1.15 Cessation  of  business:  any  Relevant  Party  suspends  or  ceases  or
        threatens  to  suspend  or cease to carry on the whole or a  substantial
        part of its business; or

26.1.16 Repudiation: any Relevant Party repudiates any of the Relevant Documents
        or does or causes or permits to be done any act or thing  evidencing  an
        intention  to  repudiate  any of  the  Transaction  Documents  or if the
        validity or enforceability of any of the Relevant Documents shall at any
        time and for any reason be contested  by any  Relevant  Party which is a
        party thereto, or if any such Relevant Party shall deny that it has any,
        or any further, liability thereunder; or

26.1.17 Arrest: the Ship is arrested,  confiscated,  seized, taken in execution,
        impounded,  forfeited, detained in exercise or purported exercise of any
        possessory  lien or other claim, or otherwise taken from the possession,
        other than due to a Lessor's  Encumbrance,  of the Lessee and/or, during
        the Sub-Lease Period,  the Sub-Lessee and the Lessee and/or,  during the
        Sub-Lease  Period,  the Sub-Lessee  shall fail to procure the release of
        the Ship within a period of ten (10) Banking Days; or

26.1.18 Environment:  the  Lessee  and/or  the  Sub-Lessee  and/or  any of their
        respective   Environmental   Affiliates   fails  to   comply   with  any
        Environmental Law or any Environmental Approval or the Ship or any other
        Relevant Ship is involved in an Environmental  Incident which gives rise
        or would be likely to give rise to Environmental  Claims which could, in
        the opinion of the Lessor, be expected to have a material adverse effect
        on the business, assets, operations,  property or financial condition of
        the Lessee Group taken as a whole; or

26.1.19 Qualifying  purpose:  if,  during the  designated  period (as defined in
        section  106 CAA),  the Ship  shall be used in a manner or for a purpose
        which results in the application of sections 109, 110, 111, 112, 113 and
        117  CAA  (including,   without  limitation  and  where  applicable,  in
        circumstances  arising  in  consequence  of the  conversion  of the Time
        Charter into a bareboat charter pursuant to clause 46(b)(ii) of the Time
        Charter); or

26.1.20 Lessee  ceases to be  Subsidiary:  (a) the  Lessee  shall  cease to be a
        wholly  owned  subsidiary  of Gotaas  Larsen or (b) Gotaas  Larsen shall
        cease to be a wholly owned  subsidiary  of the Lessee  Parent or (c) the
        Relevant Shareholder shall cease to directly or indirectly,  legally and
        beneficially  own twenty  five  percent  (25%) or more of the issued and
        outstanding share capital of the Lessee Parent; or

26.1.21 Termination  of  Sub-Lease:  the  Sub-Lease  terminates  for any  reason
        whatsoever.

26.2    Mandatory Prepayment Events

        Each of the  following  shall be a  Mandatory  Prepayment  Event for the
        purpose of this Agreement:

26.2.1  Seizure:  all or a material part of the undertaking,  assets,  rights or
        revenues  of, or shares or other  ownership  interest  in, any  Relevant
        Party are seized, nationalised, expropriated or compulsorily acquired by
        or under the authority of any  government in any manner which would,  in
        the reasonable opinion of the Lessor, affect the ability of the Relevant
        Party to perform its obligations  under the Relevant  Documents to which
        it is a party; or

26.2.2  Invalidity:  (except  where due to a Relevant Bank  Illegality  Event in
        which case clause 25.4 shall apply) any of the Relevant  Documents shall
        at any  time and for any  reason  become  invalid  or  unenforceable  or
        otherwise  cease to remain in full force and  effect and  (unless in the
        reasonable opinion of the Lessor any such invalidity or unenforceability
        is incapable of  rectification  or remedy) the Relevant Party shall have
        failed to procure within ten (10) Banking Days notice from the Lessor to
        do so that the foregoing is no longer invalid or unenforceable; or

26.2.3  Unlawfulness:  (except where due to a Relevant Bank Illegality  Event in
        which case clause 25.4 shall apply) it becomes impossible or unlawful at
        any time for any Relevant  Party or the Standby  Purchaser to fulfil any
        of the covenants and obligations expressed to be assumed by it in any of
        the  Relevant  Documents or for the Lessor to exercise the rights or any
        of them vested in it under any of the  Relevant  Documents  or otherwise
        and  (unless  in  the   reasonable   opinion  of  the  Lessor  any  such
        impossibility  or unlawfulness is incapable of  rectification or remedy)
        the Relevant Party or the Standby Purchaser shall have failed to procure
        within ten (10)  Banking  Days  notice from the Lessor to do so that the
        foregoing is no longer impossible or unlawful; or

26.2.4  Change in Law: there occurs any Change in Law  (considered by the Lessor
        in its absolute  discretion,  to be  materially  adverse to the Lessor's
        interests)  pursuant  to which  there is,  in the  Lessor's  opinion,  a
        potential  risk of the  Lessor  incurring  any  liability  or  increased
        liability  to any third party by virtue of its rights in relation to the
        Ship or otherwise in connection with the Relevant  Documents  and/or the
        rights and  obligations of the Lessor  thereunder and (a) such liability
        or increased  liability  is not, or does not continue to be,  covered by
        insurance   which  is,  in  the   reasonable   opinion  of  the  Lessor,
        satisfactory  having regard to such liability or increased  liability or
        (b) such  potential  risk is not promptly  removed or  terminated by the
        Lessee  moving  the Ship to,  and  keeping  the Ship in, a  location  or
        locations to which such potential risk would not apply or (c) such other
        steps as the  Lessor  considers  reasonably  necessary  to  remove  such
        potential  risk in such  circumstances  are not  promptly  taken  by the
        Lessee.

27      Lessor's rights following a Termination  Event and Mandatory  Prepayment
        Event

27.1    Termination rights and payments

        At any time after the occurrence of any Termination  Event (and provided
        that the same is  continuing)  the Lessor  may, by notice to the Lessee,
        accept any  repudiation  by the Lessee of this Lease  constituted by the
        occurrence of that Termination Event  (whereupon,  the Lessee agrees and
        acknowledges,  the  Lessee's  and  the  Sub-Lessee's  right,  title  and
        interest in and to the Ship and to possess  and operate the Ship,  shall
        terminate)  and,  subject  to the terms of the Quiet  Enjoyment  Letter,
        retake  possession of the Ship and the Lessee agrees that the Lessor may
        for  this  purpose  enter  upon  any  premises  belonging  to or in  the
        occupation or under the control of the Lessee where the Ship or any part
        thereof may be located and upon the  serving of the  Termination  Notice
        (and  irrespective  of whether  possession is retaken by the Lessor) the
        Lessee shall pay to the Lessor  forthwith upon such termination such sum
        as shall equal the aggregate of:

27.1.1  all amounts due under this Lease and any of the other Lease Documents as
        shall be payable and remain outstanding; and

27.1.2  all  Indemnity  Losses (as  defined  in clause  9.4 but which  Indemnity
        Losses shall not include, for the avoidance of doubt, any loss of profit
        other than any  Termination  Fee)  incurred by the Lessor in  connection
        with such termination including,  without prejudice to the generality of
        the  foregoing,  all  costs  and  expenses  so  incurred  in  recovering
        possession of the Ship or any part thereof and in carrying out any works
        or  modifications  required to bring the Ship or any part  thereof up to
        the condition specified in clause 18.1,

        and  the  Lessee  shall  also  pay to the  Lessor  forthwith  upon  such
        termination  by way of  agreed  compensation  and not as a  penalty  the
        amount of the Termination Sum as at the date of termination.

        If a  Termination  Notice is served  pursuant to this clause  27.1,  the
        Termination Sum shall become due in accordance with such notice and this
        clause 27.1 notwithstanding the existence of a Total Loss at such time.

27.2    Application of Net Sale Proceeds

        Without  prejudice to the  obligation of the Lessee to make the payments
        referred to in clause 27.1, upon any such  termination as is referred to
        in clause 27.1 and provided that the Lessor shall not be prevented  from
        so doing for any reason whatsoever  (including,  without limitation,  if
        prevented  from doing so by reason of the  provisions of clause 9 of the
        Proceeds Deed), the Lessor or, where  applicable,  the Relevant Security
        Agent as agent of the Lessor  pursuant to the  provisions of clause 9 of
        the  Proceeds  Deed  shall  endeavour  to  sell  the  Ship  as  soon  as
        practicable.  The Net Sale  Proceeds  shall be  applied by the Lessor as
        follows:

27.2.1  first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the Net Sale Proceeds;

27.2.2  secondly,  in  retention  by the Lessor of an amount equal to the lesser
        of:

        (a)     all or any part of the  Termination  Sum which the Lessee  shall
                not,  on or  before  the  date of  application  of the Net  Sale
                Proceeds,  have paid to the  Lessor in  accordance  with  clause
                27.1; and

        (b)     the balance of the Net Sale Proceeds;

27.2.3  thirdly,  in or towards  settlement  of any other  amounts  owing by the
        Lessee  to the  Lessor  under  this  Lease  or any  of the  other  Lease
        Documents (including any interest due in respect thereof);

27.2.4  fourthly,  by way of rebate of Rental,  in or towards  settlement of any
        amounts owing to the Other Lessors under the Other Ship Leases or any of
        the Other Ship Relevant Documents, such amounts to be paid to the Lessor
        Agent for  application  in accordance  with clause 4.3 of the Agency and
        Trust  Deed and  clauses  27.2.2  and  27.2.3 of each of the Other  Ship
        Leases;

27.2.5  fifthly,  in or  towards  refunding  to the  Lessee  by way of rebate of
        Rental an amount equal to all Rental (including, without limitation, any
        Termination Sum) paid to the Lessor by the Lessee under this Lease; and

27.2.6  sixthly,  to the Lessee,  by way of sales  commission  or  otherwise  as
        appropriate.

27.3    Mandatory Prepayment

        On or at any time after the occurrence of a Mandatory  Prepayment  Event
        and whilst it is continuing:

27.3.1  the Lessor may, by notice to the Lessee after the Delivery  Date,  elect
        to treat the  occurrence  of that  event as  constituting  notice by the
        Lessee pursuant to clause 3.3 but without reference to the notice period
        referred to in that clause;

27.3.2  on the date  falling  five (5) Banking Days after the date of the notice
        from the Lessor referred to in clause 27.3.1, the Lessee will pay to the
        Lessor the amounts referred to in clause 27.1 as at the required date of
        that payment;

27.3.3  the Lessor will use reasonable endeavours to sell the Ship in accordance
        with the applicable provisions of clause 3;

27.3.4  any Net Sale  Proceeds from a sale of the Ship pursuant to clause 27.3.3
        will  be  applied  in the  manner  described  in  clause  3.4  or,  if a
        Termination  Event has occurred and is continuing at the time of receipt
        of the Net Sale Proceeds, clause 27.2;

27.3.5  with  effect on and from the date of the  payment  by the  Lessee of all
        amounts  pursuant to clause 27.3.2,  the Lessee shall cease to be liable
        to pay Rental  under this Lease but without  prejudice  to the  Lessee's
        obligations  pursuant  to  paragraphs  4, 6  and/or  7 of the  Financial
        Schedule; and

27.3.6  notwithstanding  anything else to the contrary in this Lease but subject
        to any rights of the Lessor under this Lease following the occurrence of
        a Termination Event, the Lease Period will continue until and end on the
        date on which the Ship is delivered to a purchaser of the Ship following
        a sale pursuant to clause 27.3.3.

27.4    Termination Sum liabilities

27.4.1  Limitation on recourse

        Notwithstanding  anything to the contrary  expressed or implied  herein,
        where the  Termination  Sum  becomes  payable by the Lessee  pursuant to
        clauses 27.1 or 27.3.1 or, if at the time of any  voluntary  termination
        of the leasing of the Ship  pursuant to clause 3.3 a Relevant Bank Event
        has arisen,  the Lessor shall have no recourse against the Lessee or any
        of the assets and  undertakings of the Lessee in respect of such part of
        the Termination Sum as is equal to the Applicable Security Amount at the
        relevant  time and the  relevant  part of the  Termination  Sum which is
        equal to the said Applicable Security Amount shall be recoverable by the
        Lessor  only from and to the extent of the  payments  made by a Relevant
        Bank under the Letter of Credit or other Additional  Security  Document.
        The limitation on recourse contained in this clause 27.4 is given on the
        basis that:

        (a)     the  foregoing  limitation  on recourse  shall be ignored in the
                determination of the Lease Obligations and the Lease Obligations
                shall include all moneys,  obligations and liabilities which are
                to be paid,  repaid,  performed,  satisfied or discharged by the
                Lessee, notwithstanding the foregoing limitation of recourse;

        (b)     to the extent  that a claim or proof is a  necessary  procedural
                step to  enable  the  realisation  or  enforcement  of the  full
                benefit of this Lease or the other Relevant Documents, or to the
                exercise by the Lessor of any right, title, interest and benefit
                in, to,  under or pursuant to this Lease and the other  Relevant
                Documents,  the Lessor shall be entitled to make or file a claim
                or proof in any Insolvency Event in relation to the Lessee,  but
                not itself to take any legal action or  proceeding  to instigate
                any such  Insolvency  Event in  respect  of amounts to which the
                obligations of the Lessee are limited recourse  pursuant to this
                clause; and

        (c)     save where the Lessor has agreed to limit its rights of recourse
                against  the Lessee  under,  or as  referred  to in, this clause
                27.4, the Lessor shall have full recourse  against the Lessee in
                respect  of all  of  the  Lease  Obligations.  Accordingly,  and
                without limiting the generality of the foregoing,  to the extent
                that the  Termination Sum and any other amounts due and owing by
                the  Lessee to the Lessor  under this Lease and the other  Lease
                Documents   exceeds  the  Applicable   Security  Amount  at  the
                applicable time, the Lessee shall be obliged to make payment for
                the  relevant  excess  in full and the  Lessor  shall  have full
                recourse  to the Lessee  and its assets to the extent  that such
                payment is not made.

        Where the limitation on recourse  arises by reason of the existence of a
        Relevant Bank Event at the time of any termination of the leasing of the
        Ship pursuant to clause 3.3, the Lessee acknowledges and agrees that the
        Lessor  shall be entitled to make a demand  and/or,  as the case may be,
        exercise  all its  rights  under any  Letter  of  Credit  or  Additional
        Security Document provided by that Relevant Bank.

27.4.2  Suspense accounts

        Any money  received  by the  Lessor  under  any  Letter of Credit or any
        Additional  Security  Document  may,  following  the  occurrence  of  an
        Insolvency  Event in respect  of either the Lessee or the Lessee  Parent
        which is  continuing,  be  placed  by the  Lessor  to the  credit  of an
        interest  bearing  suspense account with the Account Bank with a view to
        preserving the rights of the Lessor to prove for the whole of its claims
        against the Lessee  and/or the Lessee  Parent or any other person liable
        or, as the Lessor may elect,  may be applied in or towards  satisfaction
        of the  amounts  then due and  payable  to the  Lessor  under  the Lease
        Documents.

28      Notices

        Every notice, request, demand or other communication under this Lease or
        any of the other Lease Documents shall:

28.1.1  be in writing  delivered  personally  or by first class  prepaid  letter
        (airmail if  available),  or  facsimile  transmission  or other means of
        communication in permanent written form;

28.1.2  be deemed to have been received,  subject as otherwise  provided in this
        Lease,  in the case of a letter,  when delivered  personally or five (5)
        days after it has been put to the post and,  in the case of a  facsimile
        transmission or other means of  telecommunication  or permanent  written
        form, at the time of despatch  (provided that if the date of despatch is
        not a business day in the country of the addressee it shall be deemed to
        have been  received at the opening of business on the next such business
        day); and

28.1.3  be sent:

        (1)    to the Lessor at
               c/o Sovereign House
               PO Box 302
               298 Deansgate
               Manchester M3 4HH
               Fax No:    0161 953 3517
               Attention: Corporate Administration Manager

        (2)    to the Lessee at:
               30 Marsh Wall
               London E14 9TP
               Fax No:    (44) 207 517 8601
               Attention: the President

        or to such other address,  and/or numbers as is notified by one party to
        the other under this Lease.

29      Liens and indemnities

29.1    No authority to impose liens

        Neither  the  Lessee  nor the  Master of the Ship  shall have any right,
        power or authority to create incur or permit to be imposed upon the Ship
        any liens  whatsoever  except for Permitted  Liens. The Lessee agrees to
        exhibit a  certified  copy of this Lease  with the Ship's  papers and to
        exhibit the same to any person having business with the Ship which might
        give rise to any lien thereon other than Permitted Liens.

        The Lessee further  agrees to fasten to the Ship in a conspicuous  place
        and to keep so  fastened  during  the Lease  Period a notice  reading as
        follows:

        "This Ship is the property of Golar Freeze (Bermuda) Limited (whose name
        is to be changed to Sovereign  Freeze  Limited)  (the  "Lessor")  and is
        under demise charter to Golar Gas Holding  Company,  Inc. (the "Lessee")
        and sub-demise  charter to Golar Freeze UK Ltd. (the  "Sub-Lessee") and,
        by the terms of the Lease,  neither the Lessee,  the  Sub-Lessee nor the
        Master  nor any  servant  or  agent  thereof  has any  right,  power  or
        authority  whatsoever  to  contract on behalf of the Lessor or to pledge
        the Lessor's credit or to involve the Lessor in any liability whatsoever
        or to  create,  incur,  or  permit  to be  imposed  on the Ship any lien
        whatsoever except for general average, crews' wages and salvage",

        or in such other form as the Lessor may reasonably  require from time to
        time.

        The Lessee  shall not remove or cover up such  notice and will not place
        or permit to be placed any other notice  (affecting the ownership of the
        Ship or otherwise  relating to the rights of the Lessor and dealing with
        the rights of any person other than the Lessor, the First Security Agent
        and the  Second  Security  Agent)  in or on the Ship  without  the prior
        written  consent  of the Lessor  (such  consent  not to be  unreasonably
        withheld so long as the same is not inconsistent  with the rights of the
        Lessor.

        The  Lessee  agrees  to give  written  instructions  with  regard to the
        foregoing  matters to the Master of the Ship, such instructions to be in
        such terms as may from time to time be required by the Lessor.

29.2    Release from arrest: Lessor's vessels

        If the Ship or any other vessel for the time being owned (in whole or in
        part) by or leased to the Lessor  shall at any time have a writ or libel
        filed against it or be arrested, attached or levied upon pursuant to any
        legal  process or purported  legal process or be detained in exercise or
        purported  exercise of any lien or claim of whatsoever  nature,  whether
        arising  out of the use or  operation  of the  Ship or out of the use or
        operation  of any other  vessel  owned by or leased or  chartered to the
        Lessee or the  Sub-Lessee  or otherwise by reason of the act or omission
        of any  of the  aforesaid  persons,  the  Lessee  shall  forthwith  upon
        receiving  notice thereof at its expense procure the release of the Ship
        or such  other  vessel  (as the  case may  require)  from  such  arrest,
        detention,  attachment  or levy or, as the case may be, the discharge of
        the  writ or libel by  providing  bail or  procuring  the  provision  of
        security or  otherwise as the  circumstances  may require and the Lessee
        shall be  responsible  for  discharging  each  and  every  liability  in
        connection with any such process,  claim, lien or other action.  Without
        prejudice to the generality of the other  indemnities  contained in this
        Lease or any of the other Lease Documents, should any other vessel owned
        by the Lessor and leased by it otherwise than to the Lessee be arrested,
        detained,  attached  or levied upon or be the subject of a writ or libel
        in such circumstances, the Lessee shall indemnify the Lessor against all
        claims  made on the Lessor by the  charterers  of such  other  vessel in
        connection with such arrest, detention, attachment, levy, writ or libel.

29.3    Release from arrest: Lessee's vessels

        If the Ship shall at any time have a writ or libel  filed  against it or
        be arrested,  attached or levied upon  pursuant to any legal  process or
        purported legal process or be detained in exercise or purported exercise
        of any lien or claim of whatsoever  nature in each such case arising out
        of the use or  operation of any other vessel for the time being owned by
        the  Lessor or any  other  company  in the  Lessor  Group and  leased or
        chartered by it otherwise  than to the Lessee and should the  charterers
        of such other vessel (being in that situation  under  obligations to the
        Lessor or such other  company in the Lessor  Group  equivalent  to those
        assumed  by the Lessee  under  clause  29.2)  fail to fulfil  their said
        obligations,  provided  that the Lessee  shall  first  have given  prior
        notice thereof to the Lessor and, to the extent  practicable,  consulted
        with the  Lessor or such other  company  in the  Lessor  Group as far in
        advance as is reasonable in all the  circumstances,  the Lessee shall be
        entitled  to act as agent for the  Lessor or such  other  company in the
        Lessor Group to procure release of the Ship or such other vessel (as the
        case may require) from such arrest, detention, attachment or levy or, as
        the case may be, the discharge of the writ or libel and the discharge of
        all  liabilities in connection with such process,  claim,  lien or other
        action but shall be  entitled to be  indemnified  by the Lessor and such
        other  company  in the Lessor  Group  against  all  losses and  expenses
        reasonably and properly so incurred by it.

30      Assignment and sale of Ship

30.1    Assignment by Lessee

        The  Lessee  may not  with  the  exception  of an  assignment  by way of
        security in favour of the First Security  Agent and the Second  Security
        Agent  assign or transfer  any of its rights or  obligations  under this
        Lease or any of the other  Lease  Documents  without  the prior  written
        consent of the Lessor,  but the Lessor shall not  unreasonably  withhold
        its consent in the circumstances of;

30.1.1  any assignment or transfer or novation to a company which is part of the
        Lessee Group where:

        (a)     the Lessee  Parent  Guarantee,  the  Standby  Documents  and any
                Additional Security Documents and the respective  obligations of
                the  Lessee  Parent,  the LC Bank  and any  Additional  Security
                Providers thereunder remain in full force and effect;

        (b)     the  replacement of the Lessee will not give rise to a breach of
                the provisions of clause 13.2.4;

        (c)     the  liabilities  and obligations of the Lessee under this Lease
                will not be increased following such transfer;

        (d)     the  rights of the  Lessor  under this Lease will not be reduced
                and the  liabilities  and  obligations  of the Lessor under this
                Lease  will  not  be  increased  in  each  case  following  such
                transfer; and

        (e)     the Lessor has received a legal  opinion from a lawyer chosen by
                the  Lessor   qualified   and   practising  in  the  country  of
                incorporation of the relevant assignee or transferee which is no
                worse  in form  and  substance  than  the  legal  opinion  to be
                provided  in  favour  of the  Lessor in  respect  of the  Lessee
                pursuant to clause 4.1 and Schedule 1.

30.2    Assignment by the Lessor

        The Lessor may not,  save as provided  below,  assign or transfer any of
        its rights or obligations  under this Lease or any of the other Relevant
        Documents  without the prior written consent of the Lessee which consent
        may not unreasonably be withheld.  Notwithstanding  the above provision,
        the Lessor  shall be at liberty to  transfer  (by way of  assignment  or
        novation) its rights,  benefits or obligations  under this Lease and any
        of the other  Relevant  Documents  to any leasing  company  chosen by it
        within the Lessor Group which is resident in the United  Kingdom for the
        purpose of the charge to Corporation Tax on the basis that:

30.2.1  subject to the First Security  Agent,  the Second Security Agent and the
        Lessee complying with their  obligations  under, and on the basis of the
        provisions  of clause 8.6 of the  Proceeds  Deed,  ownership of the Ship
        shall be  transferred  to such company at the same time and such company
        shall execute a replacement Lessor Mortgage and Lessor Proceeds Accounts
        Assignment in accordance with clause 8.6 of the Proceeds Deed;

30.2.2  any costs, charges or expenses including stamp duties payable in respect
        of any transfer shall be for the Lessor's account;

30.2.3  notwithstanding  any other  provision  of this Lease or any of the other
        Lease Documents all amounts payable or receivable by the Lessee or other
        Relevant Parties under this Lease and the other Relevant Documents shall
        be calculated as if no such transfer had taken place; and

30.2.4  the Lessor  Parent  shall comply with its  obligations  under the Lessor
        Support Letters in respect of such transfer.

30.3    Sale of Ship

        During the Lease Period the Lessor shall not sell,  transfer,  assign or
        otherwise  dispose of the legal title to, or beneficial  interest in the
        Ship,  or  agree  to do  so,  save  as  expressly  contemplated  by  the
        provisions  of this Lease,  the  Proceeds  Deed and the Quiet  Enjoyment
        Letter.

31      Increased costs, funding problems and illegality

31.1    Increased costs

        If any law, regulation or regulatory requirement or any judgment,  order
        or direction of any court, tribunal or authority taking effect after the
        date of this Lease which is binding upon the Lessor in the  jurisdiction
        in which it is formed or in which any action is required to be performed
        by it for the  purposes of this Lease of any  monetary  agency,  central
        bank or competent governmental or other authority shall:

31.1.1  subject  the  Lessor to Taxes or change  the  basis of  Taxation  of the
        Lessor with respect to any payment  under any of the Relevant  Documents
        (other than Taxes or Taxation which are the subject of an indemnity from
        the Lessee to the Lessor  under clause 10 or would be so subject but for
        the provisions of clauses 10.6 and 10.8); or

31.1.2  impose,  modify or deem  applicable any reserve  requirements or require
        the making of any special  deposits  against or in respect of any assets
        or liabilities of, deposits with or for the account of, or loans by, the
        Lessor or its holding company; or

31.1.3  impose on the Lessor or its  holding  company any other  condition  with
        respect to any of the Relevant Documents or its obligations under any of
        the Transaction Documents,

        and, as a result of any of the foregoing,  the cost to the Lessor or its
        holding  company of  funding,  financing  or  re-financing,  directly or
        indirectly,  its  purchase  of the Ship or of owning the Ship or leasing
        the Ship to the  Lessee  under  this  Lease is  increased  or the amount
        payable  or the  effective  return to the  Lessor  under  this  Lease is
        reduced or the Lessor or its holding company makes a payment or foregoes
        a return on or calculated by reference to any amount payable to it under
        this Lease (other than as provided in clause  31.1.1),  then and in each
        such case the Lessor shall as soon as  practicable  after becoming aware
        of the same  notify  the  Lessee of the  circumstances  thereof  and the
        Lessee  shall pay to the Lessor on demand  the  amount  which the Lessor
        specifies (in a certificate  setting forth the basis of the  computation
        of such  amount) is  required  to  compensate  the Lessor or its holding
        company for such increased  cost,  reduced  return,  payment or foregone
        return.

        Any demand  under clause 31.1 may be made at any time whether or not the
        Lease Period shall have terminated or expired.

        For the purpose of this clause 31.1 "holding  company" means the company
        or entity (if any)  within  the  consolidated  supervision  of which the
        Lessor is included.

31.2    Funding problems

        If the Lessor  notifies  the Lessee that  adequate and fair means do not
        exist for  determining  the Default  Rate or for  determining  LIBOR (as
        defined in the  Financial  Schedule)  then the Lessor  shall give notice
        thereof to the Lessee and the Lessor and the Lessee shall meet  together
        to discuss the matter in good faith and,  unless within thirty (30) days
        of the  giving of such  notice the  Lessor  and the  Lessee  arrive,  by
        negotiation in good faith, at an alternative basis reasonably acceptable
        to the  Lessor and the Lessee  for  continuing  the  leasing of the Ship
        hereunder and determining the Default Rate or LIBOR (and any alternative
        basis agreed in writing shall be  retroactive  to and effective from the
        commencement  of the relevant period and shall continue until the Lessor
        determines that  circumstances  are such that such alternative basis may
        cease to be  effective)  the Lessee shall  indemnify the Lessor from and
        against  any  liability,  loss or expense  suffered  or  incurred by the
        Lessor during the relevant  period as a result of the  circumstances  so
        notified by the Lessor to the Lessee.

31.3    Illegality

        If any law, regulation or regulatory requirement or any judgment,  order
        or direction of any court, tribunal or authority binding upon the Lessor
        in the  jurisdiction  in which it is formed  or in which  any  action is
        required to be  performed  by it for the purposes of any of the Relevant
        Documents  (whether  or not in  force  before  the  date of this  Lease)
        renders it unlawful  for the Lessor to continue to lease the Ship to the
        Lessee under this Lease, the Lessor shall promptly inform the Lessee and
        the  Lessor  shall be  entitled  by  written  notice  to the  Lessee  to
        terminate the Lease Period, the termination of the Lease Period to occur
        either (a) forthwith or (b) on a future specified date not being earlier
        than the date upon which it becomes  unlawful for the Lessor to continue
        to lease the Ship to the Lessee under this Lease.

        Such  termination  shall be deemed to be a voluntary  termination of the
        Lease Period in accordance  with clause 3.3  (notwithstanding  that such
        termination shall not have occurred on a Primary Rental Date or that the
        Lessor shall not have received thirty (30) days' notice thereof) and the
        provisions of clauses 3.3 to 3.6 shall apply thereto.

31.4    Mitigation

        If circumstances  arise which would, or would upon the giving of notice,
        result in:

31.4.1  the Lessee being  required to make a payment to the Lessor to compensate
        the Lessor or its holding company for a liability to Taxes, increased or
        additional cost, reduction, payment, foregone return or loss pursuant to
        clause 31.1;

31.4.2  the Lessee  being  required to make an  increased  payment to the Lessor
        pursuant to clause 31.2;

31.4.3  the  provision of  additional  security  and/or the  termination  of the
        leasing of the Ship pursuant to clauses 25.3, 25.4, 25.5 and 31.3; or

31.4.4  the  mandatory  prepayment  of the  amounts  referred  to in clause 27.1
        pursuant to clauses 26.2.3 or 26.2.4,

        then, without in any way limiting,  reducing or otherwise qualifying the
        obligations  of the Lessee under  clauses 25, 26 and this clause 31, the
        Lessor  shall,  at the  cost  of the  Lessee,  endeavour  to  take  such
        reasonable  steps  (and/or,  in the case of  clause  31.1 and  where the
        increased or additional  cost,  reduction,  payment,  foregone return or
        loss is that of its  holding  company,  endeavour  to  procure  that its
        holding company takes such  reasonable  steps) as may be open to it (or,
        as the case may be, its  holding  company)  to  mitigate  or remove such
        circumstances  and shall consult with the Lessee in connection with such
        mitigation  arrangements.  The Lessee  acknowledges that nothing in this
        clause  shall  oblige the Lessor (or its  holding  company)  to take any
        steps which might (in the opinion of the Lessor) be  prejudicial  to the
        Lessor (or,  as the case may be, its holding  company) or be in conflict
        with  the  Lessor's  (or,  as the case may be,  its  holding  company's)
        general banking  policies or involve the Lessor (or, as the case may be,
        its holding company) in expense or an increased administrative burden.

32      Refinancings

32.1    Refinancing by Lessee

32.1.1  Where the First  Bank Loan (as  defined  in the  Proceeds  Deed) and the
        Second Bank Loan (as defined in the  Proceeds  Deed) have been repaid in
        full (or will be repaid in full out of the  proceeds of any  refinancing
        contemplated  by this clause 32), the Lessee shall be entitled,  subject
        to clause 32.2,  to refinance its interest in the Ship and to assign the
        Lessor Mortgage to the relevant  refinancing banks or any security agent
        acting on their behalf and to grant other first and/or  second  priority
        security of the kind required under or in connection with the First Bank
        Loan and the  Second  Bank Loan and more  generally  referred  to in the
        Proceeds Deed.

32.1.2  In connection with any  refinancing  consented to pursuant to clause 32,
        the Lessor  shall  enter into such  documents  as the other party or the
        Lessee may reasonably require to amend this Lease and the other Relevant
        Documents to reflect the new financing structure.

32.2    Conditions

        The  agreement  of the Lessor to any  refinancing  referred to in clause
        32.1.1 shall be subject to the following conditions:

32.2.1  no Relevant Event shall have occurred and be continuing;

32.2.2  the Lessor shall be satisfied that the proceeds of the  refinancing  are
        sufficient to repay the First Bank Loan and the Second Bank Loan in full
        or, if not,  that the Lessee (or any other  person  obliged to repay the
        First Bank Loan and the Second  Bank Loan) has  sufficient  other  funds
        available to repay the First Bank Loan and the Second Bank Loan in full;

32.2.3  the Lessor shall be reasonably  satisfied  that the Third Priority Three
        Party  Deed  shall,  following  the  refinancing,  continue  to  provide
        security  for the  Lessee's  obligations  under this Lease in a form and
        with effect  substantively  equivalent to that  negotiated and agreed in
        relation  to the First Bank Loan and the Second Bank Loan as at the date
        of this Lease;

32.2.4  the Standby  Documents  shall remain in full force and effect  following
        the refinancing  with such amendments to such Standby  Documents  having
        been made as may, with the approval,  or at the request,  of the Lessor,
        be required having regard to the terms of the relevant refinancing:

32.2.5  the refinancing banks or the security agent acting on their behalf shall
        adhere to the provisions of the Proceeds Deed on terms acceptable to the
        Lessor and such  changes as may be  required,  and as may be approved by
        the Lessor,  shall be made to the terms of the Proceeds  Deed to reflect
        such refinancing;

32.2.6  the refinancing shall be on terms whereby:

        (a)     the  principal  amount  shall be no greater than one hundred and
                forty seven million Dollars ($147,000,000);

        (b)     the principal amount shall amortise on a straight-line  basis to
                zero over ten (10) years; or

        (c)     the  refinancing  shall be on terms  whereby the proceeds of the
                refinancing (or part thereof) will be paid direct to the account
                of the First Security Agent to repay the First Bank Loan and/or,
                as the case  may be,  the  Second  Security  Agent to repay  the
                Second Bank Loan in full.

        The amounts  referred to in sub-clauses (a) and (b) assume that the Ship
        and the Other Ships shall all be refinanced at the same time. If in fact
        the Ship and the  Other  Ships are not all  refinanced  at the same time
        then the Lessee shall as an  additional  condition to the consent of the
        Lessor  to any  refinancing,  be  required  to agree  with the  Lessor a
        revised Dollar amount for the purpose of sub-clause (a) above; and

32.2.7  the Lessor shall be entitled to receive such  evidence and  documents of
        the kind  referred  to in Schedule 1 as may in the  Lessor's  opinion be
        appropriate  and such  favourable  legal opinions as the Lessor shall in
        its reasonable discretion require.

33      Miscellaneous

33.1    Entire agreement

        This Lease and the other Lease  Documents  contain the entire  agreement
        between  the Lessor and the Lessee  relating  to the leasing of the Ship
        and the terms and conditions of this Lease and the other Lease Documents
        shall not be varied  otherwise  than by an instrument in writing of even
        date  herewith  or  subsequent  hereto  executed  by or on behalf of the
        Lessor and the Lessee  and shall  supersede  all  previous  term  sheets
        relating thereto.

33.2    Waivers

        No failure or delay on the part of the Lessor in  exercising  any right,
        power or remedy  under  this Lease or any of the other  Lease  Documents
        shall  operate  as a waiver  thereof  nor  shall any  single or  partial
        exercise by the Lessor of any such right,  power or remedy  preclude any
        other or further  exercise  thereof or the  exercise of any other right,
        power or remedy.

33.3    Remedies cumulative

        The remedies  provided in this Lease or any of the other Lease Documents
        are cumulative and are not exclusive of any remedies provided by law.

33.4    Time of the essence

        Subject to the periods of grace  referred to in clause 26, time shall be
        of  the  essence  as  regards  the  performance  by  the  Lessee  of its
        obligations under this Lease and the other Lease Documents.

33.5    General average

        All  rights  and  liabilities  in  respect of the Ship by way of general
        average shall be for the account of the Lessee.

33.6    Partial illegality

        If any  term  or  provision  of this  Lease  or any of the  other  Lease
        Documents  or the  application  thereof to any  person or  circumstances
        shall to any extent be invalid or  unenforceable,  the remainder of this
        Lease and the other  Lease  Documents  and  application  of such term or
        provision to persons or  circumstances  (other than those as to which it
        is already invalid or  unenforceable)  shall not be affected thereby and
        each term and  provision  of this  Lease and the other  Lease  Documents
        shall be valid and be  enforceable  to the fullest  extent  permitted by
        law.

33.7    Set-off

        The  Lessee  authorises  the  Lessor  without  prejudice  to  any of the
        Lessor's  rights of set-off at law, in equity or otherwise,  at any time
        that a Relevant  Event has occurred and is continuing or when  otherwise
        permitted  under this Lease or the other  Lease  Documents  and  without
        notice  to the  Lessee  to set  off or  withhold  from  any  sum or sums
        expressed  in this  Lease  or any of the  other  Lease  Documents  to be
        payable to the  Lessee by the  Lessor any amount due and  payable to the
        Lessor  from the  Lessee  under  this  Lease or any of the  other  Lease
        Documents.  For any such  purpose the Lessor is  authorised  to purchase
        with the sums which  would but for this clause 33.7 be so payable to the
        Lessee, such other currencies as may be necessary to effect such set off
        or  withholding.  The Lessor  shall not be obliged to exercise any right
        given to it by this  clause  33.7.  The Lessor  shall  notify the Lessee
        forthwith  upon the  exercise  or  purported  exercise  of any  right of
        set-off or withholding.

33.8    Further assurance

        The Lessee undertakes that it will at its expense execute, sign, perfect
        and do any and every such further assurance,  document,  act or thing as
        in the reasonable opinion of the Lessor may be necessary or desirable to
        carry out the purpose of this Lease or any of the other Lease  Documents
        or the Standby  Documents  or protect or enforce any right of the Lessor
        hereunder or thereunder or the title of the Lessor in the Ship.

33.9    Counterparts

        This  Lease may be  entered  into the form of two or more  counterparts,
        each  executed by one of the  parties,  and,  provided  both the parties
        shall so enter into this Lease, each of the executed counterparts,  when
        duly  exchanged  or  delivered,  shall be deemed to be an original  but,
        taken together, they shall constitute one instrument.

33.10   Confidentiality

        At all times during the Lease Period,  each of the parties  hereto shall
        keep  confidential  and shall not,  without the prior written consent of
        the other party, issue any press release in relation to the transactions
        evidenced by this Lease and the other Relevant Documents, or disclose to
        any other person, the business, financial or other information contained
        in or  supplied  in  connection  with this  Lease or any other  Relevant
        Document  and the  transactions  contemplated  hereby or  thereby or any
        other agreement entered into after the date hereof by the Lessor and any
        Relevant  Party or in connection  with this Lease or any other  Relevant
        Document,  or  release  copies  or  drafts  of any such  document  which
        disclose or reveal the identity of the parties (or any of them) provided
        that (a) the Lessor will not unreasonably  withhold or delay its consent
        to any  proposed  press  release  and (b) the  parties  hereto  shall be
        entitled, without any such consent, to disclose the same:

33.10.1 in connection with any proceedings  arising out of or in connection with
        this Lease or any of the other Relevant Documents; or

33.10.2 if  required to do so by an order of a court of  competent  jurisdiction
        whether in  pursuance  of any  procedure  for  discovery of documents or
        otherwise; or

33.10.3 pursuant to any law or regulation having the force of law; or

33.10.4 to any fiscal, monetary, tax, governmental or other competent authority;
        or

33.10.5 to the  auditors,  legal,  insurance or other  professional  advisors or
        insurers or underwriters of any member of either the Lessee Group or the
        Lessor Group; or

33.10.6 if required to do so in order to obtain any permits, consents,  licences
        which any Relevant Party is required to obtain  pursuant to the Relevant
        Documents; or

33.10.7 if any of the same is or shall become publicly known otherwise than as a
        result of a breach by such party of this clause 33.10; or

33.10.8 in any manner contemplated by any of the Relevant Documents; or

33.10.9 in the case of the Lessee, to the Lessee Group and the Related Companies
        and in the case of the Lessor, to the Lessor Group provided that in each
        case the Lessee or the Lessor shall  procure that the party to whom such
        disclosure  is made shall  comply with the  requirements  of this clause
        33.10; or

33.10.10 to the First  Security  Agent or any other party to the First Bank Loan
        or to the transactions  arising in respect of the First Bank Loan or, as
        the case may be, to the Second  Security Agent or any other party to the
        Second Bank Loan or to the transactions arising in respect of the Second
        Bank Loan; or

33.10.11 in the case of the  Lessee,  to any  persons who may be involved in the
        refinancing arrangements contemplated by clause 32.

34      Governing law and jurisdiction

34.1    Law

        This Lease is  governed by and shall be  construed  in  accordance  with
        English law.

34.2    Submission to jurisdiction

        The Lessee agrees, for the benefit of the Lessor,  that any legal action
        or proceedings  in connection  with this Lease or any of the other Lease
        Documents  against the Lessee or any of its assets may be brought in the
        English courts.  The Lessee irrevocably and  unconditionally  submits to
        the  jurisdiction  of such courts and  irrevocably  and  unconditionally
        designates,  appoints  and  empowers  Golar  Management  (UK) Limited at
        present of 30 Marsh  Wall,  London E14 9TP to receive  for it and on its
        behalf  service of process  issued out of the English courts in any such
        legal action or proceedings.  The submission to such jurisdiction  shall
        not (and shall not be  construed so as to) limit the right of the Lessor
        to take  proceedings  against the Lessee in any other court of competent
        jurisdiction,  nor shall the  taking of  proceedings  in any one or more
        jurisdictions   preclude  the  taking  of   proceedings   in  any  other
        jurisdiction,  whether  concurrently  or not. The parties  further agree
        that only the courts of England  and not those of any other  State shall
        have  jurisdiction  to  determine  any claim  which the  Lessee may have
        against the Lessor  arising out of or in  connection  with this Lease or
        any of the other Lease Documents.

IN WITNESS  whereof the parties  hereto have entered into this Lease the day and
year first above written.
<PAGE>

                                   Schedule 1
                         List of documents and evidence

1       A copy certified by an officer of the Lessee or the Relevant Party to be
        a true,  complete and up-to-date  copy, of the Articles of Incorporation
        and By-Laws of the Lessee and the  constitutional  documents  of each of
        the other Relevant Parties.

2       A copy,  certified  by a Director or the  Secretary of the Lessee or the
        relevant  company  to be a true  copy,  and as being in full  force  and
        effect and not  amended or  rescinded,  of  resolutions  of the board of
        directors and, if required,  of meetings of the  shareholders of each of
        the Lessee and the other Relevant Parties:

        (a)     approving the transactions  contemplated by such of the Relevant
                Documents to which the relevant company is a party;

        (b)     authorising  a person or  persons  to  execute  on behalf of the
                relevant company such of the Relevant Documents to which it is a
                party and any notices or other  documents  to be given  pursuant
                thereto.

3       A copy certified by a Director or the Secretary of the relevant  company
        to be a true copy, and as being in full force and effect and not revoked
        or withdrawn,  of any power of attorney  issued by the relevant  company
        pursuant to the said resolutions.

4       A list,  certified as true, complete and up to date by a Director or the
        Secretary of each of the Relevant Parties of its directors and officers.

5       Evidence that all governmental and other licences, approvals,  consents,
        registrations and filings necessary for any matter or thing contemplated
        by  the   Relevant   Documents   and   for   the   legality,   validity,
        enforceability, admissibility in evidence and effectiveness thereof have
        been obtained or effected on an unconditional  basis or, if conditional,
        on a basis  approved  by the Lessor  (in its  absolute  discretion)  and
        remain in full force and effect  (or,  in the case of  effecting  of any
        registrations and filings, that arrangements  satisfactory to the Lessor
        have been made for the effecting of the same within any applicable  time
        limit).

6       A copy, certified as a true and complete copy and as being in full force
        and effect and not  amended or  rescinded,  of the  Sub-Lease  in a form
        previously approved by the Lessor.

7       A copy, certified as a true and complete copy and as being in full force
        and effect and not amended or rescinded,  of the Time Charter (including
        the Time  Charter  Novation  Agreement  and any  documents  executed  in
        connection  with the Time  Charter and which amend the terms of the Time
        Charter).

8       Copies of all classification certificates relating to the Ship including
        (without limitation) the Certificate of Financial Responsibility.

9       An original of the Letter of Credit duly executed by the LC Bank.

10      A copy of the  signature  book,  power of attorney or other  evidence of
        signing  authority  satisfactory  to the Lessor of the LC Bank  together
        with  evidence  reasonably  satisfactory  to the  Lessor  as to the  due
        approval and  authorisation  for execution,  delivery and performance by
        the LC Bank of, and the validity and enforceability against the LC Bank,
        of the Letter of Credit.

11      The Lessee Parent Guarantee duly executed by the Lessee Parent.

12      The Proceeds  Deed duly  executed by the parties  thereto other than the
        Lessor.

13      The Third  Priority Three Party Deed duly executed by the Lessee and the
        Sub-Lessee respectively.

14      A copy of the  signature  book,  power of attorney or other  evidence of
        signing authority satisfactory to the Lessor of the First Security Agent
        and  the  Second  Security  Agent  together  with  evidence   reasonably
        satisfactory to the Lessor as to the due approval and  authorisation for
        execution,  delivery and performance by the First Security Agent and the
        Second Security Agent of the Proceeds Deed.

15      The Manager's Undertaking duly executed by the Manager.

16      A letter  from each  Relevant  Party's  agent for  receipt of service of
        proceedings  referred  to in  any  of the  other  Transaction  Documents
        accepting its appointment.

17      Opinions of Holland & Knight LLP,  Conyers,  Dill & Pearman and Hunter &
        Hunter  special  legal  advisers to the Lessor on matters of the laws of
        the Republic of Liberia, Bermuda and the Cayman Islands respectively.

18      The Lessor is satisfied  that at the time of Delivery the Lessee will be
        in compliance with the provisions of clause 13.2.4.

19      Equivalent documents to those referred to in paragraphs 1, 2, 3, 4 and 5
        in relation to the Standby Purchaser.

20      Each of the  Standby  Documents  duly  executed  by each of the  parties
        thereto other than the Lessor.

21      A copy, certified as a true and complete copy and as being in full force
        and  effect  and not  amended  or  rescinded,  of the DOC  issued to the
        Operator and the SMC for the Ship.

22      Evidence that the Ship:

        (a)     maintains the  Classification  with the  Classification  Society
                free   of   all   requirements   and   recommendations   of  the
                Classification  Society  that  are  overdue  or  have  not  been
                complied with in accordance with their relevant terms; and

        (b)     is insured in accordance  with the  provisions of this Lease and
                all requirements of this Lease in respect of such insurance have
                been complied with.

23      The  Protocol of Delivery and  Acceptance  duly signed by the Lessor and
        the Lessee.

24      An insurance  report from Marsh Limited as to the  acceptability  of the
        insurances referred to in paragraph 1(b) above.

25      Evidence  that (a) the  Lessee is a wholly  owned  subsidiary  of Gotaas
        Larsen,  (b) Gotaas  Larsen is a wholly owned  subsidiary  of the Lessee
        Parent and (c) not less than twenty five percent (25%) of the issued and
        outstanding   share   capital  of  the  Lessee  Parent  is  directly  or
        indirectly, legally and beneficially owned by the Relevant Shareholder.

26      Any such further opinions as may be reasonably required by the Lessor.

27      Evidence that the Lessor's  obligations  under a guarantee dated 4 April
        2003 in favour of the Time Charterer have been irrevocably discharged.
<PAGE>

                                   Schedule 2
                         Form of Delivery Request Notice

To:      Golar Freeze (Bermuda) Limited
         c/o  Sovereign House
         298 Deansgate
         Manchester
         M3 4HH
                                                              April 2003

                           Lease dated [o] April 2003
                         relating to m.v. "GOLAR FREEZE"

We refer to the above  Lease and  hereby  give you  notice  that we wish to take
delivery of the Ship on [o].

We confirm that:

        (a)     no event or  circumstance  has occurred and is continuing  which
                constitutes a Relevant  Event, a Relevant Bank Event, a Relevant
                Bank Change of Law Event or a Relevant Bank Illegality Event;

        (b)     the representations and warranties  contained in clauses 2.1 and
                2.2 of the Lease (and so that  representation  and  warranty  in
                clause  2.1.7  shall for this  purpose  refer to the then latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause  11.1.4) and in clauses 4.1 and 4.2 of the Lessee  Parent
                Guarantee (and so that the representation and warranty in clause
                4.1.6  thereof  shall for this purpose  refer to the then latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause 5.1.4 thereof) are true and correct at the date hereof as
                if made with respect to the facts and circumstances  existing at
                such date; and

        (c)     the  leasing  of the Ship in  accordance  with the Lease will be
                within our  corporate  powers,  has been validly  authorised  by
                appropriate corporate action and will not cause any limit on our
                borrowings (whether imposed by statute, regulation, agreement or
                otherwise) to be exceeded.

Words and  expressions  defined in the Lease shall have the same  meanings  when
used herein.

                              For and on behalf of
                         GOLAR GAS HOLDING COMPANY, INC.
<PAGE>

                                   Schedule 3
             Form of Protocol of Delivery and Acceptance under Lease

                               m.v. "GOLAR FREEZE"

It is  hereby  certified  that,  pursuant  to a lease  dated o April  2003  (the
"Lease") and made between (1) Golar Freeze  (Bermuda)  Limited (whose name is to
be changed to Sovereign Freeze Limited) (the "Lessor") and (2) Golar Gas Holding
Company, Inc. (the "Lessee") in respect of the m.v. "GOLAR FREEZE" (the "Ship"),
registered under British flag with and on the basis of the confirmation given by
the Lessee below the Ship was delivered by the Lessor to the Lessee and accepted
by the Lessee  from the  Lessor at [o] hours  [GMT] on [o] April 2003 at [insert
location] under, and in accordance with the terms and conditions of, the Lease.

The Lessee hereby confirms that as at the date hereof:

        (a)     no Relevant Event has occurred and is continuing; and

        (b)     the  representations  and  warranties set out in clauses 2.1 and
                2.2 of the Lease and  clauses  4.1 and 4.2 of the Lessee  Parent
                Guarantee  are true and correct as if each was made with respect
                to the facts and circumstances existing at such time.

Dated:  o April 2003

                              For and on behalf of
                    Golar Freeze (Bermuda) Limited as Lessor

                       By: ..............................

                              For and on behalf of
                    Golar Gas Holding Company, Inc. as Lessee

                       By: ..............................
<PAGE>

                                   Schedule 4
                               Financial Schedule

                       FINANCIAL SCHEDULE - (Golar Freeze)

1       Definitions and Interpretations

1.1     Definitions

        In this  Schedule  words and  expressions  defined in clause 1.2 of this
        Lease  shall have the  meanings  ascribed to them in such clause and the
        following  expressions  shall have the  following  meanings when used in
        this Schedule and this Lease:

        "Accountancy  Rental Earnings" means  "accountancy  rental earnings" for
        the  purposes  of  Schedule 12 to the Finance Act 1997 in respect of the
        leasing of the Ship under this Lease;

        "Accountancy  Rental Excess" means  "accountancy  rental excess" for the
        purposes  of  Schedule  12 to the  Finance  Act 1997 in  respect  of the
        leasing of the Ship under this Lease;

        "Additional  Security  Table" means any Security  Table  prepared by the
        Lessor pursuant to paragraph 9.2;

        "Adjustment Date" means, for any Adjustment Period, the last day of such
        Adjustment Period;

        "Adjustment Period" means:

        (a)     the period commencing on the Delivery Date and ending on 14 July
                2003;

        (b)     thereafter and until the Tax Payment Date immediately  preceding
                the Primary Period End Date, each successive  period  commencing
                on the last day of the immediately  preceding  Adjustment Period
                and ending on the next succeeding Tax Payment Date;

        (c)     thereafter  the  period  commencing  on  the  Tax  Payment  Date
                immediately  preceding the Primary Period End Date and ending on
                the Primary Period End Date;

        (d)     thereafter the period  commencing on the Primary Period End Date
                and ending on the immediately succeeding Tax Payment Date; and

        (e)     thereafter each successive  period commencing on the last day of
                the immediately  preceding  Adjustment  Period and ending on the
                next succeeding Tax Payment Date;

        PROVIDED THAT:

        (i)     if any Adjustment  Period would  otherwise end on a day which is
                not a Banking  Day then the last day of that  Adjustment  Period
                shall (taking into account any substitution  referred to in (ii)
                and  (iii)  below) be the  immediately  succeeding  Banking  Day
                unless such  Banking Day falls in the next  calendar  month,  in
                which case the last day of that Adjustment  Period should be the
                immediately preceding Banking Day;

        (ii)    if the  Termination  Payment  Date  falls  otherwise  than on an
                Adjustment  Date the Adjustment  Period which would otherwise be
                current  on that date  shall be  treated  as coming to an end on
                that date and an Adjustment Period shall be treated as beginning
                on that date and ending on the next succeeding Tax Payment Date;

        (iii)   the  Adjustment  Period which would  otherwise be current on the
                Final  Date in  relation  to any Cash Flow  shall be  treated as
                having come to an end on that date and the period ending on such
                date  shall be the last  Adjustment  Period  so far as that Cash
                Flow is concerned;

        (iv)    if the  Lessor  pays  or  receives  any  amount  which  is to be
                reflected  in a Cash  Flow on a day  which  does not fall on the
                first day of an  Adjustment  Period  (the "Basis  Period"),  the
                period (the  "Remaining  Period") from and including the date on
                which  the  Lessor  pays or  receives  any  such  amount  to and
                including  the last day of the then  current  Basis Period shall
                constitute  an  Adjustment  Period for that  element only of the
                Notional  Capital  Outstanding and the rate of interest  applied
                during the Basis  Period  shall be the rate  applicable  to such
                part  of  the  Notional  Capital  Outstanding  as is  funded  or
                invested for the Basis  Period and the rate of interest  applied
                during the Remaining Period shall be the rate applicable to such
                part  of  the  Notional  Capital  Outstanding  as is  funded  or
                invested for the Remaining Period;

        (v)     interest  calculated by reference to an Adjustment  Period shall
                be calculated from and including the first day of such period to
                but excluding the last day thereof;

        "After-Tax  Interest Rate" means, at any relevant time, a rate per annum
        calculated in accordance with the following formula:

                  ATR = ((PTR x [1-TR]) + PR)

        Where:

        ATR     is the After-Tax Interest Rate (expressed as a decimal);

        PTR     is the Assumed Rate  (expressed  as a decimal) as at the Primary
                Period End Date;

        TR      is the Corporation Tax Applicable Rate for the Accounting Period
                of the  Lessor  in  which  the  above  Applicable  Rate is to be
                applied (expressed as a decimal); and

        PR      is the Percentage Return (expressed as a decimal);

        "Applicable  Cash Flow"  means the Initial  Cash Flow,  or any Cash Flow
        prepared by the Lessor pursuant to paragraph 4;

        "Applicable  Rate" means, in relation to any Adjustment  Period or other
        relevant period:

        (a)     where  applied  to  a  negative   balance  of  Notional  Capital
                Outstanding,  the  aggregate of LIBOR and the Reserve Asset Rate
                on the first day of that period, and

        (b)     where  applied  to  a  positive   balance  of  Notional  Capital
                Outstanding, LIBID on the first day of that period,

        "Applicable  Security  Table"  means the Initial  Security  Table or any
        Security Table prepared by the Lessor pursuant to paragraph 9.3;

        "Applicable  Tax Report"  means the Initial Tax Report or any Tax Report
        prepared by the Lessor pursuant to paragraph 4.1;

        "Arrangement  Fee"  means the fee of an amount  equal to zero point five
        per cent (0.5%) of the Ship Cost  payable by the Lessor to the  Arranger
        in  accordance  with the letter of  today's  date from the Lessor to the
        Arranger;

        "Assumed Rate" means, subject to paragraph 6.1.4(d),  in relation to any
        Adjustment Period or other relevant period:

        (a)     in  respect of  Notional  Capital  Outstanding  where a negative
                amount the rate of five point  three five per cent  (5.35%)  per
                annum,  which Assumed Rate shall include an amount in respect of
                the Reserve Asset Rate equal to zero per cent (0%); or

        (b)     in  respect of  Notional  Capital  Outstanding  where a positive
                amount the rate of five point two two five per cent (5.225%) per
                annum;

        "Assumptions"  means  the  Variable  Assumptions  and  the  Non-Variable
        Assumptions  set out in Appendix 1 to this  Schedule,  all of which were
        taken into account in preparing the Initial Cash Flow;

        "Base  Currency"  has  the  meaning  attributed  to  that  term  in  the
        definition of "Spot Exchange Rate";

        "Broken Funding Costs" means an amount equal to the loss (if any) to the
        Lessor arising by virtue of any payment being made or received hereunder
        otherwise  than  on the  last  day of an  Adjustment  Period  and in the
        amounts specified herein, the amount of such loss being deemed to be the
        amount  (if any) by which  (i) the cost to the  Lessor of  funding  that
        payment in the London  Inter-Bank  Market at LIBID  determined as at the
        date on which such payment is made or received for the unexpired portion
        of that  Adjustment  Period  exceeds  (ii) the amount of interest  which
        would have  accrued on the amount of such payment  during the  unexpired
        portion of that  Adjustment  Period at the Applicable Rate as determined
        at the commencement of such Adjustment Period;

        "Broken Funding Gains" means an amount equal to the gain (if any) to the
        Lessor arising by virtue of any payment being made or received hereunder
        otherwise  than  on the  last  day of an  Adjustment  Period  and in the
        amounts specified herein, the amount of such gain being deemed to be the
        amount (if any) by which (i) the  amount of  interest  which  would have
        accrued on the amount of such payment  during the  unexpired  portion of
        that  Adjustment  Period at the  Applicable  Rate as  determined  at the
        commencement  of such  Adjustment  Period  exceeds  (ii) the cost to the
        Lessor of funding that payment in the London  Inter-Bank Market at LIBID
        determined  as at the date on which such payment is made or received for
        the unexpired portion of that Adjustment Period;

        "Capital  Allowances"  means any  allowance  made in  respect of capital
        expenditure  on  machinery or plant under the CAA and/or under any other
        enactment  for the time  being  in force  providing  for the  making  of
        similar  allowances  and/or giving similar relief whether  introduced in
        addition to or as a replacement for the same;

        "Cash Flow" means any cash flow  prepared  for the  purposes  hereof and
        required to be provided by the Lessor to the Lessee hereunder;

        "Consolidated  Group Accounts" means any consolidated group accounts for
        the  purposes  of  Schedule  12 to the  Finance Act 1997 of any group of
        companies of which the Lessor is a member;

        "Corporation  Tax Applicable  Rate" means, in relation to any Accounting
        Period,  the  effective  rate of  Corporation  Tax  which is or would be
        applicable (if there were such profits and ignoring for this purpose any
        special rate  applicable to small  companies and to any special class of
        companies  unless the  company  concerned  is itself  such a company) to
        taxable profits arising in such Accounting Period.  Such rate is to be a
        weighted average  calculated on a daily basis where different  statutory
        rates  apply  for  financial  years  which  are  not  the  same  as such
        Accounting Period. If, at the date at which any calculation hereunder is
        to be made, the  Corporation  Tax  Applicable  Rate is not known because
        Corporation Tax rates are fixed retrospectively,  such calculation shall
        (without  prejudice to any  provision of this Lease  providing  for such
        calculation to be adjusted once the rate of Corporation Tax is known) be
        made on the basis that the rate of  Corporation  Tax last fixed will not
        change  unless  there has been an official  announcement  of a change in
        such rate in which case it shall be made on the basis that the rate will
        change in accordance with such announcement;

        "Cumulative Accountancy Rental Excess" means the "cumulative accountancy
        rental  excess" for the  purposes of Schedule 12 to the Finance Act 1997
        in respect of the leasing of the Ship under this Lease;

        "Cumulative  Normal Rental Excess" means the  "cumulative  normal rental
        excess"  for the  purposes  of  Schedule  12 to the  Finance Act 1997 in
        respect of the leasing of the Ship under this Lease;

        "Determination" means any determination,  calculation,  recalculation or
        quantification  made in accordance  with  paragraph 11 of this Financial
        Schedule and  "Determined",  "Determination"  and  "Determine"  shall be
        construed accordingly;

        "Disposal  Value" means  disposal  value for the purposes of sections 61
        and 62 of the CAA;

        "Economically  Burdensome"  means any change in any Variable  Assumption
        which results or is likely to result in the net present value benefit of
        the Lease to the  Lessee  over the  Primary  Period  anticipated  at the
        Delivery  Date and as notified by the Lessee in writing to the Lessor on
        or before the Delivery Date decreasing by more than thirty five per cent
        (35%);

        "Effective  Date" means the date falling ten (10) Banking Days after the
        date on which a new  Applicable  Cash Flow is prepared and  delivered to
        the Lessee pursuant to paragraph 4.2;

        "Event"  means,  where  paragraph 4.9 applies,  any change in any of the
        Variable Assumptions or the Termination Assumptions;

        "Extra Security  Amounts" means in respect of any Security  Period,  the
        amount,  if any, set out in relation to that Security Period in Appendix
        6;

        "Final Date" means, in relation to any Cash Flow:

        (a)     except where paragraph 6.4 applies, the first anniversary of the
                date on which the last  payment of  Corporation  Tax is shown by
                such Cash Flow to be paid or  relieved  by the Lessor in respect
                of:

                (i)     the Final  Rental in the case of any Cash Flow  prepared
                        for the purpose of determining the Primary Rentals; or

                (ii)    the  Termination  Sum or  the  amount  of  any  revision
                        thereto  (as  appropriate)  in the case of any Cash Flow
                        prepared for the purpose of determining the same; and

        (b)     where  paragraph  6.4.2  applies at any time  before the Primary
                Period  End  Date,  the  date  on  which  the  last  payment  of
                Corporation  Tax is shown by the  Applicable  Cash Flow prepared
                pursuant thereto to be paid or relieved by the Lessor in respect
                of the  Accounting  Period of the  Lessor in which the  fortieth
                (40th)  anniversary of the Delivery Date falls;  and in relation
                to the Applicable  Cash Flow prepared under  paragraph 6.4.2 for
                the Primary Period End Date, the Accounting Period of the Lessor
                in which the Primary Period End Date falls; and

        (c)     where paragraph 6.4.2 applies on the expiry by effluxion of time
                of the Lease Period on the Primary  Period End Date, the date on
                which  the  last  payment  of  Corporation  Tax is  shown by the
                Applicable  Cash Flow  prepared  pursuant  thereto to be paid or
                relieved  by the Lessor in respect of the  Accounting  Period of
                the Lessor in which the first  anniversary of the Primary Period
                End Date falls;

        "Final Rental" means the Rental referred to in paragraph 2.1.5;

        "First Accounting  Period" has the meaning given in Variable  Assumption
        1.2;

        "First UK  Meeting  Date" has the  meaning  given to it in  Non-Variable
        Assumption 2.16;

        "Further  Termination  Cash  Flow"  means  any  Cash  Flow  produced  in
        accordance with paragraph 7;

        "Generally Accepted  Accounting  Principles" means (i) insofar as any of
        the same are  applicable  to the  Lessor or any  Holding  Company of the
        Lessor, the accounting requirements of the Companies Acts, statements of
        standard  accounting  practice,  financial  reporting  standards and any
        other accounting standards having the like effect of financial reporting
        standards  issued by the Accounting  Standards Board Limited  (including
        abstracts  issued by the  Urgent  Issues  Task  Force of the  Accounting
        Standards  Board Limited) or any other body from time to time prescribed
        by  regulations  pursuant to section 256 of the Companies Act 1985,  and
        (ii) any other  accounting  principle  observance of which by the Lessor
        (or any  Holding  Company of the  Lessor) is required in order to ensure
        that its  accounts  and any  Consolidated  Group  Accounts  comply  with
        applicable  law  and  with  the  regulations  of  any   governmental  or
        regulatory body compliance with which is customary by leasing  companies
        generally (or, in relation to any Holding  Company of the Lessor,  banks
        generally)  or which  the  Auditors  advise  the  Lessor in  writing  is
        necessary to ensure that the Auditors can give an unqualified  report on
        the Lessor's or, as the case may be, any Consolidated Group Accounts;

        "Group  Relief"  shall have the meaning  attributed  thereto by Variable
        Assumption 1.11.2

        "Group Relief  Payment" means any payment taken to have been received by
        the Lessor in accordance with Non-Variable Assumption 2.6;

        "Group Relief  Receipt" means, in respect of each Past Tax Payment Date,
        the positive  amount (if any) shown  opposite that date in the column of
        the Applicable Cash Flow headed "Tax";

        "Group Relief  Recipient"  means the Lessor Agent or any Holding Company
        or Subsidiary of the Lessor Agent being a company which  presently draws
        accounts up to 31st December in each year and which pays Corporation Tax
        on  profits  arising in any  Accounting  Period in  accordance  with the
        Corporation Tax (Instalment Payments) Regulations 1998;

        "Initial Cash Flow" means the Cash Flow  printout  annexed as Appendix 2
        to this Schedule;

        "Initial  Insurance  Premium" means the insurance premium payable by the
        Lessor in respect of the first year of operation of the Ship and as more
        fully described in Variable Assumption 1.38;

        "Initial Security Table" means the Security Table prepared in accordance
        with paragraph 9.1 and annexed as Appendix 5;

        "Initial Tax Report" means the Tax Report  annexed as Appendix 3 to this
        Schedule;

        "Inland Revenue Terms" means the basis on which,  from time to time, the
        Inland  Revenue  charge  interest on underpaid  Corporation  Tax and pay
        interest on overpaid  Corporation  Tax and shall include any penalty due
        as a result of an underpayment of Corporation Tax;

        "Interest  Adjustments"  means the amounts calculated in accordance with
        paragraph 5.1.1 and payable in accordance with paragraph 5.1.2;

        "Irrecoverable VAT" means any amounts paid or payable by or on behalf of
        the Lessor in respect of Value Added Tax under or as contemplated by any
        of the  Transaction  Documents  to the  extent  that  the  Lessor  shall
        determine  that the Lessor,  or if the Lessor is a member of a group for
        Value Added Tax purposes, the representative member, has not or will not
        receive a credit (whether by way of credit or repayment) for that amount
        as "input  tax" (as that  expression  is defined in  sub-section  (1) of
        Section  24 of VATA)  under  Sections  25 and 26 of VATA (nor  receive a
        credit for it under any similar or equivalent legislation);

        "Lease Fee" means the fee in an amount of  (pound)120,745.15  payable on
        the Delivery Date by the Lessor to the Lessor Agent;

        "Lessor's  Professional  Costs"  means the Legal Fee  together  with the
        amount of fees and  disbursements  paid by the  Lessor  to the  Lessor's
        insurance advisers,  accountants and any other professional  adviser the
        Lessor shall  consult in relation to the  preparation,  negotiation  and
        completion of the Transaction Documents;

        "LIBID"  means,  in  relation  to any  period  for which  LIBID is to be
        determined, LIBOR for that period less one-eighth (1/8) of one per cent;

        "LIBOR"  means  in  relation  to any  period  for  which  LIBOR is to be
        determined:

        (a)     if the  relevant  period is equal to or greater  than one month,
                the  rate  for  Sterling  deposits  for  the  number  of  months
                comprised  in the  relevant  period  which  rates  appear on the
                display  designated  as  "Reuters  Page  LIBOR 01" on the Reuter
                Monitor  Money Rates  Service as at or about 11.00 a.m.  (London
                time) on the date on which the relevant period commences or such
                other  page  as may  replace  "Reuters  Page  LIBOR  01" on that
                service  or,  if  there  is no  such  replacement  page  on that
                service,  the page on any other service  displaying  the rate so
                designated  Provided  that if the  period is more than one month
                but not a  whole  number  of  months,  "LIBOR"  shall  mean  the
                interpolated  rate  calculated  by  reference  to LIBOR  for the
                number of months rounded down or up to the nearest whole number;
                or

        (b)     if the  relevant  period  is equal to or more  than one week and
                there  is no  such  page  on  such  service  as  referred  to in
                sub-paragraph  (a) above, or if the relevant period is less than
                one week, the rate per annum reasonably determined by the Lessor
                Agent to be the average (rounded  upwards,  if necessary to five
                decimal  places) of the rates per annum offered by leading banks
                in the London  Interbank  Market to other  leading  banks in the
                London  Interbank  Market for  deposits in Sterling for a period
                equal to, or as near as  possible  equal to,  that  period at or
                about 11.00 a.m. (London time),

        and for any  period in  respect of which  LIBOR is to be  determined  in
        relation  to  a  currency  other  than  Sterling,  the  rate  per  annum
        reasonably  determined  by the Lessor  Agent to be the average  (rounded
        upwards,  if necessary,  to five decimal places) of the rates offered by
        leading  banks in the London  Interbank  Market to leading  banks in the
        London Interbank Market for deposits in that currency for a period equal
        to, or as near as possibly  equal to, that period at or about 11.00 a.m.
        (London time) two Banking Days prior to the  commencement of that period
        or, in any such case, such other rate as may be agreed in writing by the
        Lessor and the Lessee;

        "Other  Currency"  has  the  meaning  attributed  to  that  term  in the
        definition of "Spot Exchange Rate";

        "Non-Variable  Assumptions"  means  the  assumptions  listed  as such in
        paragraph 2 of Appendix 1;

        "Normal Rent" means the "normal rent" for the purposes of Schedule 12 to
        the  Finance  Act 1997 in respect of the  leasing of the Ship under this
        Lease;

        "Normal Rental Excess" means the "normal rental excess" for the purposes
        of  Schedule 12 to the Finance Act 1997 in respect of the leasing of the
        Ship under this Lease;

        "Notional Capital  Outstanding"  means for any day, the sum (as the same
        may be adjusted  pursuant to the provisions of this  Schedule)  shown in
        the column of any Applicable Cash Flow headed "NCI";

        "Past Tax Payment  Date" means any Tax Payment Date  falling  before the
        Effective Date;

        "Percentage  Return"  means,  subject to  paragraph  4.8,  the  Lessor's
        after-tax  nominal  annual  percentage  rate of return of zero point two
        eight four four percent (0.2844%);

        "Prepaid  Rental"  means  the  amount   determined  in  accordance  with
        paragraph 8.3.5;

        "Prepayment"  means any election by the Lessee to make a  prepayment  of
        Primary Rental pursuant to clause 25.2.1(c);

        "Prepayment Amount" has the meaning given in paragraph 8.2;

        "Prepayment  Cash  Flow"  means the Cash  Flow  produced  by the  Lessor
        pursuant to paragraph 8.3;

        "Prepayment  Date" means if the Lessee elects to make a Prepayment,  the
        date falling not less than thirty (30) days after  receipt of the notice
        from the Lessor  referred to in clause  25.2.1,  unless such  Prepayment
        Date would otherwise fall on a day which is not a Banking Day, then such
        Prepayment Date shall be the immediately preceding Banking Day;

        "Primary  Period  End  Date"  means  the  twentieth  anniversary  of the
        Delivery Date;

        "Primary  Rental"  means the  Rental  payable  pursuant  to clause 7 and
        paragraph  2.1 in respect of the  leasing of the Ship during the Primary
        Period;

        "Primary  Rental Date" means 14 July 2003, each Tax Payment Date falling
        thereafter  until  (and  including)  the Tax  Payment  Date  immediately
        preceding the Primary Period End Date, and the Primary Period End Date;

        "Purchaser" means Sovereign Finance plc;

        "Relevant  Amount" means,  in relation to any Past Tax Payment Date, the
        sum of:

        (a)     the Tax Payment or Group Relief  Receipt (as the case may be) in
                respect of that Past Tax Payment Date; and

        (b)     the Revised Tax Payment or Revised Group Relief  Receipt (as the
                case may be) in respect of that Past Tax Payment Date,

        and provided  that for the  purposes  only of  calculating  any Relevant
        Amount,  the amount of any  Revised  Tax  Payment  and the amount of any
        Group Relief  Receipt shall be expressed as a negative  amount,  and the
        amount of any Tax  Payment and the amount of any  Revised  Group  Relief
        Receipt shall be expressed as a positive amount;

        "Rental"  means each amount  calculated  and payable in accordance  with
        this Schedule;

        "Rental Date" means each Primary Rental Date and each  Secondary  Rental
        Date;

        "Reserve  Asset  Rate"  means the rate  determined  in  accordance  with
        Appendix 4 to this Schedule;

        "Revised Group Relief Receipt" means, in respect of any Past Tax Payment
        Date, the amount of the Group Relief Payment which the Lessor would have
        been  assumed (on the basis of the  Variable  Assumptions  as revised to
        take the Event into  account) to have  received on that Past Tax Payment
        Date had the Event occurred before that Past Tax Payment Date;

        "Revised Tax Payment"  means,  in respect of any Past Tax Payment  Date,
        the amount of  Corporation  Tax which the Lessor would have been assumed
        (on the basis of the Variable  Assumptions  as revised to take the Event
        into  account) to have paid on that Past Tax Payment  Date had the Event
        occurred before that Past Tax Payment Date;

        "Risk Asset Weighting"  means, in relation to any form of security,  the
        counterparty  and/or  security  weightings  (expressed  as  percentages)
        attributable  from  time to time  to so  much  of the  transactions  and
        matters contemplated by the Transaction  Documents as is secured by such
        security  for the purpose of  determining  the capital  which the Lessor
        Agent or any other relevant  member of the Lessor's Group is required to
        maintain by the Financial  Services  Authority,  the Bank of England (or
        any other institution  requiring the Bank to maintain a particular level
        of capital,  where the Lessor Agent or any other relevant  member of the
        Lessor's   Group  is  obliged  or   accustomed   to  comply   with  such
        requirement);

        "RPI"  means  the  General  Index of Retail  Prices,  being  that  index
        calculated  for the time  being by the  Central  Statistical  Office  at
        intervals of approximately one month on one date in each and every month
        of each and every year and representing the average change from month to
        month  in  prices  of goods  and  services  bought  by the  majority  of
        consumers in Great  Britain,  or such similar  index as may from time to
        time replace the General Index of Retail Prices and the General Index of
        Retail Prices for any date shall be the most recently  published General
        Index of Retail Prices (or other similar index);

        "Sale Assumptions" has the meaning given in paragraph 6.1.5;

        "Secondary Rental" has the meaning given in paragraph 2.2;

        "Secondary  Rental  Date"  means any date on which  Secondary  Rental is
        payable;

        "Security Period" means:

        (a)     the period commencing on the Delivery Date and ending on 14 July
                2003;

        (b)     thereafter and until the Tax Payment Date immediately  preceding
                the Primary Period End Date, each successive  period  commencing
                on  the  day   immediately   succeeding  the  last  day  of  the
                immediately  preceding  Security  Period  and ending on the next
                succeeding Tax Payment Date;

        (c)     thereafter,   the  period  commencing  on  the  day  immediately
                succeeding  the Tax Payment Date  referred to in (b) above,  and
                ending on the Primary Period End Date;

        (d)     thereafter, in the event that any Potential Liabilities have not
                been  agreed  in  accordance   with  clause  25.5,   the  period
                commencing  on the  Primary  Period  End Date and  ending on the
                immediately succeeding Tax Payment Date;

        (e)     thereafter,   each  successive  period  commencing  on  the  day
                immediately succeeding the last day of the immediately preceding
                Security  Period and ending on the next  succeeding  Tax Payment
                Date  until  such time as the  Potential  Liabilities  have been
                agreed in accordance with clause 25.5,

        PROVIDED THAT if any Security  Period would otherwise end on a day which
        is not a Banking Day, then the last day of that Security Period shall be
        the immediately succeeding Banking Day unless that day falls in the next
        calendar  month,  in which  case it shall be the  immediately  preceding
        Banking Day;

        "Security  Table" means any table prepared in accordance  with paragraph
        9;

        "Security  Termination  Sum"  means,  in  respect  of  each  day in each
        Security  Period,  each Termination Sum which would appear in the column
        of  a  Termination  Cash  Flow  headed   "Termination   Sum"  were  such
        Termination  Cash Flow to be prepared in accordance  with  paragraph 6.1
        and assuming a termination of the Lease in accordance with clause 3.3 on
        each and every day of such Security Period;

        "Share  Acquisition   Documents"  means  the  share  sale  and  purchase
        agreement  entered into on 7 April 2003 between the Lessee as Vendor and
        the Lessor Agent as Purchaser and any and all other  documents  pursuant
        to which the Lessor Agent acquired the share capital of the Lessor;

        "Ship Cost" means the lowest of:

        (a)     the Sterling Equivalent of the expenditure  incurred on the Ship
                by Golar Freeze Inc.;

        (b)     the Sterling  Equivalent of the price paid by the Lessor for the
                Ship to Golar Freeze Inc.; or

        (c)     the fair  market  value of the Vessel as at the First UK Meeting
                Date,  as shown in the  independent  valuation  provided  by the
                Lessee;

        "Spot  Exchange  Rate"  for  any  day and  for  the  purchase  with,  or
        conversion from any currency (the "Base Currency") into another currency
        (the "Other  Currency")  the rate  determined  by the Lessor as the rate
        quoted by the Lessor  Agent in  accordance  with its usual  practice  at
        which the Lessor Agent is able to purchase the Other  Currency  with the
        Base  Currency in London at or about  10.00am Two (2) Banking Days prior
        to such day for delivery on such day and the Lessor's  determination  of
        any such rate  shall be  conclusive  and  binding  on the Lessee for all
        purposes;

        "Sterling  Equivalent"  on any  day for any  amount  denominated  (a) in
        Sterling,  means  that  amount or (b) in a currency  (as Base  Currency)
        other  than  Sterling  (as  Other  Currency),  means the  equivalent  in
        Sterling of that amount,  calculated  by  converting  that Base Currency
        amount into sterling at the Spot Exchange Rate for that day;

        "Tax Authority"  means the Inland Revenue,  H.M. Customs & Excise or any
        other  revenue,  customs,  fiscal,   governmental,   statutory,   state,
        provincial,  local governmental or municipal authority,  body or person,
        whether of the United Kingdom or elsewhere;

        "Tax Loss" means,  for any Accounting  Period of the Lessor,  the result
        (when the same is a negative  figure) of the aggregate of (i) the amount
        relating to Rentals which (in accordance with Variable Assumption 1.10.2
        as the same may be varied  from time to time) the Lessor is  required to
        bring  into  account  for tax  purposes  in such  period;  and  (ii) any
        interest  notionally  receivable by the Lessor on daily balances  during
        the relevant  period in respect of the Lessor's  notional  deposit of an
        amount  equal to the surplus  funds  (represented  by  Notional  Capital
        Outstanding  when that is a positive  figure)  assumed to be invested by
        the  Lessor in  accordance  with  Non-Variable  Assumption  2.1 (if such
        receipts were actual  rather than  notional) to the extent that the same
        would be taxable in such period (the Lessor  preparing its  computations
        in accordance with Variable Assumption 1.10.2, as the same may be varied
        from time to time) less the aggregate of (i) Capital  Allowances assumed
        to be  available  to the Lessor  for that  period in respect of the Ship
        Cost;  (ii) any  interest  notionally  payable  by the  Lessor  on daily
        balances during the relevant period in respect of the Lessor's  notional
        borrowing of amounts equal to negative  balances of the Notional Capital
        Outstanding  from time to time  assumed to be  borrowed by the Lessor in
        accordance with  Non-Variable  Assumption 2.1 to the extent that if such
        interest  payments  were  actual  rather  than  notional  the same would
        qualify  for tax  relief  in  such  period  (the  Lessor  preparing  its
        computations in accordance with Variable  Assumptions  1.10.2 and 1.8 as
        the same may be varied from time to time);  and (iii) the Lease Fee, the
        Arrangement  Fee,  the  Lessor's  Professional  Costs  and  the  Initial
        Insurance  Premium  to  the  extent  that  the  same  are  allowable  in
        accordance  with Variable  Assumptions  1.19, 1.20 and 1.38 (as the same
        may be varied from time to time);

        "Tax  Payment"  means,  in respect of each Past Tax  Payment  Date,  the
        negative  amount (if any) shown  opposite that date in the column of the
        Applicable Cash Flow headed "Tax";

        "Tax  Payment  Date"  means each of the dates  referred  to in  Variable
        Assumption 1.12;

        "Tax Report" means any report  prepared by the Lessor in accordance with
        paragraph 3.2 or 4.1 hereof;

        "Tax  System"  means the law and practice  (of general  application)  in
        relation to Corporation Tax;

        "Tax Written Down Value" means,  in relation to an Accounting  Period of
        the Lessor, the aggregate Ship Cost treated as incurred by the Lessor in
        that  and  all  previous   Accounting  Periods  qualifying  for  Capital
        Allowances (the Lessor preparing its computations in accordance with the
        Variable Assumptions,  as the same may be varied from time to time) less
        the aggregate of all Capital Allowances made to the Lessor in respect of
        the Ship Cost in all previous  Accounting  Periods of the Lessor and any
        Disposal Value which the Lessor is required to bring into account in any
        previous Accounting Period of the Lessor;

        "Termination Assumptions" means the assumptions to be taken into account
        in preparing the Termination  Cash Flow or any Further  Termination Cash
        Flow and which are set out in  paragraph  6.1.4 (as varied  from time to
        time in accordance herewith);

        "Termination  Cash Flow" means the Cash Flow produced in accordance with
        paragraph 6.1;

        "Termination Payment Date" means:

        (a)     where the leasing of the Ship to the Lessee terminates following
                the occurrence of any  Termination  Event pursuant to clause 27,
                the date specified in the notice referred to therein;

        (b)     in the case of a  voluntary  termination  of the  leasing of the
                Ship  pursuant  to clause  3.3,  the date upon which the Ship is
                delivered to and accepted by a purchaser following a sale of the
                Ship pursuant to clause 3.4;

        (c)     where the  leasing of the Ship  terminates  by reason of a Total
                Loss pursuant to clause 22, the Total Loss Payment Date;

        "Termination Sum" has the meaning given in paragraph 6.1.4(e);

        "Total Security Amount" means, in respect of each Security  Period,  the
        highest Security Termination Sum for that Security Period; and

        "Variable Assumptions" means the assumptions listed as such in paragraph
        1 of Appendix 1 (as varied from time to time in accordance herewith).

2       Rentals

2.1     Primary Rental

2.1.1   Subject  to the terms of this  Lease the  Lessee  shall pay the  Primary
        Rentals to the Lessor on the Primary Rental Dates.

2.1.2   The  Primary  Rental  payable on each  Primary  Rental Date shall be the
        amount shown in the Applicable Cash Flow in the column headed  "Rentals"
        opposite that Primary Rental Date.

2.1.3   The Primary  Rental payable under this paragraph 2.1 shall be payable in
        accordance  with clause 7, the first Primary Rental being paid in arrear
        in respect of the period from the  Delivery  Date until 14 July 2003 and
        each subsequent  Primary Rental being payable on each subsequent Primary
        Rental  Date in arrear in  respect of the  period  from the  immediately
        preceding  Primary  Rental Date until the  Primary  Rental Date on which
        such  Primary  Rental is due until the Primary  Rental Date  immediately
        preceding the Primary Period End Date, the Primary Rental payable on the
        Primary  Period  End  Date  being  in  respect  of the  period  from the
        immediately  preceding  Primary Rental Date until the Primary Period End
        Date.

2.1.4   Each instalment of Primary Rental payable under paragraph 2.1.3 shall be
        subject to adjustment in the manner specified in this Schedule.

2.1.5   The Final  Rental shall  (subject to  paragraph  4.6 and except where no
        other  Primary  Rental is capable of  variation)  be an amount  equal to
        forty per cent (40%) of the Ship Cost and shall be payable in respect of
        and shall be  payable  on the  Primary  Period  End Date as shown in the
        Initial  Cash Flow in the column  headed  "Final  Rental"  opposite  the
        Primary Period End Date.

2.2     Secondary Rental

        In respect  of the  Secondary  Period the Lessee  shall on the first day
        following the Primary  Period End Date and on each  anniversary  thereof
        during  the  Secondary  Period  pay to the  Lessor a Rental  ("Secondary
        Rental")  annually in advance equal to zero point one per cent (0.1%) of
        the Ship Cost.

2.3     Early Termination and Prepayment

        If a Primary Rental falls due on the date for which the  Termination Sum
        is  payable,  the Primary  Rental  falling due on that date shall not be
        payable.  If a  Primary  Rental  falls  due on the  date for  which  any
        Prepayment  Amount is payable,  the Primary  Rental  falling due on that
        date shall not be payable (but without prejudice to paragraph 8).

3       Initial Cash Flow and Initial Tax Report

3.1     Initial Cash Flow

        The Lessor has prepared the Initial Cash Flow:

3.1.1   on the basis of the Assumptions;

3.1.2   in accordance with the Initial Tax Report;

3.1.3   to ensure that Primary  Rental payable in paragraph  2.1.3  increases by
        five per cent (5%) per annum and accordingly:

        (a)     that the Primary Rental payable under paragraph 2.1.3 on 14 July
                2004 is 105% of the immediately preceding Primary Rental; and

        (b)     that the Primary Rental payable under paragraph 2.1.3 on each 14
                July  falling  after 14 July 2004 and before the Primary  Period
                End Date is 105% of the Primary Rental  payable under  paragraph
                2.1.3 on the immediately preceding 14 July;

3.1.4   to procure  that,  subject to the  payment by the Lessee of the  Primary
        Rentals on each Primary Rental Date, the Notional Capital Outstanding on
        the Final Date will be zero or as near thereto as may be;

3.2     Initial Tax Report

        The  Initial  Tax Report has been  prepared,  and any revised Tax Report
        prepared  pursuant to  paragraph  4.1 shall be prepared to show,  on the
        basis of  Variable  Assumptions  1.7 and 1.11 (as the same may be varied
        from time to time),  how the taxable  income  arising to the Lessor from
        the  transactions  contemplated  by the  Transaction  Documents  will be
        calculated in the Accounting Period of the Lessor current at the date of
        preparation  thereof  and in all  subsequent  Accounting  Periods of the
        Lessor up to the Accounting Period of the Lessor in which the Final Date
        applied in the preparation of the Applicable Cash Flow falls.

4       New Applicable Cash Flows

4.1     Applicable Tax Reports

        Where an Applicable  Cash Flow is to be prepared in accordance with this
        paragraph  4 the  Lessor  shall  for  the  purposes  of  preparing  such
        Applicable Cash Flow also prepare a new Tax Report (the  "Applicable Tax
        Report")  which shall be delivered to the Lessee at the same time as the
        Applicable Cash Flow.

4.2     New Applicable Cash Flow - Changes in Variable Assumption

        As soon as reasonably  practicable  after any day falling after the date
        hereof on which the  Lessor  determines  that there has been a change in
        any of the Variable Assumptions (determined in accordance with paragraph
        4.5) on the basis of which any  Applicable  Cash Flow has been  prepared
        and the occurrence of such an event would, if a new Applicable Cash Flow
        were then prepared, produce different figures in respect of the Notional
        Capital  Outstanding and/or Rentals payable hereunder,  the Lessor shall
        promptly  prepare and deliver to the Lessee a new  Applicable  Cash Flow
        prepared in accordance with paragraph 4.3 which shall take effect on the
        Effective Date.

4.3     Preparation of Applicable Cash Flows

        Where any new  Applicable  Cash Flow is prepared  pursuant to  paragraph
        4.2, such Cash Flow shall:

4.3.1   subject to  sub-paragraphs  4.3.2 to 4.3.7 (inclusive) below be prepared
        on the same basis as the immediately  preceding Applicable Cash Flow was
        prepared;

4.3.2   take into account any changes in any of the Variable  Assumptions  which
        have  occurred  (and  are  known  to the  Lessor)  between  the  date of
        preparation of the  immediately  preceding  Applicable Cash Flow and the
        date of  preparation  of such new  Applicable  Cash  Flow and any  other
        changes  in the  Variable  Assumptions  not taken  into  account  in the
        preparation of any preceding Applicable Cash Flow;

4.3.3   take  into  account  the  Rentals  shown  in the  immediately  preceding
        Applicable  Cash Flow as payable  before the  Effective  Date of the new
        Applicable Cash Flow;

4.3.4   be  prepared  in  accordance  with the  revised  Applicable  Tax  Report
        prepared by the Lessor in accordance with paragraph 4.1;

4.3.5   procure  that each  Primary  Rental  payable  on a Primary  Rental  Date
        falling after the Effective Date shall bear the same ratio to each other
        such Primary Rental as the Primary  Rental payable on the  corresponding
        Primary Rental Date shown in the immediately  preceding  Applicable Cash
        Flow  bears  to  each  of  the  other  Primary  Rentals  shown  in  such
        immediately   preceding  Applicable  Cash  Flow  as  payable  after  the
        Effective Date;

4.3.6   procure  that the Final Rental shall be equal to forty per cent (40%) of
        the Ship Cost; and

4.3.7   procure that, subject to the payment by the Lessee of Primary Rentals on
        each subsequent Primary Rental Date, (including the payment of the Final
        Rental on the Primary Period End Date), the Notional Capital Outstanding
        on the Final Date will be zero or as near thereto as may be.

4.4     Effect of substitution of new Applicable Cash Flows

        As from the Effective  Date of any new  Applicable  Cash Flow,  the same
        shall be  deemed  to be  incorporated  herein  in  substitution  for the
        Initial Cash Flow or, as the case may be, the previous  Applicable  Cash
        Flow,  and  payments  of Primary  Rental to be made  hereunder  shall be
        determined by reference thereto.

4.5     Occurrence of Change

4.5.1   Subject to paragraph 10, for the purposes of this Schedule,  a change in
        a Variable  Assumption or a Termination  Assumption shall be regarded as
        having occurred if:

        (a)     without  prejudice  to  sub-paragraphs  (b) to  (d)  (inclusive)
                below,  the  Lessor  determines  such  Variable   Assumption  or
                Termination Assumption is incorrect;

        (b)     any  statute  or  statutory  instrument  embodying  such  change
                becomes law or if earlier when HM Government or other regulatory
                body makes an official announcement of a change even though such
                change  will only  take  effect  in the  future  and a Cash Flow
                prepared,  in such a case and at that  time,  shall  immediately
                take into account all changes so embodied or announced  provided
                that a further  change shall be regarded as having  occurred if,
                following  an  announcement  of a  change,  such  change  is not
                implemented in accordance with such announcement;

        (c)     the  Lessor  receives  a  determination,  decision,  assessment,
                notice or other  written  communication  from any Tax  Authority
                from which it appears  that any matter  relating to or affecting
                any  Variable  Assumption  or  Termination  Assumption  is being
                disputed  by such  Tax  Authority,  regardless  of any  right or
                decision to dispute,  challenge  or appeal the same (but without
                prejudice  to the terms of the Tax Contest  Letter)  and, in the
                reasonable  opinion  of  the  Lessor,  such  dispute  cannot  be
                resolved  promptly by  negotiation  with such Tax Authority on a
                basis  which  would  confirm the  correctness  of such  Variable
                Assumption  or  Termination  Assumption  provided that a further
                change shall be deemed to occur  depending on the final  outcome
                of any such dispute, challenge or appeal concerning the disputed
                matter; and

        (d)     following a  Termination  Event the Lessor  shall be entitled to
                deem  a  change  in  any  of  the  Variable  Assumptions  or the
                Termination Assumptions to have occurred at any time when it has
                reasonable  grounds for believing  that such a change will occur
                and, in such case, if the change does not in fact occur and take
                effect when anticipated, a further change shall then be regarded
                as having occurred.

4.5.2   A new  Applicable  Cash Flow prepared as a consequence of the occurrence
        of any  such  change  or  deemed  change  in a  Variable  Assumption  or
        Termination  Assumption shall take into account the date from which such
        change or deemed change becomes  effective and such new Applicable  Cash
        Flow shall be accompanied by a notice from the Lessor specifying:

        (a)     the Variable Assumption or the Termination  Assumption which has
                changed;

        (b)     the Lessor's reason or reasons for its  determination  that such
                Variable Assumption or Termination Assumption has changed;

        (c)     the replacement Variable Assumption or Termination Assumption on
                the  basis  of  which  the new  Applicable  Cash  Flow  has been
                prepared; and

        (d)     the date  from  which the  replacement  Variable  Assumption  or
                Termination Assumption is to apply.

4.6     Changes in Variable Assumptions after payment of Final Rental

        The  provisions of paragraph 7 shall (mutatis  mutandis)  apply if there
        shall be any change in any of the Variable Assumptions after the payment
        of the Final  Rental by treating  the latest  Applicable  Cash Flow as a
        Termination Cash Flow, and by treating such Final Rental as a payment in
        respect of the Termination Sum.

4.7     Revision of Assumptions

4.7.1   In the  event  of a change  in any of the  Variable  Assumptions  or the
        Termination   Assumptions,   that  Variable  Assumption  or  Termination
        Assumption  shall be deemed to be revised as  necessary  to reflect such
        change and that  Variable  Assumption  or  Termination  Assumption as so
        revised shall be deemed to be incorporated  herein in  substitution  for
        that set out in this  Schedule  (as the same may  previously  have  been
        revised pursuant to this Schedule).

4.8     Risk Asset Weighting

4.8.1   The  Percentage  Return  has been  determined  by the Lessor on the date
        hereof  on the  basis  that the Risk  Asset  Weighting  of the  Lessor's
        investment in the Transactions is an average (the "Average  Weighting"),
        which  Average  Weighting  has  been  calculated  by  reference  to  the
        percentage of the Lessor's  investment in the transactions  contemplated
        in the  Transaction  Documents  which is to be  secured by the Letter of
        Credit  with a Risk  Asset  Weighting  of twenty  per cent (20%) and the
        percentage of the Lessor's  investment in the transactions  contemplated
        by the Transaction  Documents which is to be unsecured with a Risk Asset
        Weighting of one hundred per cent (100%).

4.8.2   In the event that the Lessor  reasonably  determines that the Risk Asset
        Weighting is increased or decreased at any time after the date hereof as
        a result of a change in a  Variable  Assumption  which  gives  rise to a
        change in the Lessor's  investment in the  transactions  contemplated by
        the Transaction Documents, or a change in the percentage of the Lessor's
        investment  secured  by the  Letter  of  Credit,  the  provision  of any
        Additional  Security,  or any change in the  percentage  of the Lessor's
        investment secured by any Additional Security, or any change made by the
        Financial  Services  Authority,  Bank of  England  or other  appropriate
        regulatory body to the capital  required or a change to the structure of
        the  transactions  contemplated by the Transaction  Documents  otherwise
        than as a result of any  voluntary  act or omission by the Lessor or the
        Lessor  Agent or any  member of the  Lessor's  Group,  then,  subject to
        paragraph 4.8.3 below, a new Cash Flow shall be prepared under paragraph
        4.2 and  paragraph  4.3  shall  apply as if there had been a change in a
        Variable Assumption.

4.8.3   Subject to paragraph 4.8.4, where this paragraph 4.8.3 applies:

        (a)     the  Lessor  shall  determine  the  revised  average  Risk Asset
                Weighting  of  the  Lessor's   investment  in  the  transactions
                contemplated by the Transaction  Documents (the "Revised Average
                Weighting"), which Revised Average Weighting shall be calculated
                by reference to the percentage of the Lessor's investment in the
                transactions  contemplated by the Transaction  Documents on each
                Rental Date  falling  prior to the date on which this  paragraph
                4.8.3 is to be applied (the "Application Date") and by reference
                to the percentage of the Lessor's investment in the Transactions
                on each Rental  Date  falling on or after the  Application  Date
                which  is to be  secured  by  the  Letter  of  Credit  or  other
                Additional Security,  and the Risk Asset Weighting  attributable
                thereto,  and the  percentage of the Lessor's  investment in the
                transactions  contemplated by the Transaction  Documents on each
                Rental Date falling on or after the Application Date which is to
                be unsecured, and the Risk Asset Weighting attributable thereto.
                Where this paragraph  4.8.3 applies,  the Lessor shall notify in
                writing to the Lessee  such  Revised  Average  Weighting,  which
                shall be calculated on the same basis as the Average  Weighting,
                or,  as the case  may be,  the last  preceding  Revised  Average
                Weighting  notified  to the  Lessee,  save that such new Revised
                Average  Weighting  shall take into account the  application  of
                paragraph  4.8.2  and the  calculations  to be made  under  this
                paragraph 4.8.3(a);

        (b)     where the Revised Average  Weighting is greater than the Average
                Weighting,  or,  following  any  previous  application  of  this
                paragraph 4.8.3,  the Revised Average  Weighting last calculated
                under this sub-paragraph 4.8.3 (the "Latest Average Weighting"),
                then a new Cashflow Report prepared in accordance with paragraph
                4.2 shall  apply as if there had been a change in an  Assumption
                and in preparing  that Cashflow (and any  subsequent  Cashflow),
                the Percentage Return shall be increased by zero point zero zero
                nine seven  (0.0097) for each one per cent (1%)  increase in the
                Revised Average Weighting over the Latest Average Weighting;

        (c)     where the  Revised  Average  Weighting  is less than the Average
                Weighting or, as the case may be, the Latest Average  Weighting,
                then a new Cashflow Report prepared in accordance with paragraph
                4.2 shall  apply as if there had been a change in an  Assumption
                and in preparing  that Cashflow (and any  subsequent  Cashflow),
                the Percentage Return shall be decreased by zero point zero zero
                nine seven  (0.0097) for each one per cent (1%)  decrease in the
                Revised  Average  Weighting  below the Average  Weighting or the
                Latest Average Weighting;

        (d)     the  increased,  or,  as the case may be,  decreased  Percentage
                Return  calculated in accordance with this paragraph 4.8.3 shall
                apply from the date of  application  of this paragraph 4.8 until
                the  Primary  Period End Date,  or if  earlier,  the date of any
                further application of this paragraph 4.8.

4.8.4   The  Percentage  Return shall not be reduced  below zero point two eight
        four four  (0.2844%) as a result of any  application  of this  paragraph
        4.8.

4.8.5   This  paragraph 4.8 shall apply in the same way to any further change in
        Risk  Asset  Weighting.  In  the  event  of any  change  in  Risk  Asset
        Weighting, the Lessor shall notify the Lessee forthwith.

4.9     Retrospective changes in Variable Assumptions or Termination Assumptions

4.9.1   This  paragraph 4.9 shall apply where the  occurrence of a change in any
        of the Variable  Assumptions or the Termination  Assumption  results, in
        respect of any Past Tax  Payment  Date,  in a Relevant  Amount  which is
        other than zero.

4.9.2   Where this paragraph 4.9 applies,  the new Applicable Cash Flow required
        to be prepared  in  accordance  with  paragraphs  4.2 and 4.3 shall,  in
        respect of any Past Tax Payment Date, be prepared on the basis that:

        (a)     the amount of Corporation  Tax shown as payable,  or as the case
                may be, the Group Relief  Payment  shown as  receivable  on each
                Past Tax Payment  Date is  unchanged  from the amount  shown for
                that date in the immediately preceding Applicable Cash Flow;

        (b)     where the  Relevant  Amount is a negative  amount there shall be
                debited to the new  Applicable  Cash Flow in the  column  headed
                "Tax"  on  the  Tax  Payment  Date  immediately  succeeding  the
                Effective Date an amount equal to the Relevant Amount and in the
                column headed "Interest on Overdue Tax" interest on the Relevant
                Amount  calculated  on the Inland  Revenue  Terms for the period
                from and  including  the  relevant  Past Tax Payment Date to but
                excluding  the  Tax  Payment  Date  immediately  succeeding  the
                Effective Date;

        (c)     where the  Relevant  Amount is a positive  amount there shall be
                credited to the new  Applicable  Cash Flow in the column  headed
                "Tax" on the assumed date of the receipt  thereof in  accordance
                with  Non-Variable  Assumption  2.13  an  amount  equal  to  the
                Relevant  Amount and in the column  headed  "Interest on Overdue
                Tax" interest on the Relevant  Amount,  calculated on the Inland
                Revenue  Terms for the period from and  including  the  relevant
                Past Tax Payment Date to but excluding that assumed date.

5       Adjustments for changes in Interest Rates

5.1     Adjustments in respect of Applicable Rate

5.1.1   In respect of the Adjustment Date for each Adjustment  Period commencing
        after the Delivery  Date up to and including  the  Adjustment  Period in
        which the Final Date in relation to the  relevant  Cash Flow falls,  the
        Lessor shall calculate an amount  ("Interest  Adjustment")  equal to the
        difference between:

        (a)     the amount of interest which has been debited or credited to the
                relevant Cash Flow for such Adjustment  Period calculated at the
                Assumed Rate; and

        (b)     the amount of interest which would have been debited or credited
                to that  Cash  Flow if the  amount  of the debit or credit to be
                made had been calculated by reference to the Applicable Rate for
                such Adjustment Period instead of the Assumed Rate,

        which shall be expressed as a positive amount where:

                (i)     the amount calculated under (b) above exceeds the amount
                        calculated  under  (a) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is negative;
                        or

                (ii)    the amount calculated under (a) above exceeds the amount
                        calculated  under  (b) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is positive;
                        and

                shall be expressed as a negative amount where:

                (iii)   the amount calculated under (a) above exceeds the amount
                        calculated  under  (b) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is negative;
                        or

                (iv)    the amount calculated under (b) above exceeds the amount
                        calculated  under  (a) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is positive;
                        and

                the  Lessor  shall  give  notice to the Lessee not less than ten
                (10)  Banking Days before the  relevant  Adjustment  Date of the
                amount of the Interest Adjustment and in the absence of manifest
                error,  the  Lessor's   calculation  of  such  amount  shall  be
                conclusive and binding on the Lessee.

5.1.2   On each Adjustment Date in respect of each Adjustment Period, the Lessee
        shall pay to the Lessor (where  positive) or the Lessor shall pay to the
        Lessee (where negative) the amount of the Interest Adjustment calculated
        in  accordance  with  paragraph  5.1.1 to the extent  possible by way of
        adjustment to the Rental otherwise payable on that date.

5.2     Adjustments in respect of new Applicable Cash Flow

        Where  any  new  Applicable  Cash  Flow is  prepared  the  Lessor  shall
        separately  calculate  the financial  adjustment  (if any) which has not
        been  taken  into  account  and which  needs to be made as  between  the
        parties  by reason of  adjustments  in respect  of the  Applicable  Rate
        calculated  under  paragraph 5.1 having been based on figures in respect
        of Notional Capital  Outstanding which such new Applicable Cash Flow may
        show to be incorrect,  which  adjustment shall be notified to the Lessee
        and paid in  accordance  with such  calculation  within ten (10) Banking
        Days  of  receipt  by the  Lessee  of such  notice  which  shall  not be
        reflected in any Applicable Cash Flow.

5.3     Consequences of Termination

        The  Lessee  undertakes  and  agrees to  indemnify  the Lessor on demand
        against  any Broken  Funding  Costs (as  certified  to the Lessee by the
        Lessor)  arising to the Lessor as a result of the Lessor  repaying prior
        to its  specified  maturity  any  funding  assumed to be obtained by the
        Lessor in respect of the  transactions  contemplated  by the Transaction
        Documents or in consequence of any Termination, or any Prepayment. If in
        consequence  of such repayment any Broken Funding Gains (as certified to
        the Lessee by the  Lessor)  accrue to the Lessor in  connection  with an
        early repayment of such funding, the Lessor undertakes to pay the Lessee
        an amount equal to such Broken Funding Gains. If the Lessor is unable to
        repay such funding actually entered into by the Lessor,  it shall notify
        the Lessee of the Lessor's best estimate of the Broken  Funding Costs or
        Broken  Funding  Gains  which  would have  resulted to the Lessor if the
        Lessor had in fact repaid such funding and such estimated amount will be
        treated for the purposes of this  paragraph  5.3 as if it were an actual
        amount.

5.4     Payments under this paragraph 5

        Payments  by or to the Lessee  under this  paragraph  5 shall be paid as
        additional Rental or rebates of Rental (as appropriate) but shall not be
        reflected in any Applicable Cash Flow.

6       Termination

6.1     Termination Cash Flow

        In any case where the  Termination  Sum is to be ascertained  the Lessor
        shall,  as  soon  as  practicable  and in any  event,  in the  case of a
        Termination other than following a Termination Event, not later than ten
        (10) Banking Days before the  Termination  Payment Date and, in the case
        of a  Termination  pursuant  to clause 27, on or before the  Termination
        Payment  Date,  prepare  and  deliver  to the  Lessee a Cash  Flow  (the
        "Termination Cash Flow") which shall:

6.1.1   subject as mentioned  below, be prepared on the same basis as the latest
        Applicable  Cash Flow was prepared  and on the basis of the  Assumptions
        but excluding Variable Assumption 1.15;

6.1.2   take into account any changes in any of the Variable  Assumptions  which
        have occurred (in  accordance  with paragraph 4.5) (and are known to the
        Lessor)  between the date of preparation of the latest  Applicable  Cash
        Flow and the date of  preparation of the  Termination  Cash Flow and any
        other such changes in the Variable Assumptions not taken into account in
        the latest Applicable Cash Flow;

6.1.3   take into  account any Primary  Rental  payable  before the  Termination
        Payment Date;

6.1.4   be  prepared  on the basis of the  following  assumptions  ("Termination
        Assumptions",   which   assumptions   shall  be  treated   as   Variable
        Assumptions):

        (a)     that

                (i)     the Ship  will  cease to belong  to the  Lessor  for the
                        purposes  of the  CAA in the  Accounting  Period  of the
                        Lessor in which the Termination Payment Date falls; and

                (ii)    the Ship will be sold and the Net Sale  Proceeds  and/or
                        Net Total  Loss  Proceeds,  as the case may be,  will be
                        received  by the  Lessor  on or before  the  Termination
                        Payment Date;

        (b)     that the aggregate  amount of the Net Sale  Proceeds  and/or Net
                Total Loss Proceeds, as the case may be, will be the only amount
                required to be brought  into  account as  Disposal  Value in the
                Accounting Period in which the Termination Payment Date falls;

        (c)     that the  amount so  required  to be  brought  into  account  as
                Disposal  Value will not be less than the Tax Written Down Value
                of the Ship at the  commencement  of the  Accounting  Period  in
                which the Termination Payment Date falls;

        (d)     where the  Termination Sum is to be ascertained in the case of a
                Termination  pursuant to clause 27, the Assumed  Rate in respect
                of Notional Capital Outstanding where a positive amount shall be
                the best  estimate of LIBID as  determined by the Lessor for the
                date which the Termination Sum is to be calculated;

        (e)     assume  that  the  Lessor  receives  or pays on the  Termination
                Payment Date a single sum (the  "Termination  Sum") of an amount
                that will procure that the Notional  Capital  Outstanding  as at
                the Final Date for the Termination  Cash Flow will be zero or as
                near thereto as may be possible.

6.1.5   For  the  avoidance  of  doubt,  to  the  extent  that  the  Termination
        Assumptions  referred to in sub-paragraphs  6.1.4(a),  (b) and (c) above
        (the  "Sale  Assumptions")  are  correct,  there  shall be  deemed to be
        available to the Lessor in the Accounting  Period of the Lessor in which
        the Termination  Payment Date falls a Capital Allowance equal to the Tax
        Written  Down Value of the Ship at the  commencement  of the  Accounting
        Period in which the Termination Payment Date falls.

6.2     Determination of Termination Sum

6.2.1   The Termination  Sum shall be the number  appearing in the column headed
        "Termination  Sum" of the  Termination  Cash Flow prepared in accordance
        with paragraph 6.1 opposite the Termination Payment Date.

6.2.2   If the  Termination  Cash Flow has  assumed  the receipt of a sum by the
        Lessor, the amount of the Termination Sum shall be payable by the Lessee
        to the Lessor on the Termination Payment Date by way of Rental.

6.2.3   If the  Termination  Cash Flow has  assumed  the payment of a sum by the
        Lessor, the amount of the Termination Sum shall be payable by the Lessor
        to the  Lessee  on the  Termination  Payment  Date by way of  rebate  of
        Rental.

6.3     Termination Fee

6.3.1   Subject to paragraph 6.3.2 below,  if this Lease is terminated  prior to
        the date falling sixty (60) months after the Delivery  Date,  the Lessee
        shall,  in addition  to the  Termination  Sum,  pay to the Lessor on the
        Termination  Payment  Date,  the  Termination  Fee which  shall be of an
        amount equal to:

        A
        B

        where:  A is the aggregate of each amount of the Percentage Return which
                would have been  debited in the column  headed  "Margin"  in the
                latest  Applicable Cash Flow after the Termination  Payment Date
                and until and including the date falling sixty (60) months after
                the  Delivery  Date (on the basis that the Lease  would not have
                Terminated  before  such  date)  discounted  to the  Termination
                Payment  Date at the  rate of five  point  two two five per cent
                (5.225%) per annum; and

                B is  (1-x)  where  x is the  Corporation  Tax  Applicable  Rate
                (expressed as a decimal) for the Accounting Period of the Lessor
                in which the Termination Payment Date falls.

6.3.2   The Termination Fee referred to in paragraph 6.3.1 shall not be payable:
        (i) in the event that this Lease is  terminated  after the date  falling
        sixty (60) months  after the  Delivery  Date;  or (ii) in the event that
        this Lease is  terminated  as a result of a Total  Loss of the Ship;  or
        (iii) in the  event  that  this  Lease is  terminated  as a result  of a
        Relevant  Bank Change of Law Event  pursuant to clause 25.3;  or (iv) in
        the event that this Lease is  terminated  as a result of a Relevant Bank
        Illegality  Event pursuant to clause 25.4; or (v) in the event that this
        Lease is  terminated  as a result of a  Termination  Event  pursuant  to
        clauses  26.1.8 to 26.1.14  (inclusive)  and clause 26.2; or (vi) in the
        event that this Lease is  terminated as a result of the  application  of
        clause 31; or (vii)  where this  Lease is  terminated  prior to the date
        falling  sixty  (60)  months  after  the  Delivery  Date and the  Lessee
        certifies in writing to the reasonable  satisfaction  of the Lessor that
        it  is  terminating  this  Lease  because  it  has  become  Economically
        Burdensome.

6.4     Change in Variable Assumption 1.15 and/or the Sale Assumptions

6.4.1   Any  Applicable  Cash Flow  prepared  to  reflect  a change in  Variable
        Assumption  1.15.1  or,  as the case  may be,  the  Sale  Assumption  in
        paragraph 6.1.4(a),  shall take into account such change and be prepared
        on the assumption that there will be no sale of the Ship or, as the case
        may be, no receipt of Net Sale Proceeds  and/or Net Total Loss Proceeds,
        on or after the Termination Payment Date and that no Disposal Value will
        be required to be brought into account in respect thereof.

6.4.2   Any  Applicable  Cash Flow  prepared  to  reflect  a change in  Variable
        Assumption  1.15.2 or, as the case may be, the Sale  Assumptions,  or as
        the case may be, the  assumption  in  paragraph  6.4.1 (each a "Relevant
        Assumption")  shall take into account such change and be prepared on the
        basis of the following assumptions:

        (a)     that  Capital  Allowances  on the  amount  by which any Net Sale
                Proceeds  and/or Net Total Loss Proceeds  required to be brought
                into account as Disposal Value in the relevant Accounting Period
                are less than the Tax Written  Down Value in respect of the Ship
                Cost  will be  obtainable  in  accordance  with  the Tax  System
                prevailing  at the  date of  such  Cash  Flow in the  Accounting
                Period of the  Lessor in which the  Relevant  Assumption  proved
                incorrect and in each subsequent Accounting Period of the Lessor
                ending before the Primary Period End Date;

        (b)     that  the   Corporation   Tax  Applicable  Rate  for  each  such
                Accounting  Period of the Lessor  subsequent  to the  Accounting
                Period in which such  Applicable Cash Flow is prepared but prior
                to the  Accounting  Period in which the Primary  Period End Date
                falls  will  be the  Corporation  Tax  Applicable  Rate  for the
                Accounting  Period  current  at  the  date  such  Cash  Flow  is
                prepared;

        (c)     that Capital  Allowances  will be obtainable in accordance  with
                the Tax System  prevailing  at the date of  preparation  of such
                Cash Flow for each Accounting  Period of the Lessor ending after
                the  Primary   Period  End  Date  until  the   fortieth   (40th)
                anniversary of the Delivery Date;

        (d)     that, for the purposes of this calculation only, the Corporation
                Tax Applicable  Rate for the Accounting  Period of the Lessor in
                which the Primary Period End Date falls will be the lower of the
                Corporation Tax Applicable Rate for the Accounting Period of the
                Lessor current at such date and 25 per cent; and

        (e)     in an Applicable  Cash Flow prepared for the Primary  Period End
                Date there  shall be  credited  to the column of the  Applicable
                Cash Flow headed "Tax"  opposite the Primary Period End Date the
                allowances   assumed  by  sub-paragraph  (c)  to  be  obtainable
                multiplied by the  Corporation  Tax  Applicable  Rate assumed in
                sub-paragraph  (d) and discounted to the Primary Period End Date
                at the After-Tax Interest Rate.

6.4.3   Any Applicable  Cash Flow prepared  pursuant to this paragraph 6.4 shall
        be prepared on the  assumption  that the Assumed Rate for any Adjustment
        Period commencing after the date of preparation of such Cash Flow is:

        (a)     the  lower  of  (A)  twelve  month  LIBOR  (as at  the  date  of
                preparation of the Applicable  Cash Flow) minus one per cent and
                (B) LIBID (as at the date of preparation of the Applicable  Cash
                Flow) in respect of Notional Capital Outstanding when a positive
                amount; and

        (b)     the  aggregate  of  twelve  month  LIBOR  (as  at  the  date  of
                preparation of such  Applicable Cash Flow) plus four per cent in
                respect of Notional Capital Outstanding when a negative amount.

6.4.4   The  assumptions  made in  sub-paragraphs  6.4.1,  6.4.2(a)  and (b) and
        6.4.3(a)  and (b) above shall be treated as Variable  Assumptions  until
        the  Primary  Period  End Date or,  where the Lease  Period  expires  by
        effluxion of time on that date,  the first  anniversary of that date and
        as  Non-Variable  Assumptions  thereafter;   and  any  change  in  those
        assumptions shall be reflected in a Further  Termination Cash Flow which
        shall only be prepared on each 31 March  falling  after the  Termination
        Payment  Date and on the  Primary  Period End Date and,  where the Lease
        Period expires by effluxion of time on the Primary Period End Date, only
        on the first anniversary of the Primary Period End Date. The assumptions
        made in sub-paragraphs 6.4.2(c) and (d) shall be treated as Non-Variable
        Assumptions.

7       Variation of Termination Sum

7.1     Further Termination Cash Flow

7.1.1   In any case where the Lessor has prepared a Termination  Cash Flow,  the
        Lessor shall prepare a further cash flow (the "Further  Termination Cash
        Flow")  to  take  into  account  any  change  in  any  of  the  Variable
        Assumptions and/or the Termination Assumptions which has occurred and is
        known  to the  Lessor  but  which  was not  taken  into  account  in the
        Termination Cash Flow.

7.1.2   The Further Termination Cash Flow shall be prepared on the same basis as
        the Termination Cash Flow and shall ensure that, in the light of changes
        in the Variable Assumptions and the Termination  Assumptions and subject
        to either  the  receipt  by the  Lessor of a further  single  sum or the
        payment  by the  Lessor  of a single  sum on the  last day of the  month
        following  that in which the Further  Termination  Cash Flow is prepared
        and delivered to the Lessee,  the Notional  Capital  Outstanding  on the
        Final Date for the Further Termination Cash Flow will be zero or as near
        thereto as may be.

7.2     Delivery of Further Termination Cash Flow

        The Lessor shall deliver the Further Termination Cash Flow to the Lessee
        as soon as reasonably  practicable and in any event no later than thirty
        (30)  Banking Days after the change in the  Variable  Assumption  or the
        Termination  Assumption  becomes  known to the Lessor by reason of which
        such Cash Flow is to be prepared.

7.3     Payment of adjustment to the Lessor

        If the Further Termination Cash Flow has assumed the receipt of a sum by
        the Lessor,  the Lessee  shall pay to the Lessor,  by way of  additional
        Rental,  the  amount  of  such  receipt  on the  last  day of the  month
        following  that in which the Further  Termination  Cash Flow is prepared
        and a copy delivered to the Lessee.

7.4     Payment of adjustment to the Lessee

        If the Further Termination Cash Flow has assumed the payment of a sum by
        the Lessor, the amount thereof shall be paid to the Lessee by the Lessor
        by way of rebate of Rental on the last day of the month  following  that
        in which  the  Further  Termination  Cash  Flow is  prepared  and a copy
        delivered to the Lessee.

7.5     Further Changes

        If any further change in the Variable Assumptions and/or the Termination
        Assumptions occurs after the Further Termination Cash Flow was prepared,
        which  would  have  affected  the  same  had it been  known  when it was
        prepared,  the  provisions  of this  paragraph  7 shall  apply,  mutatis
        mutandis, to the same.

8       Prepayment

8.1     Payments

        Where the Lessee  notifies the Lessor in  accordance  with clause 25.2.1
        that it wishes to make a Prepayment, the Lessor shall no later than five
        (5) days before the Prepayment  Date calculate the Prepayment  Amount in
        accordance with this paragraph 8.

8.2     Prepayment Amount

        The Prepayment Amount shall be the aggregate of:

8.2.1   the Prepaid Rental; and

8.2.2   any Broken Funding Costs or, as the case may be, less any Broken Funding
        Gains.

8.3     Prepayment Cash Flow

        When any Prepayment Amount is required to be calculated pursuant to this
        paragraph 8, the Lessor shall,  as soon as practicable  and in any event
        on or before  the date  falling  five (5) days  prior to the  Prepayment
        Date,  produce and  deliver to the Lessee a  Prepayment  Cash Flow.  The
        Prepayment Cash Flow shall:

8.3.1   subject as  mentioned  below be  prepared  on the same basis as the last
        preceding Applicable Cash Flow was prepared;

8.3.2   take into account any changes in any of the Variable  Assumptions  which
        have occurred (and are known to the Lessor) between the date of the last
        preceding  Applicable  Cash Flow and the  preparation  of the Prepayment
        Cash Flow and any other  changes in the Variable  Assumptions  not taken
        into account in the last preceding Applicable Cash Flow;

8.3.3   be prepared on the  assumption  (which  shall be a Variable  Assumption)
        that the Prepaid  Rental  shall be included as Schedule D Case I receipt
        of the Lessor and taxed on the date on which such amount is payable;

8.3.4   assume that:

        (a)     Primary Rental due up to and including the Prepayment Date shall
                be the  Primary  Rental  determined  by  reference  to the  last
                preceding Applicable Cash Flow;

        (b)     the Prepaid Rental is received on the Prepayment Date;

8.3.5   assume that the Lessor  receives on the Prepayment  Date a single sum by
        way of Rental (the  "Prepaid  Rental")  of such amount as would  result,
        subject  to the  receipt  by the Lessor of the  Rentals  referred  to in
        paragraph  8.3.4(b),  in the Total  Security  Amount for and during each
        Security  Period shown in the new Additional  Security Table prepared by
        the Lessor  pursuant  to clause  25.2.1  being equal to or less than the
        aggregate of the Letter of Credit Amount,  the Maximum  Unsecured  Strip
        Liability Amount and any Additional Security Amount in each case for and
        during each such Security Period.

8.4     New Applicable Cash Flow

        Subject  to  the  payment  by the  Lessee  of the  Prepaid  Rental,  the
        Prepayment  Cash Flow  produced in accordance  with  paragraph 8.3 above
        shall be substituted for the last preceding  Applicable Cash Flow to the
        exclusion of any previous Cash Flow.

9       Security

9.1     Initial Security Table

9.1.1   The Lessor has prepared a Security Table (the "Initial  Security Table")
        based on the Initial Cash Flow  setting out in column 2 the  Termination
        Sum on the first day of each Security Period,  in column 3 the Letter of
        Credit  Amount on that date,  in column 4 the  Maximum  Unsecured  Strip
        Liability Amount in each such case for each Security Period specified in
        column 1 and  ending on or before  the  Primary  Period  End Date and in
        column 5 the Extra Security Amounts.

9.2     Additional Security Table

        In any case where the Lessor  prepares an Applicable  Cash Flow pursuant
        to paragraph 4 on or after the date hereof,  the Lessor shall as soon as
        reasonably  practicable prepare and deliver to the Lessee a new Security
        Table  ("Additional  Security  Table")  on the same  basis as the latest
        Applicable  Security  Table was  prepared  save that the new  Additional
        Security Table shall:

9.2.1   take into  account the changes in Variable  Assumptions  which are taken
        into  account in the  preparation  of such new  Applicable  Cash Flow in
        accordance with paragraph 4;

9.2.2   show in column 2 the Total Security Amount for each Security Period;

9.2.3   show in column 3 the  aggregate  of the Letter of Credit  Amount and any
        Additional Security Amount;

9.2.4   column 5 shall be left blank; and

9.2.5   show,  in an  additional  column 6, as a negative  figure,  the Required
        Security  Amount (if any),  being the amount by which the Total Security
        Amount shown in column 2 of the new  Additional  Security  Table exceeds
        the aggregate of the Letter of Credit Amount and any Additional Security
        Amount shown in column 3, the Maximum  Unsecured Strip Liability  Amount
        shown in column 4 and the Extra Security  Amounts,  as  appropriate,  in
        column 5, in each case for and during each Security Period  specified in
        column 1 of the new Additional Security Table or, as the case may be, as
        a positive  figure,  the Required  Security  Amount (if any),  being the
        amount by which the aggregate of each such Letter of Credit Amount,  any
        Additional  Security  Amount and the Maximum  Unsecured  Strip Liability
        Amount and Extra  Security  Amounts  exceeds  each such  Total  Security
        Amount.

9.3     Substitution of new Applicable Security Table

9.3.1   As soon as  practicable  following  the increase in the Letter of Credit
        Amount, the provision by the Lessee of an Additional  Security Amount or
        the payment of a Prepayment Amount by the Lessee, as the case may be, in
        each case in  accordance  with clause  25.2.1 or, the  reduction  in the
        Letter  of Credit  Amount  or the  release  of any  Additional  Security
        Amounts,  as the case may be, in each  case in  accordance  with  clause
        25.2.2,  the  Lessor  shall  prepare  and  deliver  to the  Lessee a new
        Security Table ("Applicable  Security Table") which shall be prepared on
        the same  basis as the new  Additional  Security  Table  referred  to in
        paragraph 9.2 was prepared save that:

        (a)     in the case of an increase or  reduction in either the Letter of
                Credit Amount or the Additional  Security Amount,  it shall show
                the  revised  Letter  of Credit  Amount  or, as the case may be,
                Additional Security Amount; and

        (b)     in the case of the payment by the Lessee of a Prepayment Amount,
                shall also be prepared on the same basis as the Prepayment  Cash
                Flow prepared to calculate such  Prepayment  Amount was prepared
                and accordingly reflecting the revised Total Security Amount,

        in each case in respect of each Security Period.

9.3.2   As from the date  any new  Applicable  Security  Table is  prepared  and
        delivered  to the  Lessee,  the same  shall be  incorporated  herein  in
        substitution for the previous Applicable Security Table.

10      Limitations on Adjustment

        Notwithstanding  anything  in  this  Schedule  and  this  Lease  to  the
        contrary,  the Lessor  shall not be  entitled  or  required  to make any
        adjustment  under the provisions of this Schedule or in the  preparation
        of any Cash Flow and no change  shall be  treated  as  occurring  in any
        Variable  Assumption or Termination  Assumption  where and to the extent
        that,  otherwise than (i) as a result of the occurrence of any change in
        Variable  Assumption  1.13,  (ii) by reason  of any of the  transactions
        effected  under  or  pursuant  to or  contemplated  by  the  Transaction
        Documents and the Share Acquisition  Documents (other than an assignment
        by the Lessor pursuant to clause 30.2), (iii) as a result of a change in
        Generally  Accepted  Accounting  Principles  or,  (iv) as a result  of a
        breach by the  Lessee of any of its  obligations  under the  Transaction
        Documents,  a Variable  Assumption  would but for the provisions of this
        paragraph 10, be treated as changing by reason of:

10.1    the Lessor not duly  claiming on a timely  basis all Capital  Allowances
        available  to it in  respect  of the Ship Cost or not  supplying  to any
        relevant Tax  Authority on a due and timely  basis any  information  and
        documents  which are properly  required by such  authority in support of
        any such  claim  (unless  such  failure  to make a claim or supply  such
        document or  information  on a timely basis results from a breach by the
        Lessee  of  its  obligations  under  this  Lease  or  such  document  or
        information not being available to the Lessor and/or unless such failure
        results  from any  written  request  made by the Lessee to the Lessor in
        relation  to such  claim  or  other  matter  affecting  such  claim)  or
        withdraws,  amends or  postpones  all or any of such  claim for  Capital
        Allowances,  or the  Lessor  not  treating  the  Ship  Cost  as  capital
        expenditure incurred by it for Tax purposes; or

10.2    the group of  companies  of which the  Lessor  Agent is a member for the
        purposes  of Group  Relief not having  sufficient  profits to absorb Tax
        Losses (calculated on the basis of the Initial Cash Flow) of the Lessor;
        or

10.3    any act or omission of the Lessor  (otherwise than as required by law or
        statute)  which  is a  breach  by the  Lessor  of  any  of  its  express
        obligations  under  any of the  Transaction  Documents  to which it is a
        party; or

10.4    the  Lessor  submitting  its  Corporation  Tax  computations  claims  or
        returns,  as  initially  submitted to any  relevant  Tax  Authority,  or
        preparing its accounts on a basis which is inconsistent  with any of the
        Variable  Assumptions  (as the  same  may be  varied  from  time to time
        pursuant to this  Schedule),  save where required by law, Inland Revenue
        practice or Generally Accepted Accounting Principles,  or not submitting
        its Corporation Tax returns and computations on a timely basis; or

10.5    any  voluntary  act or  omission  by the  Lessor  or any  member  of the
        Lessor's  Group  (other  than  as  required  or   contemplated   by  the
        Transaction  Documents or the Share  Acquisition  Documents) at any time
        after the Delivery  Date,  which  results in the Lessor  ceasing to be a
        member of the Lessor's Group for Group Relief purposes; or

10.6    any Non-Variable Assumption not occurring as a fact.

11      Reference to Expert

11.1    Dispute Procedure

11.1.1  If the Lessee does not accept that any determination  made by the Lessor
        has been made  and/or any  Applicable  Cash Flow (other than the Initial
        Cash Flow) or any adjustment thereto or to the Rental (or any adjustment
        thereto) has been prepared  and/or  calculated  in  accordance  with the
        terms and provisions of this Lease, the Lessee may (without prejudice to
        its  obligations to make payment  hereunder in accordance with such Cash
        Flow  and/or  calculation   pending   determination  of  the  matter  as
        hereinafter  provided)  give  notice to the Lessor  within  thirty  (30)
        Banking  Days of  receiving a copy of such Cash Flow and/or  calculation
        from  the  Lessor   together   with  the   Lessee's   reasons  for  such
        non-acceptance.  As soon as practicable after a notification  under this
        paragraph  11.1.1 by the  Lessee,  if required in writing by the Lessee,
        the  Lessor  and the  Lessee  shall  discuss  with each  other  (and any
        relevant advisors) the determination in question. Such discussions shall
        be conducted  conscientiously and in good faith and shall allow time for
        full consideration of the views of both parties of the issues concerned.

11.1.2  If the Lessor and the Lessee cannot agree the  correctness  or otherwise
        of such  determination  within a further  period of twenty (20)  Banking
        Days  of the  Lessee's  notice  referred  to in  paragraph  11.1.1,  the
        Lessee's reasons together with the Lessor's  determination,  calculation
        and/or Cash Flow  and/or any  adjustment  thereto  and reasons  therefor
        shall then be referred to the  Auditors who shall act as experts and not
        as  arbitrators  and  whose  decision  as to  the  correctness  of  such
        determination and/or calculations and/or Cash Flow and/or any adjustment
        thereto in accordance with the terms of this Lease shall,  except in the
        case of manifest error until the same has been corrected,  or save where
        paragraph 11.1.3 below applies,  be conclusive and binding on the Lessor
        and the Lessee.

11.1.3  If the Auditors consider that the determination of the Lessor relates to
        a matter of law, then the matter (together with the material provided to
        the  Auditors  as  referred  to in  paragraph  11.1.1)  will  instead be
        referred to an independent Queen's Counsel (the "QC") who specialises in
        tax matters and who is acceptable  to the Lessor and the Lessee.  In the
        event that the parties  cannot agree on the  appointment  of the QC then
        the Lessee shall  nominate as the QC one out of three tax counsel chosen
        by the Lessor.

11.1.4  The costs of the  Auditors,  or as the case may be, the QC, in so acting
        shall be borne by the Lessee  unless the  amount(s)  resulting  from the
        finding of the Auditors, or as the case may be, the QC, differs from the
        amount(s)  resulting  from the  determination  made by the  Lessor in an
        amount in excess of  (pound)10,000  in respect of a  calculation  of any
        Termination Sum or  (pound)10,000  in respect of each  determination  or
        calculation of any other amount of Rental in which case the costs of the
        Auditors, or as the case may be, the QC, shall be borne by the Lessor.

11.1.5  The Lessor shall  provide the  Auditors,  or as the case may be, the QC,
        with  such  information  as they or he may  reasonably  require  for the
        purposes of this paragraph 11.1.

11.2    If  the  Lessee   considers  that  the  Lessor  ought  to  have  made  a
        determination  but has not done so,  the  Lessee  may  inform the Lessor
        within twenty (20) Banking Days of the date the Lessee  becomes aware of
        the alleged omission, giving its written reasons why it considers that a
        determination  ought to have been made. For the purposes of paragraph 11
        any  omission by the Lessor to make a  determination  as  specified in a
        notice  under  this   paragraph   11.2,   shall   itself   constitute  a
        determination to which paragraph 11.1 shall apply.

11.3    Adjustments

        Should  the  decision  of the  Auditors,  or as the case may be, the QC,
        require an  adjustment  to an amount  previously  paid  hereunder,  such
        adjustment  shall  apply  retrospectively  from the  date on  which  the
        relevant  amount was paid and the amount of any  deficiency or excess in
        or of such amount  previously  paid by or received by the Lessor  shall,
        within ten (10) Banking Days after  receipt by the Lessor and the Lessee
        of written  notice of the decision and of a revised Cash Flow (which the
        Lessor shall  produce  forthwith  after,  and in  accordance  with,  the
        decision of the Auditors, or as the case may be, the QC), be remedied by
        a payment by or to the Lessor by way of  adjustment to the Rental or any
        adjustment thereto (as appropriate).

11.4    Detail of Calculations

        All  determinations  to be made by the Lessor  under this Lease and this
        Financial  Schedule  shall be made  reasonably  and in good  faith.  All
        calculations  provided by the Lessor to the Lessee under this  Financial
        Schedule shall be made in good faith and in reasonably sufficient detail
        to enable the Lessee to substantiate the same.
<PAGE>

                                   Appendix 1
                                   ----------

                                 The Assumptions
                                 ---------------

1       Variable Assumptions

1.1     The  Lessor  will  become  resident  in  the  UK  for  the  purposes  of
        Corporation Tax on the First UK Meeting Date.

1.2     The first Accounting  Period of the Lessor ("First  Accounting  Period")
        will commence on the First UK Meeting Date.

1.3     The Lessor  will be  treated  under  section  13 CAA as having  incurred
        capital expenditure on the provision of the Ship on the Delivery Date in
        an amount equal to the Ship Cost.

1.4     The Lessor  shall be  entitled to Capital  Allowances  by way of writing
        down  allowances of twenty five per cent (25%) per annum on the reducing
        balance  basis  on  the  full  amount  of the  Ship  Cost  such  Capital
        Allowances  commencing  on the  Delivery  Date in the  First  Accounting
        Period (and in respect of the First Accounting  Period being reduced pro
        rata to the proportion which the length of the First  Accounting  Period
        bears to a period  of  twelve  (12)  months),  in which the Ship Cost is
        treated (on the basis  assumed in paragraph  1.3) to have been  incurred
        and to continue in each subsequent Accounting Period of the Lessor until
        but excluding the Accounting  Period referred to in Variable  Assumption
        1.15.1.

1.5     The rate and times at which Capital  Allowances are obtainable under the
        Tax System at the date  hereof  will not change and  Capital  Allowances
        obtained  by the Lessor in respect of the Ship Cost will not at any time
        be withdrawn or postponed in whole or in part nor,  otherwise than on an
        actual  disposal  or  Total  Loss  of the  Ship,  be made  subject  to a
        balancing charge at any time in so far as the Lessor is concerned.

1.6     The rate of Corporation  Tax for the Financial Year ending 31 March 2002
        and each subsequent financial year will be thirty per cent (30%).

1.7

1.7.1   The Lessor will not be required by law or Generally Accepted  Accounting
        Principles to draw up its accounts as at any other date than 31 December
        in any year and/or for any other period than twelve  months,  except for
        the First Accounting Period.

1.7.2   None of the Group Relief Recipients will be required by law or Generally
        Accepted  Accounting  Principles  to draw up its accounts as at any date
        other than 31  December  in any year  and/or for any other  period  than
        twelve months.

1.7.3   None of the  Lessor  (other  than in  respect  of the  First  Accounting
        Period) and any of the Group Relief  Recipients  will be required by law
        to have  Accounting  Periods  which  are  other  than  twelve  months in
        duration nor will any of them be required to draw up their  accounts for
        periods which do not coincide with the relevant Accounting Period.

1.8     Any  interest  payable  or deemed to be  payable in respect of any funds
        borrowed  or deemed to be  borrowed by the Lessor for the purpose of the
        transactions  contemplated by the Transaction  Documents (as represented
        by Notional  Capital  Outstanding  when that is a negative figure) is or
        would if funds had actually  been  borrowed and interest  actually  been
        payable  been  allowed or, as the case may be, have been  allowable as a
        trading expense.

1.9     The Lessor's  taxable  income,  receipts and outgoings in respect of the
        transactions  contemplated by the Transaction  Documents will fall to be
        assessed and dealt with under Case I of Schedule D.

1.10    The Lessor will be entitled to prepare its Corporation Tax  computations
        (and the Inland Revenue will accept such  computations  as the basis for
        charging Corporation Tax):

1.10.1  insofar as they relate to interest received or paid, on a daily accruals
        basis for the period in respect of which it is received or paid;

1.10.2  insofar as they relate to Primary  Rentals,  on the basis that an amount
        shall be brought into account as income in each Accounting  Period equal
        to the greater of:

        (1)     the Accountancy Rental Earnings for that Accounting Period; and

        (2)     the Normal Rent for that Accounting Period;

        PROVIDED THAT

                (A)     if the  Accountancy  Rental  Earnings in any  Accounting
                        Period exceed the Normal Rent for that Accounting Period
                        and there is a Cumulative  Normal Rental Excess for that
                        Accounting Period, the amount to be brought into account
                        for the Accounting Period will be the greater of:

                        (1)     the   Accountancy   Rental   Earnings  for  that
                                Accounting  Period  less the  Cumulative  Normal
                                Rental Excess for that Accounting Period; and

                        (2)     the Normal Rent for that Accounting Period; and

                (B)     if the Normal Rent in any Accounting  Period exceeds the
                        Accountancy  Rental Earnings for that Accounting  Period
                        and there is a Cumulative  Accountancy Rental Excess for
                        that  Accounting  Period,  the amount to be brought into
                        account for that  Accounting  Period will be the greater
                        of:

                        (1)     the  Normal  Rental for that  Accounting  Period
                                less the  Cumulative  Accountancy  Rental Excess
                                for that Accounting Period; and

                        (2)     the   Accountancy   Rental   Earnings  for  that
                                Accounting Period.

1.11    Subject in the case of the First Accounting Period to paragraph 1.34, in
        respect  of the First  Accounting  Period and each  subsequent  relevant
        Accounting  Period of the Lessor,  the Lessor  shall have  received  and
        retained  the  benefit  of relief  for the Tax Loss in  respect  of that
        Accounting Period by reason of either:

1.11.1  a set-off of such Tax Loss  against  other  profits of the Lessor  under
        section 393 and/or 393A ICTA; or

1.11.2  the  surrender  by the  Lessor of such Tax Loss or any part  thereof  in
        accordance  with the  provisions  relating to group relief  contained in
        Chapter  IV Part X and  Schedule  18 ICTA as at the  date of this  Lease
        ("Group Relief") to one or more Group Relief  Recipients and the receipt
        of payments for Group  Relief so  surrendered  on the dates,  and in the
        amounts calculated in accordance with Non-Variable Assumption 2.6.

1.12    In respect of the First Accounting  Period and each relevant  Accounting
        Period  of  the  Lessor  thereafter  and in  respect  of  each  Relevant
        Accounting  Period of any Group  Relief  Recipient,  the Lessor and each
        Group Relief Recipient shall be liable to pay twenty five per cent (25%)
        of the total  Corporation Tax on profits for each such Accounting Period
        on each of 14 July  and 14  October  in that  Accounting  Period  and 14
        January and 14 April following the end of that Accounting Period.

1.13    There will be no change in the Tax  System  affecting  the  transactions
        contemplated by the Transaction Documents after the date hereof.

1.14    In  respect  of  the   transactions   contemplated  by  the  Transaction
        Documents:

1.14.1  the accounts of the Lessor  following the First UK Meeting Date, and any
        Consolidated Group Accounts, will be prepared in accordance with SSAP 21
        on the actuarial after tax basis;

1.14.2  the accounts of the Lessor  following the First UK Meeting Date, and any
        Consolidated Group Accounts, will be prepared on the assumption that the
        leasing of the Ship will terminate on the Primary Period End Date;

1.14.3  following the First UK Meeting Date there will be no change in the basis
        on which the Lessor prepares its accounts in respect of the transactions
        contemplated by the Transaction Documents;

1.14.4  if and  as  often  as  Variable  Assumption  1.6 is  varied,  a  one-off
        adjustment will be made to the profit and loss account of the Lessor for
        the earliest Accounting Period then possible to reflect the consequences
        of the  change in the rate of  Corporation  Tax and to  ensure  that the
        treatment  described above in relation to the application of SSAP 21 can
        be applied to subsequent Accounting Periods;

1.14.5  there  will be no change in  Generally  Accepted  Accounting  Principles
        after the date of this Lease.

1.15

1.15.1  the Ship will be sold  during  the  Accounting  Period of the  Lessor in
        which the Primary Period End Date falls;

1.15.2  the Net Sale Proceeds or Net Total Loss Proceeds  required to be brought
        into  account as  Disposal  Value will be not less than the Tax  Written
        Down Value of the Ship at the  commencement of the Accounting  Period of
        the Lessor in which the Termination Payment Date falls;

        (and to the extent that this Variable Assumption 1.15 is satisfied there
        shall be deemed to be available to the Lessor a Capital  Allowance equal
        to such Tax Written Down Value).

1.16    The Lessor will not be required to bring into account as Disposal  Value
        any amount in excess of the  aggregate of Net Sale Proceeds or Net Total
        Loss Proceeds.

1.17    The Lessor  will be subject  to no Tax other  than  Corporation  Tax and
        Value  Added Tax in  respect  of the  transactions  contemplated  by the
        Transaction Documents.

1.18    Subject to  paragraph  1.33 the only  amounts  which the Lessor  will be
        required  to bring  into  account  as income in  calculating  UK taxable
        profits by  reference  to the  leasing  of the Ship will be the  Primary
        Rental payable in accordance  with paragraph 2.1,  interest  received or
        assumed to be received by the Lessor in accordance  with this  Financial
        Schedule,  the Termination Sum (or any adjustment thereto),  any Prepaid
        Rental,  any Disposal  Value,  and any other amount  payable  under this
        Lease expressed to be payable by way of Rental.

1.19

1.19.1  the  Arrangement Fee will be  (pound)352,648.52  and will be incurred on
        the Delivery Date;

1.19.2  the  Lease Fee will be  (pound)120,745.15  and will be  incurred  on the
        Delivery Date;

1.19.3  the Lessor's  Professional Costs will be  (pound)135,555.75  and will be
        incurred on the Delivery Date.

1.20    The Arrangement Fee, the Lease Fee and the Lessor's  Professional  Costs
        will be allowable as a trading  expense for  Corporation Tax purposes in
        the First Accounting Period.

1.21    The  "designated  period" (as that  expression is defined in section 106
        CAA):

1.21.1  will commence on the First UK Meeting Date; and

1.21.2  in the  "designated  period",  the Ship  will not be used for a  purpose
        which results in sections 109 or 110 CAA applying.

1.22    The United  Kingdom  will not take part in the Third  Stage and the Euro
        will not replace Sterling as the United Kingdom national currency.

1.23    Chapter 10 of Part 2 CAA does not apply to the Ship.

1.24    Section 225 CAA will not apply to the  transactions  contemplated by the
        Transaction Documents.

1.25    Interest on any late  payment of  Corporation  Tax made by the Lessor in
        respect of this Lease,  and interest on any  Relevant  Amount which is a
        negative  amount is (or would be had it  actually  been  payable  by the
        Lessor) deductible in computing the taxable profits of the Lessor.

1.26    Interest on any  overpayment  of  Corporation  Tax made by the Lessor in
        respect of this Lease,  and interest on any  Relevant  Amount which is a
        positive  amount is (or  would  had it  actually  been  received  by the
        Lessor) taxable in computing the taxable profits of the Lessor.

1.27    The Lessee and the Sub-Lessee  will not elect to include the Ship in the
        tonnage  tax regime (as  referred  to in  schedule 22 of the Finance Act
        2000).

1.28    The  Lessee  will  not  elect to make a  Prepayment  of  Primary  Rental
        pursuant to clause 25.2.1(c).

1.29    That any amounts received or receivable from:

1.29.1  the LC Bank under any Letter of Credit;  1.29.2 the Lessee  Parent under
        the Lessee Parent Guarantee;

1.29.3  any Additional Security Provider under any Additional Security;

        will be  treated in the same way for  Corporation  Tax  purposes  as the
        payments  due under the  Transaction  Documents in respect of which such
        amount  is  received  under the  Letter of  Credit,  the  Lessee  Parent
        Guarantee and any Additional Security.

1.30    The Lessor will become a member of the  Lessor's  Group for the purposes
        of Group Relief on the Delivery Date.

1.31    The First UK Meeting Date will occur on 7 April 2003.

1.32    The Delivery Date will occur on 8 April 2003.

1.33

1.33.1  the Lessor will be treated as commencing a trade of operating leasing on
        the First UK Meeting Date and ceasing such trade on the Delivery Date;

1.33.2  no  Capital  Allowances  will be due to the  Lessor in  respect  of such
        trade;

1.33.3  profit of  (pound)33,940.01  will be earned in respect of such trade and
        (pound)47,348.78 of Tax Loss will be available to shelter such profit.

1.34

1.34.1  in  respect  of the First  Accounting  Period  the  Lessor  will only be
        entitled to surrender a proportion of Tax Loss,  that  proportion  being
        equal to

        Tax Loss x number of days from Delivery Date to end of First  Accounting
        Period
                   total number of days in the First Accounting Period

1.34.2  the balance (being  (pound)13,408.77) of such Tax Loss shall be eligible
        to be set off as in  paragraph  1.33.3  and to the  extent of any excess
        carried  forward and set against  profits  arising in the finance  lease
        trade of the Lessor in later Accounting Periods.

1.35    the Ship Cost will be (pound)70,495,764.41.

1.36    There  will  be no  liability  to Tax  in  respect  of the  transactions
        contemplated by the Deed of Assignment,  Novation and Waiver (as defined
        in the Share Acquisition Documents).

1.37    The Spot  Exchange  Rate as between  Sterling as the Base  Currency  and
        Dollars as the Other  Currency  on the  Primary  Period End Date for the
        purposes of Non Variable Assumption 2.19 is 1:1.

1.38    The Initial Insurance Premium:

1.38.1  will be (pound)6000;

1.38.2  is incurred on the Delivery Date; and

1.38.3  is deductible as a trading  expense for the purposes of Corporation  Tax
        in the Accounting Period in which it is incurred.

1.39    The  Notional  Capital  Outstanding  on 8  April  2003 is  equal  to the
        aggregate of:

        (a)     (pound)70,495,764.41;

        (b)     the Arrangement Fee;

        (c)     the Lease Fee;

        (d)     the Lessor's Professional Costs; and

        (e)     the Initial Insurance Premium.

2       Non-Variable Assumptions

2.1     On  each  Adjustment  Date  the  Lessor  will  pay or  receive  interest
        calculated  (on a daily  basis  and  using a 365 day  year) on the daily
        balances during each Adjustment  Period of Notional Capital  Outstanding
        calculated at the Assumed Rate.

2.2     The Percentage  Return will be applied to the daily negative balances of
        Notional Capital  Outstanding using a year of 365 days during the period
        from the Delivery  Date until the Final Date and the product is shown in
        the column of the Applicable Cash Flow headed "Margin", each such figure
        being  debited to the Cash Flow on each  Primary  Rental Date and on the
        Final Date.

2.3     All  notional  borrowing by the Lessor of funds in  connection  with the
        transactions of which this Lease forms part shall be deemed to have been
        raised in the  United  Kingdom  on a  sterling  advance  from a bank (as
        defined,  for the purposes of section  349(3)(a)  ICTA,  in section 840A
        ICTA) in  circumstances  where at the time when the interest is paid (or
        deemed to be paid) the person  beneficially  entitled to the interest is
        within the charge to Corporation Tax in respect of the interest and on a
        full recourse basis.

2.4     For the purposes of preparing any Applicable Cash Flow only, it shall be
        assumed that the Primary Rentals and any other amount payable under this
        Lease or the other Transaction Documents and which is taken into account
        in any  Applicable  Cash Flow  will be paid on the due date for  payment
        thereof.

2.5     The Lessor shall have no taxable profits other than any it shall make in
        respect of the  transactions  contemplated by the Transaction  Documents
        and shall be  regarded as having no assets on which  Capital  Allowances
        are available other than the Ship.

2.6     Subject only to there being no change in any Variable  Assumption  which
        affects the  operation  of the  following,  and to paragraph  1.34.1,  a
        single Group Relief Recipient will make to the Lessor payments for Group
        Relief which are calculated and receivable on the following basis:-

        (a)     by applying the provisions of section 403A ICTA to determine how
                much of the Lessor's Tax Loss for any  Accounting  Period of the
                Lessor is available for  surrender to the relevant  Group Relief
                Recipient  for  such  Group  Relief  Recipient's   corresponding
                Accounting  Period  (as  that  expression  is used  in the  said
                section 403A);

        (b)     by assuming that,  with the consent of the Lessor,  the relevant
                Group  Relief  Recipient  makes  such claim as is  necessary  to
                procure that the full amount of such Tax Loss is available to it
                by way of Group Relief;

        (c)     by assuming that the relevant Group Relief Recipient pays to the
                Lessor  by way of  Group  Relief  Payment  amounts  equal to the
                product of:

                (i)     the amount of the Tax Loss in respect of each Accounting
                        Period  of the  Group  Relief  Recipient  assumed  under
                        sub-paragraph  (a) above to have been surrendered by the
                        Lessor; and

                (ii)    the  Corporation  Tax Applicable Rate in relation to the
                        Accounting Period of the Group Relief Recipient to which
                        such Tax Loss was surrendered;

        (d)     by assuming that the relevant Group Relief  Recipient makes each
                payment  referred  to in  sub-paragraph  (c)  above  on the date
                assumed  to be the  date for the  payment  by the  Group  Relief
                Recipient  of  Corporation  Tax on profits in  relation  to that
                Accounting Period in Variable Assumption 1.12.

2.7     No payments or recovery of Value Added Tax will be taken into account in
        any Cash Flow.

2.8     The Lessor will pay the Arrangement  Fee, the Lease Fee and the Lessor's
        Professional Costs.

2.9     Subject  to there  being no change  in the  Variable  Assumptions  which
        affects  the  Lessor  or a Group  Relief  Recipient,  any  Group  Relief
        Recipient  will have an  Accounting  Period which ends on 31 December in
        each year.

2.10    Where it is assumed in any of the  Assumptions or in the  preparation of
        any Cash Flow that an amount is  received  or paid by the  Lessor on any
        date,  an amount  equal to such  receipt  or  payment  shall be shown as
        credited or debited to such Cash Flow on such date.

2.11    The aggregate of any Relevant Amount which is a negative amount together
        with  interest  thereon  at the rate and for the period  referred  to in
        paragraph  4.9.2(b) shall be paid by the Lessor to the Inland Revenue on
        the Tax Payment Date immediately succeeding the Effective Date.

2.12    Interest on any Relevant  Amount which is a negative  amount as referred
        to in  Non-Variable  Assumption  2.11 shall be deemed to be  interest on
        underpaid Corporation Tax payable by the Lessor to the Inland Revenue.

2.13    Any Relevant  Amount which is a positive amount shall be received by the
        Lessor  together  with  interest  thereon at the rate and for the period
        referred to in paragraph  4.9.2(c) on the Tax Payment  Date  immediately
        succeeding the monthly anniversary of the Effective Date.

2.14    The amount of any  interest on any  Relevant  Amount which is a positive
        amount as referred to in Non-Variable Assumption 2.13 shall be deemed to
        be interest on overpaid Corporation Tax payable by the Inland Revenue to
        the Lessor.

2.15    The Lessor will not be entitled to Capital  Allowances or any other form
        of Tax relief in respect of the Ship Cost at a rate of more than  twenty
        five per cent. (25%) per annum on a reducing balance basis.

2.16    Immediately following the completion of the acquisition by the Purchaser
        of the shares of the Lessor pursuant to the Share Acquisition Documents,
        a meeting of the board of directors of the Lessor will be held in the UK
        (the "First UK Meeting Date") and all subsequent board meetings at which
        major and  strategic  decisions  relating  to the  Lessor's  business or
        affairs will be taken and subject to any Bermudan law  requirements  all
        general  meetings  of the  Lessor  will  be held  within  the UK and all
        corporate  books and accounts  relating to the Lessor's  affairs will be
        maintained in the UK.

2.17    At the meeting  referred to in  Non-Variable  Assumption  2.16 above and
        after the First UK Meeting Date, at least a majority of the directors of
        the Lessor will be UK residents and at least a majority of the directors
        of the Lessor will be physically  present in the UK at board meetings of
        the Lessor.

2.18    Subject to there being no change in any Variable  Assumption  which will
        affect the Lessor,  after the First UK Meeting Date the Lessor will draw
        up its accounts for periods ending on 31 December in each year.

2.19    The Lessor will pay a fee of the Sterling  Equivalent  of $12,000 on the
        Primary Period End Date or, if earlier,  the Termination Date and no Tax
        relief will be available in respect of such fee.
<PAGE>

                                   Appendix 2
                                   ----------

                              The Initial Cash Flow
                              ---------------------
<PAGE>

                                   Appendix 3
                                   ----------

                             The Initial Tax Report
                             ----------------------
<PAGE>

                                   Appendix 4
                                   ----------

                               Reserve Asset Rate
                               ------------------

The Reserve Asset Rate for any Adjustment  Period or other relevant period shall
mean the annual percentage rate of interest derived from the following formula:

                             XL + S (L-D) + 0.01 x F
                             -----------------------
                                  100 - (X + S)

Where:

        "X"     is the amount required to be held as a non-interest bearing cash
                ratio  deposit  with  the  Bank of  England  or  other  relevant
                authority expressed as a percentage of an eligible institution's
                eligible liabilities (above any stated minimum);

        "L"     is LIBOR for the relevant Interest Period;

        "S"     is the amount required to be placed as special deposits with the
                Bank of  England or other  relevant  authority,  expressed  as a
                percentage  of an eligible  institution's  eligible  liabilities
                (above any stated minimum);

        "F"     is the amount of Sterling per  (pound)1,000,000  of the fee base
                of an authorised  institution  payable to the Financial Services
                Authority per annum  (disregarding any minimum fee payable under
                the Fees Regulations);

        "D"     is the lower of L and the rate of interest per annum paid by the
                Bank of England or other relevant  authority on special deposits
                at or about 11.00 am on the date of calculation;

PROVIDED THAT:

        (a)     for the  purposes  of  calculating  the  Reserve  Asset  Rate in
                accordance with this Appendix 4:

                (i)     X, L, S and D are included in the formula as numbers and
                        not as percentages (for example, if X=0.15 per cent. and
                        L=7 per cent., XL is calculated as 0.15 x 7;

                (ii)    the  formula is applied on the first day of each  period
                        for  which  is falls to be  calculated  (and the  result
                        shall apply for the duration of such period);

                        (A)     each  amount is rounded up to the  nearest  four
                                decimal places;

                        (B)     if the formula  produces a negative  percentage,
                                the percentage shall be taken as zero;

        (b)     if alternative or additional financial  requirements are imposed
                by the Bank of England,  the Financial Services Authority or any
                other United Kingdom  governmental  authority or agency which in
                the Lessor's  opinion  makes the formula no longer  appropriate,
                the  Lessor  shall  be  entitled  by  notice  to the  Lessee  to
                stipulate  such other  formula as shall be  suitable to apply in
                substitution  for  the  formula.   Any  such  other  formula  so
                stipulated  shall take  effect in  accordance  with the terms of
                such notice; and

        (c)     for the purposes of this Appendix 4:

                (i)     "authorised" and  "institution"  have the meanings given
                        to those terms in the Banking Act 1987;

                (ii)    "Bank of  England  Act"  means the Bank of  England  Act
                        1998;

                (iii)   "eligible  institution"  has the  meaning  given to that
                        term in schedule 2 to the Bank of England Act;

                (iv)    "eligible  liabilities"  has the  meaning  given to that
                        term in the Cash Ratio Deposits  (Eligible  Liabilities)
                        Order 1998 or the applicable substitute order made under
                        the  Bank of  England  Act as in  force  on the  date of
                        application of the formula;

                (v)     "fee base" has the meaning given to the term in the Fees
                        Regulations;

                (vi)    "Fees Regulations" means the Banking  Supervision (Fees)
                        Regulations   2000   or   the   applicable    substitute
                        regulations made under the Bank of England Act as are in
                        force on the date of application of the formula; and

                (vii)   "special deposits" has the meaning given to that term by
                        the Bank of  England on the date of  application  of the
                        formula.
<PAGE>

                                   Appendix 5
                                   ----------

                             Initial Security Table
                             ----------------------

<PAGE>
                                   Appendix 6
                                   ----------

                             Extra Security Amounts
                             ----------------------

           Security Period                    Amount (pound)

         15 Jul 03 to 14 Oct 03                  115,200
         15 Oct 03 to 14 Jan 04                  254,582
         15 Apr 04 to 14 Jul 04                   27,898
         15 Jul 04 to 14 Oct 04                  194,810
         15 Oct 04 to 14 Jan 05                  337,962
         15 Apr 05 to 14 Jul 05                   86,734
         15 Jul 05 to 14 Oct 05                  253,062
         15 Oct 05 to 14 Jan 06                  394,622
         15 Jul 06 to 14 Oct 06                  143,336
         15 Oct 06 to 14 Jan 07                  278,466
         15 Jul 07 to 14 Oct 07                   52,784
         15 Oct 07 to 14 Jan 08                  191,356
         15 Oct 08 to 14 Jan 09                  118,354
         15 Oct 09 to 14 Jan10                    56,589
         15 Oct 10 to 14 Jan 11                    1,696
         15 Jul 22 to 14 Oct 22                      352
         15 Oct 22 to 14 Jan 23                   25,090

<PAGE>

                                   Schedule 5
                          Forms of Loss Payable Clause

Hull and Machinery (Marine and War Risks)

By a charterparty  by way of demise made the [o] day of April 2003 between Golar
Freeze  (Bermuda)  Limited  (whose  name is to be  changed to  Sovereign  Freeze
Limited) (the "Lessor") and Golar Gas Holding  Company,  Inc. (the "Lessee") the
Lessor has demise chartered the Ship to the Lessee.

By a sub  charterparty  by way of demise made the [o] day of April 2003  between
the  Lessee  and  Golar  Freeze  UK Ltd.  (the  "Sub-Lessee"),  the  Lessee  has
sub-demise chartered the Ship to the Sub-Lessee.

All recoveries under this policy shall be applied as follows:

(a)    all  claims  hereunder  in  respect  of  an  actual  or  constructive  or
       compromised or arranged total loss shall be paid in full to the Lessor;

(b)    all claims in respect of a major  casualty  (that is to say any  casualty
       the claim in respect of which exceeds five million  Dollars  ($5,000,000)
       (or the equivalent) inclusive of any deductible) shall be paid in full to
       the Lessor; and

(c)    all other claims  hereunder shall be paid in full to the Sub-Lessee or to
       its order  unless  and until the  Lessor  shall  have  notified  insurers
       hereunder to the contrary, whereupon all such claims shall be paid to the
       Lessor.

Protection and Indemnity Risks

Payment of any recovery which Golar Freeze  (Bermuda)  Limited (whose name is to
be changed to  Sovereign  Freeze  Limited)  (the  "Lessor") or Golar Gas Holding
Company,  Inc.  (the  "Lessee") or Golar Freeze UK Ltd.  (the  "Sub-Lessee")  is
entitled  to  make  out of  the  funds  of the  Association  in  respect  of any
liability,  costs  or  expenses  incurred  by the  Lessor,  the  Lessee  and the
Sub-Lessee,  shall be paid to the  person  to whom  the  liability  (or  alleged
liability) covered by the entry was incurred or to the extent that the liability
(or alleged  liability)  to such person has  previously  been  discharged by the
Lessor,  the Lessee and the Sub-Lessee,  such moneys shall be paid to the Lessor
or its order or, as the case may be, the Lessee or its order or, as the case may
be, the Sub-Lessee or its order in reimbursement of the moneys so expended by it
in satisfaction of such liability (or alleged  liability),  unless and until the
Association  receives  notice to the contrary from the Lessor in which event all
recoveries due to the Lessee and the Sub-Lessee  shall thereafter be paid to the
Lessor;  provided that no liability  whatsoever shall attach to the Association,
its Managers or their  agents for failure to comply with the latter  obligations
until the expiry of two clear Banking Days from the receipt of such notice.  The
Association shall, unless it receives from the Lessor notice to the contrary, be
at liberty at the request of the Lessee and the  Sub-Lessee  to provide  bail or
other  security  to  prevent  the arrest or obtain  the  release of the  vessel,
without liability to the Lessor.
<PAGE>

                                   Schedule 6
                         Form of Compliance Certificate

                   Compliance Certificate issued pursuant to a
             Lease Agreement dated [o] April 2003 in respect of m.v.
                          "GOLAR FREEZE" (the "Lease")

I, [o], the Chief  Financial  Officer of Golar Gas Holding  Company,  Inc.  (the
"Lessee"), hereby certify that:

1       Attached hereto are the latest [Annual Financial Statements]  [Quarterly
        Financial  Statements]  for the [o] period ended on [o] (the  "Reference
        Date").  Such financial  statements  [were  prepared in accordance  with
        Relevant  GAAP] [were not prepared in accordance  with Relevant GAAP and
        attached  hereto is a statement of the full  details of the  adjustments
        required to in such statements to reflect  Relevant GAAP as necessary to
        calculate the amounts referred to in paragraph 2 below].

2       Attached hereto is a statement of the respective amounts of:

        o       the Cash Balances and Minimum Free Available Cash

        o       Current Assets,  Current  Liabilities and the current portion of
                long-term debt

        o       Annualised EBITDA and Interest Expense

        o       Net Debt,

        as at, and for each relevant period ended on, the Reference Date.

3       The Lessee has complied with each of the financial  undertakings set out
        in clause  11.1.9 of the Lease and is not in default in the  performance
        or observance of any of such covenants [specify any exceptions].

4       As at [date] no Relevant  Event has occurred and is continuing  [specify
        any exceptions].

5       The person executing this certificate on our behalf has full information
        concerning our financial  affairs and has executed the same after having
        made due investigation and enquiry as to the accuracy of the information
        herein contained.

Terms used herein and not otherwise  defined  herein shall have the meanings set
forth in the said Lease. This certificate is rendered pursuant to clause 11.1.11
of the Lease.

IN WITNESS WHEREOF, the undersigned has set his hand this [o] day of [o] [20o].

GOLAS GAS HOLDING COMPANY INC.

By: ...............................
         Chief Financial Officer
<PAGE>

SIGNED by                        )
GOLAR FREEZE (BERMUDA) LIMITED   )  ...........................................
                                    Name:
                                    Title:

SIGNED by                        )
GOLAR GAS HOLDING COMPANY, INC.  )  ...........................................
                                    Name:
                                    Title:Dated April 2003

                         GOLAR SPIRIT (BERMUDA) LIMITED
                  (to be renamed SOVEREIGN SPIRIT LIMITED) (1)

                                       and

                       GOLAR GAS HOLDING COMPANY, INC. (2)

                                 LEASE AGREEMENT
                           relating to "GOLAR SPIRIT"

                                                                     NORTON ROSE

<PAGE>

                                    Contents

clause                                                                  Page

1   Purpose and definitions...............................................

2   Lessee's representations and warranties...............................

3   Term of Lease.........................................................

4   Conditions............................................................

5   Delivery and acceptance...............................................

6   Extent of Lessor's liability..........................................

7   Rental................................................................

8   Payments, interest and calculations...................................

9   Costs and indemnities.................................................

10  Taxation..............................................................

11  General undertakings..................................................

12  Sub-leasing...........................................................

13  Use and trade of the Ship.............................................

14  Title, registration, name and house flag..............................

15  Maintenance and operation.............................................

16  Insurance Undertakings: wreck removal.................................

17  Powers of Lessor to remedy defaults...................................

18  Redelivery............................................................

19  Consumable stores.....................................................

20  Use of equipment and replacement......................................

21  Encumbrances: Lessor's undertakings...................................

22  Loss and damage.......................................................

23  Salvage...............................................................

24  Requisition for hire..................................................

25  Security Provisions...................................................

26  Termination Events....................................................

27  Lessor's rights following a Termination Event and
    Mandatory Prepayment Event............................................

28  Notices...............................................................

29  Liens and indemnities.................................................

30  Assignment and sale of Ship...........................................

31  Increased costs, funding problems and illegality......................

32  Refinancings..........................................................

33  Miscellaneous.........................................................

34  Governing law and jurisdiction........................................

Schedule 1 List of documents and evidence.................................

Schedule 2 Form of Delivery Request Notice................................

Schedule 3 Form of Protocol of Delivery and Acceptance under Lease........

Schedule 4 Financial Schedule.............................................

Schedule 5 Forms of Loss Payable Clause...................................

Schedule 6 Form of Compliance Certificate.................................

<PAGE>

April 2003 and made BETWEEN:

(1)  GOLAR SPIRIT  (BERMUDA)  LIMITED  (whose name is to be changed to Sovereign
     Spirit Limited), a company incorporated in Bermuda whose principal place of
     business is situated at Sovereign House,  298 Deansgate,  Manchester M3 4HH
     (the "Lessor"); and

(2)  GOLAR GAS HOLDING COMPANY,  INC., a company incorporated in the Republic of
     Liberia whose registered  office is situated at 80 Broad Street,  Monrovia,
     Republic of Liberia (the "Lessee").

BY WHICH IT IS AGREED as follows :

1       Purpose and definitions

1.1     Purpose

        This Lease sets out the terms and  conditions  upon and subject to which
        the Lessor agrees to lease to the Lessee,  and the Lessee agrees to take
        on lease, the Ship.

1.2     Definitions

        In this Lease, unless the context otherwise requires:

        "Account  Bank" means Nordea Bank  Finland Plc of 8th Floor,  City Place
        House, 55 Basinghall Street, London EC2V 5NB and includes its successors
        in title;

        "Accounting  Period" means an accounting period as defined in section 12
        ICTA;

        "Additional  Amount" has the  meaning  given to that  expression  in the
        Letter of Credit;

        "Additional  Security" means any additional security for the obligations
        of the Lessee under this Lease provided in accordance  with clause 25 in
        form and  content  acceptable  to the Lessor  and,  where the context so
        requires,  includes any replacement of such  additional  security issued
        pursuant to clause 25;

        "Additional  Security Amount" means, at any time, the amount in Sterling
        (as certified by the Lessor whose  certificate  shall, in the absence of
        manifest  error,  be conclusive  and binding on the Lessee) which is the
        value of any  Additional  Security  at such time (but for the purpose of
        the definition of the Applicable  Security Amount and in the case of any
        Additional  Security  provided  by a  Relevant  Bank,  disregarding  any
        Relevant  Bank Change of Law Event or  Relevant  Bank  Illegality  Event
        which may affect the  liability  of the LC Bank to the Lessor in respect
        of the relevant Additional Security at such time);

        "Additional   Security   Documents"  means  all  documents  under  which
        Additional  Security  is  constituted  or  by  which  such  security  is
        evidenced or pursuant to which any person  secures the  provision of any
        Additional Security;

        "Additional  Security  Provider" means any entity  providing  Additional
        Security and,  where the context so requires,  means any entity  issuing
        any replacement Additional Security pursuant to clause 25;

        "Additional  Security Table" has the meaning given to that expression in
        the Financial Schedule;

        "Adjustment  Period" has the  meaning  given to that  expression  in the
        Financial Schedule;

        "Adverse  Event" has the meaning given to that  expression in the Letter
        of Credit;

        "Adverse  Event Notice" has the meaning given to that  expression in the
        Letter of Credit;

        "Agency  and Trust  Deed"  means the  agency and trust deed of even date
        herewith made between the Lessor,  the Other Lessors,  the Lessor Agent,
        the  Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees  and the  Standby
        Purchaser relating to (inter alia) the Lessee Third Party Assignment and
        the Sub-Lessee Third Party Assignment;

        "Annual Financial Statements" means annual:

        (a)     financial  statements of the Lessee, the Manager, the Sub-Lessee
                and each of the Other Sub-Lessees;

        (b)     consolidated financial statements of the Lessee Group; and

        (c)     proforma combined and consolidated  financial  statements of the
                Golar Gas Group,

        each  comprising a profit and loss account and a balance  sheet and cash
        flow statement and audited by the Lessee's Auditors;

        "Applicable  LC  Increased   Amount"  has  the  meaning  given  to  that
        expression in clause 25.8.1;

        "Applicable  Rate"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Applicable  Security Amount" means, at any relevant time, the aggregate
        of the  Letter of  Credit  Amount  and the  Additional  Security  Amount
        attributable to an Additional  Security  Document provided by a Relevant
        Bank less any amount which,  by virtue of any Relevant  Bank  Illegality
        Event and/or  Relevant  Bank Change of Law Event,  the Relevant  Bank is
        relieved from its  obligation to make payment under the Letter of Credit
        or,  as the  case  may be,  the  Additional  Security  Document  at such
        relevant time;

        "Applicable  Security Table" has the meaning given to that expression in
        the Financial Schedule;

        "Approved  Brokers" means Marsh Marine & Energy AS or such other firm of
        insurance  brokers  appointed  by the Lessee as may from time to time be
        approved  in writing by the Lessor for the  purposes of this Lease (such
        approval not to be unreasonably withheld or delayed);

        "Arranger" means Citibank N.A. of 33 Canada Square, Canary Wharf, London
        E14 5LB and includes its successors in title;

        "Arrangement  Fee"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Assumed Rate" has the meaning given to that expression in the Financial
        Schedule;

        "Assumptions"  has the meaning given to that expression in the Financial
        Schedule;

        "Auditors" means the auditors from time to time of the Lessor;

        "Banking  Day"  means a day (other  than a Saturday  or Sunday) on which
        dealings in deposits in Sterling are carried on in the London  Interbank
        Eurocurrency  Market and on which banks are open for  business in London
        (or any other relevant place of payment under clause 8);

        "Borrowed Money" means Indebtedness incurred in respect of:

        (a)     money borrowed or raised and debit balances at banks;

        (b)     any  bond,   note,   loan  stock,   debenture  or  similar  debt
                instrument;

        (c)     acceptance or documentary credit facilities;

        (d)     receivables sold or discounted (otherwise than on a non-recourse
                basis);

        (e)     deferred  payments for assets or services  acquired  (other than
                assets or services  acquired on normal  commercial  terms in the
                ordinary course of business where payment is deferred by no more
                than one hundred and eighty (180) days);

        (f)     Capitalised Lease Obligations;

        (g)     any other transaction  (including,  without limitation,  forward
                sale or purchase  agreements)  having the commercial effect of a
                borrowing or raising of money;

        (h)     guarantees  in respect  of  Indebtedness  of any person  falling
                within any of (a) to (g) above; and

        (i)     preference  share  capital in the Lessee or any other  member of
                the Golar Gas Group  which is or may be  redeemable  before  the
                full and final discharge of all  Indebtedness and liabilities of
                the Lessee under this Lease;

        "CAA" means the Capital Allowances Act 2001;

        "Capitalised Lease Obligation" of any person means the obligation to pay
        rent or other payment  amounts under a lease of (or other Borrowed Money
        arrangements conveying the right to use) real or personal property which
        is required to be classified and accounted for as a capitalised lease or
        a liability on the face of a balance  sheet of such person in accordance
        with Relevant GAAP (in the case of this Lease and the Other Ship Leases,
        net of an  amount  equal to the  aggregate  of the  Applicable  Security
        Amount and the Applicable  Security Amount (as defined in the Other Ship
        Leases));

        "Cash  Balances"  means,  at any relevant  time,  an amount equal to the
        aggregate amount which is, at such time,  credited to and/or invested in
        the Earnings Accounts;

        "Casualty  Amount"  means  five  million  Dollars  ($5,000,000)  (or the
        equivalent  in any other  currency)  or, if the  context so  requires in
        respect of any single  refurbishment of the Ship to be undertaken by the
        Lessee  or, as the case may be,  the  Sub-Lessee  during  the  period of
        twenty  four (24)  months  from the date of this  Lease,  eight  million
        Dollars ($8,000,000);

        "Change of Law" means, in each case after the date of this Lease:

        (a)     the  introduction,   imposition,   assessment,   application  or
                amendment by any  governmental  authority,  central bank or Tax,
                fiscal,  monetary  or other  authority  of any  applicable  law,
                order,  regulation,  official directive or guideline (whether or
                not having the force of law but, if not having the force of law,
                compliance   with  which  is  regarded  by  banks  and/or  other
                financial  institutions  conducting  business  in  the  relevant
                jurisdiction  as customary  (including,  but not limited to, the
                introduction  of or changeover to the Euro in any  participating
                member state of the European Union); and/or

        (b)     any  change  in, or any new or  further  or  different  official
                interpretation,  administration  or  application  after the date
                hereof of,  any  applicable  law,  order,  regulation,  official
                directive or  guideline  (whether or not having the force of law
                but,  if not having the force of law,  compliance  with which is
                regarded by banks and/or other financial institutions conducting
                business in the relevant jurisdiction as customary) or Generally
                Accepted Accounting Principles; and/or

        (c)     any  compliance  with any  request,  requirement,  directive  or
                guideline  (whether  or not having the force of law but,  if not
                having the force of law,  compliance  with which is  regarded by
                banks and/or other financial institutions conducting business in
                the relevant  jurisdiction  as  customary)  issued by an central
                bank, Tax, fiscal, monetary or governmental authority; and/or

        (d)     the  adoption,  introduction  or variation of, or change in, any
                ruling,  decision,   judgment,  statement  of  policy,  official
                proposal or any other  assessment or  determination  (whether or
                not having the force of law but, if not having the force of law,
                compliance   with  which  is  regarded  by  banks  and/or  other
                financial  institutions  conducting  business  in  the  relevant
                jurisdiction  as  customary) by any court,  central  bank,  Tax,
                fiscal, monetary or governmental authority;

        "Classification" means the classification +1A1, Tanker for Liquefied Gas
        (-163(0)C,  0.5 ton/m(3),  0.7kg/cm(2),  DAT -10(0)):  MV+KV, EO or such
        other classification available for liquefied natural gas carriers of the
        same age and type as the Ship,  in each  case,  with the  Classification
        Society as the Lessor shall,  at the request of the Lessee,  have agreed
        in writing  shall be treated as the  Classification  for the purposes of
        this Lease;

        "Classification   Society"  means  Det  Norske  Veritas  or  such  other
        classification  society  which the Lessor  shall,  at the request of the
        Lessee,  have agreed in writing  shall be treated as the  Classification
        Society for the Ship for the purposes of this Lease;

        "Compulsory Acquisition" means requisition for title or other compulsory
        acquisition,  requisition,  appropriation,  expropriation,  deprivation,
        forfeiture or confiscation  for any reason of the Ship by any Government
        Entity or other competent  authority,  whether de jure or de facto,  but
        shall exclude  requisition for use or hire not involving  requisition of
        title;

        "Corporation  Tax" means corporation tax in the context of the scheme of
        taxation  contained in the Corporation  Taxes Act (as defined in section
        831 ICTA) or any other Tax on companies imposed in the United Kingdom in
        substitution for corporation tax;

        "Cost of  Lessor's  Management  Time"  means  the  cost of the  Lessor's
        personnel  charged  at  an  amount  of  two  hundred  and  fifty  Pounds
        ((pound)250) per hour for a senior officer of the Lessor and one hundred
        and seventy five pounds  ((pound)175)  per hour for a junior  officer of
        the Lessor,  in each case  excluding  VAT,  escalated at the rate of RPI
        from the Delivery Date;

        "Credit  Rating"  means,  in  respect  of  any  person,  the  unsecured,
        unguaranteed  and  unsubordinated  long term debt  rating of such person
        with the applicable credit rating agency;

        "Credit Review Date" means 31 December 2010;

        "Current Assets" means, on a consolidated  basis, the current assets (as
        determined in accordance with Relevant GAAP) of the Golar Gas Group;

        "Current  Liabilities"  means,  on a  consolidated  basis,  the  current
        liabilities  (as  determined  in accordance  with Relevant  GAAP) of the
        Golar Gas Group;

        "Default Rate" means the rate of interest determined by the Lessor to be
        one per cent (1%) per annum above the  aggregate of the Margin and LIBOR
        for such  period  not  exceeding  six (6) months in respect of which the
        Default  Rate falls to be  determined  as the Lessor  may  determine  in
        amounts  comparable  with the sum in respect of which the  Default  Rate
        falls to be determined  or, where by reason of  circumstances  affecting
        the London Interbank Market generally, deposits in the relevant currency
        are not, in the ordinary  course of business,  available at any relevant
        time in the London Interbank Market, the rate of interest  determined by
        the Lessor to be one per cent (1%) above the aggregate of the Margin and
        the  cost  (expressed  as a  percentage  per  annum)  to the  Lessor  of
        obtaining  funds in the currency and in amounts  comparable with the sum
        in respect of which the Default Rate falls to be determined;

        "Delivery"  means the time when the Lessor shall deliver the Ship to the
        Lessee pursuant to clause 5;

        "Delivery  Date" means the date  (which must be a Banking  Day) on which
        Delivery shall occur;

        "Delivery  Request Notice" means a notice  substantially in the terms of
        Schedule 2;

        "Determination"  have the  meaning  given to  those  expressions  in the
        Financial Schedule;

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

        "Dollars"  and "$" means the lawful  currency  for the time being of the
        United States of America and in respect of all payments to be made under
        this Lease in Dollars,  means funds which are for same day settlement in
        the New York Clearing  House  Interbank  Payments  System (or such other
        U.S.  dollar  funds as may at the  relevant  time be  customary  for the
        settlement of international  banking transactions  denominated in United
        States dollars);

        "Earnings  Account"  means  any of the  accounts  of the  Lessee  or the
        Sub-Lessee  or the  Other  Sub-Lessees  of the Ship or any of the  Other
        Ships  designated in writing by the Lessor (based,  where  applicable on
        information  received  from  the  First  Security  Agent  or the  Second
        Security Agent) to be an Earnings Account for the purposes of this Lease
        (and includes any fixed term deposit contract or account associated with
        such  account) and  "Earnings  Accounts"  means all of such accounts and
        fixed term deposit contracts and/or accounts;

        "EBITDA" means, for any period, the earnings before interest,  taxes and
        depreciation and amortisation (calculated as income from operations plus
        any  depreciation  and  amortisation,  Interest  Expense,  and  taxes on
        overall net income  deducted in  calculating  income from  operations in
        respect of such period) of the Golar Gas Group  determined in accordance
        with Relevant GAAP on a consolidated basis;

        "Economically  Burdensome"  has the meaning given to that  expression in
        the Financial Schedule;

        "Encumbrance"  means any mortgage,  charge  (whether fixed or floating),
        pledge, lien, hypothecation,  assignment,  trust arrangement or security
        interest or other encumbrance of any kind securing any obligation of any
        person  or any  type of  preferential  arrangement  (including,  without
        limitation,  title  transfer  and/or  retention  arrangements  having  a
        similar effect);

        "Environmental  Affiliate"  means any agent or employee of the Lessee or
        any other Relevant Party or any person having a contractual relationship
        with the  Lessee  or any other  Relevant  Party in  connection  with any
        Relevant  Ship  or  its  operation  or  the  carriage  of  cargo  and/or
        passengers  thereon and/or the provision of goods and/or  services on or
        from the Relevant Ship;

        "Environmental  Approval" means any consent,  authorisation,  licence or
        approval of any  governmental  or public body or  authorities  or courts
        applicable  to any  Relevant  Ship or its  operation  or the carriage of
        cargo and/or  passengers  thereon  and/or the  provision of goods and/or
        services on or from the Relevant Ship required  under any  Environmental
        Law;

        "Environmental Claim" means:

        (a)     any  and  all  enforcement,   clean-up,  removal  or  any  other
                governmental or regulatory  action or order or claim  instituted
                or made pursuant to any  Environmental  Law or any Environmental
                Approval or resulting from a Spill; and

        (b)     any claim made by any other person relating to a Spill;

        "Environmental Incident" means any Spill:

        (a)     from any Relevant Ship; or

        (b)     from any other vessel in circumstances where:

                (i)     the Ship or the Lessor,  the Lessee,  the  Sub-Lessee or
                        the  Manager  may  be  liable  to  Environmental  Claims
                        arising from the Spill; and/or

                (ii)    the  Ship  may be  arrested,  attached  or  attached  in
                        connection with any such Environmental Claims;

        "Environmental Laws" means laws,  regulations and conventions concerning
        pollution or protection of human health or the environment;

        "Financial    Schedule"    means    Schedule   4   and    includes   its
        appendices/annexes;

        "Financial  Year" has the meaning given to that expression in Schedule 1
        of the Interpretation Act 1978;

        "First  Security  Agent" means Den norske Bank ASA of Stranden 21, Oslo,
        Norway and includes its successors in title;

        "Fixed Liability Amount" has the meaning given to that expression in the
        Letter of Credit;

        "Free  Available  Cash" means,  at any relevant  time, the amount of the
        Cash  Balances,  freely  available  for  use by the  Lessee  and/or  the
        Sub-Lessee   and/or   any   of  the   Other   Sub-Lessees   which   may,
        notwithstanding any Encumbrance,  right of set-off or agreement with any
        other party, be withdrawn  and/or encashed and used by it for any lawful
        purpose without  restriction  (save for restrictions that may be imposed
        by the First Security Agent or the Second Security Agent);

        "GIMI" means the liquefied  natural gas carrier "GIMI"  registered under
        British flag in the ownership of the relevant Other Lessor;

        "Golar  Gas  Group"  means  the  Lessee,  the  Sub-Lessee  and the Other
        Sub-Lessees;

        "GOLAR  FREEZE" means the liquefied  natural gas carrier  "GOLAR FREEZE"
        registered  under  British flag in the  ownership of the relevant  Other
        Lessor;

        "Gotaas  Larsen"  means Gotaas  Larsen  Shipping  Corp.,  a  corporation
        incorporated in the Republic of Liberia having its registered  office at
        80  Broad  Street,  Monrovia,  Republic  of  Liberia  and  includes  its
        successors in title;

        "Government  Entity" means and includes (whether having a distinct legal
        personality or not) any national or local government  authority,  board,
        commission,  department,  division,  organ,  instrumentality,  court  or
        agency and any association,  organisation or institution of which any of
        the foregoing is a member or to whose  jurisdiction any of the foregoing
        is subject or in whose activities any of the foregoing is a participant;

        "HILLI" means the liquefied natural gas carrier "HILLI" registered under
        British flag in the ownership of the relevant Other Lessor;

        "Holding  Company"  means any  holding  company  within  the  meaning of
        section 736 of the Companies Act 1985;

        "ICTA" means the Income and Corporation Taxes Act 1988;

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

        "Indemnified  Person"  means each  member of the Lessor  Group and their
        respective officers, directors, employees, servants and agents;

        "Indexation  Relief Letter" means a side letter to this Lease in respect
        of indexation relief, to be executed by the Lessor and the Lessee;

        "Initial Security Table" has the meaning given to that expression in the
        Financial Schedule;

        "Insolvency  Event"  means,  in  relation  to the  Lessee or the  Lessee
        Parent,  any of the  events  referred  to in  clauses  26.1.8 to 26.1.14
        inclusive occurring in respect of the Lessee or, as the case may be, the
        Lessee Parent;

        "Insurances"  means all  policies  and  contracts  of  insurance  (which
        expression  includes  all  entries  of  the  Ship  in a  protection  and
        indemnity or war risks  association)  which are from time to time during
        the Lease  Period in place or taken out or  entered  into by the  Lessee
        pursuant  to  clause  16  (or,  during,  the  Sub-Lease  Period,  by the
        Sub-Lessee)  for the  benefit of the Lessee  alone or the Lessee and the
        Lessor and,  during the Sub-Lease  Period,  the Sub-Lessee in respect of
        the Ship (but  excluding any policies and  contracts of insurance  taken
        out or entered into for the sole benefit and, save as provided in clause
        16.1.1,  at the cost of the  Lessor  and  without  being  subject to any
        indemnity  provision  under  this  Lease  (provided  such  policies  and
        contracts  of insurance do not affect  recoveries  under the  Insurances
        effected by the Lessee and/or the Sub-Lessee) or otherwise  howsoever in
        connection with the Ship and all benefits thereof  (including  claims of
        whatsoever nature and return of premiums);

        "Interest  Expense" means, for any period,  interest charges and related
        expenses for such period of the Golar Gas Group determined in accordance
        with Relevant GAAP on a consolidated basis;

        "Irrecoverable  VAT" has the  meaning  given to that  expression  in the
        Financial Schedule;

        "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  regulations  issued  pursuant to
        it;

        "KHANNUR" means the liquefied natural gas carrier  "KHANNUR"  registered
        under British flag in the ownership of the relevant Other Lessor;

        "LC Bank" means  Bayerische  Landesbank,  a German company acting out of
        its London branch at 13/14 Appold Street, London EC2A 2NB and, where the
        context so requires,  means such other bank  acceptable to the Lessor as
        may replace such bank as an "LC Bank" pursuant to clause 25 and includes
        its successors in title;

        "Lease  Documents"  means  this  Lease,  the  Proceeds  Deed,  the Third
        Priority  Three Party Deed,  the Agency and Trust Deed,  any  Additional
        Security  Documents  executed  by the Lessee and any other  document  to
        which the  Lessee is party and which the  Lessor  and the  Lessee  agree
        shall be a "Lease  Document"  for the  purposes  of this  Lease  and all
        notices,  consents,  certificates  and other documents and agreements to
        which the  Lessee is party  issued  or, as the case may be, to be issued
        pursuant to any of the foregoing;

        "Lease Fee" has the meaning  given to that  expression  in the Financial
        Schedule;

        "Lease  Obligations" means all moneys,  obligations and liabilities from
        time to time  owing or  payable,  incurred  or  assumed by the Lessee in
        favour of the Lessor under or pursuant to this Lease and the other Lease
        Documents;

        "Lease  Period"  means  the  period  during  which the  Lessee  shall be
        entitled to the possession  and use of the Ship in accordance  with this
        Lease;

        "Legal  Fee"  means the fees and  disbursements  of Messrs  Norton  Rose
        acting as counsel to the  Lessor,  together  with the fees in respect of
        any  correspondent  counsel  instructed  by Messrs  Norton Rose with the
        approval of the Lessee;

        "Lessee" means Golar Gas Holding Company,  Inc., a Liberian  corporation
        having its registered office at 80 Broad Street,  Monrovia,  Republic of
        Liberia and includes its successors in title;

        "Lessee  Group"  means  together  the  Lessee  Parent  and  each  of its
        Subsidiaries from time to time and for the purposes of "Annual Financial
        Statements"  and "Quarterly  Financial  Statements"  (and the expression
        "Lessee  Group"  where used in such  definitions)  any company or entity
        whose accounts are to be consolidated with those of the Lessee Parent in
        accordance  with  Relevant  GAAP shall be treated as a Subsidiary of the
        Lessee Parent;

        "Lessee Parent" means Golar LNG Limited,  a Bermudan  company having its
        principal  place of business at  Par-la-Ville  Place,  Second Floor,  14
        Par-la-Ville  Road,  Hamilton  HM08,  Bermuda,  and being  the  indirect
        Holding Company of the Lessee and includes its successors in title;

        "Lessee Parent  Guarantee" means the guarantee of the obligations of the
        Lessee  under this Lease  issued or (as the context  may  require) to be
        issued by the Lessee Parent in favour of the Lessor in the agreed form;

        "Lessee's Auditors" means  PricewaterhouseCoopers or another first class
        firm of international accountants;

        "Lessor"  means  Golar  Spirit  (Bermuda)  Limited  (whose name shall be
        changed to Sovereign Spirit Limited), a Bermudan company whose principal
        place of business is at Sovereign  House,  298 Deansgate,  Manchester M3
        4HH and includes its successors in title;

        "Lessor  Agent"  means  Sovereign  Finance Plc of Sovereign  House,  298
        Deansgate, Manchester M3 4HH;

        "Lessor Group" means the group of companies from time to time comprising
        the Lessor Parent and all of its Subsidiaries;

        "Lessor  Mortgage"  means the first priority  statutory  mortgage of the
        Ship and  collateral  deed of covenant  (containing an assignment by the
        Lessor of its interest in the  Insurances  (other than the Insurances in
        respect  of  protection  and  indemnity  and other  third  party  risks)
        executed or (as the context may require) to be executed by the Lessor in
        favour of the Lessee in the agreed form as security for its  obligations
        to pay certain sums to the Lessee under this Lease;

        "Lessor Parent" means Alliance & Leicester plc;

        "Lessor Payment  Account" means the account of the Lessor referred to in
        clause 8.1;

        "Lessor Proceeds Accounts" means any proceeds accounts opened or, as the
        context  may  require,  to be opened by the  Lessor  pursuant  to and in
        accordance with clause 2.8 of the Proceeds Deed;

        "Lessor Proceeds Accounts  Assignment" means the assignment  executed or
        (as the context  may  require) to be executed by the Lessor in favour of
        the Lessee in respect of the Lessor  Proceeds  Accounts,  and, where the
        context  requires,  includes  any Lessor  Proceeds  Accounts  Assignment
        executed pursuant to clause 8.6 of the Proceeds Deed;

        "Lessor  Support  Letters"  means the support  letters issued or (as the
        context may require) to be issued by the Lessor Parent to (inter alios):

        (a)     the Lessee,  the First  Security  Agent and the Second  Security
                Agent in respect of,  amongst  other  things,  the ownership and
                obligations  of the  Lessor  under  this  Lease  and  the  other
                Transaction Documents to which it is a party in the agreed form;
                and

        (b)     the Time  Charterer in respect of the  obligations of the Lessor
                under the Registered Owner's Undertaking;

        "Lessor's  Encumbrance" means any Encumbrance which arises or is created
        solely as a result of:

        (a)     any  obligation of the Lessor or a member of the Lessor Group or
                any claim  against  or  affecting  the Lessor or a member of the
                Lessor  Group  (other than  (except for the  purposes of clauses
                3.6.3 and 21) a claim for or obligation in respect of Taxes or a
                claim or obligation in respect of which the liability to pay the
                same, or the amount of the same,  is then being  disputed by the
                Lessor or a member of the  Lessor  Group in good faith and which
                will not cause any interference to the use, possession and quiet
                enjoyment of the Ship by the Lessee during the Lease Period), in
                each case, that is not related to, or does not arise directly or
                indirectly as a result of, the transactions contemplated by this
                Lease  or any  of the  other  Transaction  Documents  including,
                without limitation,  any Encumbrance which arises as a result of
                the  operation of any vessel  (other than the Ship and the Other
                Ships) of which any member of the Lessor Group is the owner or a
                disponent owner;

        (b)     any Taxes  imposed  upon the  Lessor  or a member of the  Lessor
                Group which are not  required to be  indemnified  against by the
                Lessee or by any other  person  under this Lease or under any of
                the other  Transaction  Documents  (other  than  (except for the
                purposes of clauses  3.6.3 and 21) Taxes in respect of which the
                liability to pay the same,  or the amount of the same,  is being
                disputed  by the Lessor or a member of the Lessor  Group in good
                faith and which  will not  cause  any  interference  to the use,
                possession and quiet  enjoyment of the Ship by the Lessee during
                the Lease Period);

        (c)     any act or  omission  of the  Lessor or a member  of the  Lessor
                Group (but not of any member of the Lessee Group acting as agent
                or representative of the Lessor or a member of the Lessor Group)
                that is not related  to, or does not arise  directly as a result
                of, the  transactions  contemplated  by this Lease or any of the
                other Transaction Documents;

        (d)     any act or  omission  of the  Lessor or a member  of the  Lessor
                Group (but not of any member of the Lessee Group acting as agent
                or representative of the Lessor or a member of the Lessor Group)
                constituting  a breach by the Lessor of its express  obligations
                under this Lease or any of the other Transaction Documents; or

        (e)     any act or omission of the Lessor  which  constitutes  the gross
                negligence or wilful misconduct of the Lessor;

        "Letter of Credit"  means the Letter of Credit issued or (as the context
        may  require)  to be issued by the LC Bank in favour of the  Lessor in a
        form and in an amount acceptable to the Lessor and, where the context so
        requires,  means any replacement  letter of credit executed  pursuant to
        clause 25, such letter of credit to be for a period  initially  expiring
        on 14 January 2015;

        "Letter of Credit  Amount"  means,  at any  relevant  time,  the maximum
        amount  of the  liability  of the LC Bank to the  Lessor  under,  and as
        determined  pursuant to, the Letter of Credit at such time (but, for the
        purpose of the definition of Applicable Security Amount disregarding any
        Relevant  Bank Change of Law Event or  Relevant  Bank  Illegality  Event
        which may affect the  liability  of the LC Bank to the Lessor  under the
        Letter of Credit at such relevant time);

        "Letter of Credit Expiry Date" means,  at any relevant time, the date on
        which the Letter of Credit expires in accordance with its terms;

        "LIBOR"  has the  meaning  given  to that  expression  in the  Financial
        Schedule;

        "Loss Payable  Clauses"  means the  provisions  regulating the manner of
        payment  of  sums  receivable  under  the  Insurances  which  are  to be
        incorporated  in the  relevant  insurance  documents,  such Loss Payable
        Clauses to be in the form set out in  Schedule 6 or in such forms as may
        from time to time be agreed in writing by the Lessor;

        "Management  Agreement"  means  an  agreement  entered  into  or (as the
        context may require) to be entered into between the  Sub-Lessee  and the
        Manager on terms  acceptable to the Lessor  providing for the Manager to
        provide services relating to the commercial and technical management and
        crewing of the Ship during the Sub-Lease Period;

        "Manager" means Golar  Management (UK) Limited,  an English company with
        company  number  04396172  having its principal  place of business at 30
        Marsh Wall, London E14 9TP and includes its successors in title;

        "Manager's  Undertaking"  means an  undertaking  in  respect of the Ship
        executed or (as the  context may  require) to be executed by the Manager
        in favour of the Lessor Agent in respect of the Ship in the agreed form;

        "Mandatory  Prepayment  Event" means any of the events or  circumstances
        described in clause 26.2;

        "Manuals and Technical  Records"  means all such books,  records,  logs,
        manuals,  handbooks,  technical  data,  drawings and other materials and
        documents (whether or not kept or required to be kept in compliance with
        any applicable laws or the requirements of the  Classification  Society)
        relating to the Ship;

        "Margin" has the meaning given to the expression  "Percentage Return" in
        the Financial Schedule;

        "Maximum  Unsecured Strip Liability  Amount" means the maximum unsecured
        Strip Liability  Amount permitted under this Lease as determined for any
        Security  Period by  reference to the amounts set out in column 4 of the
        Initial  Security Table for such Security  Period set out in column 1 of
        the Initial Security Table;

        "Minimum  Free  Available  Cash"  means an amount  equal to twenty  five
        million Dollars ($25,000,000);

        "Minimum LC Bank  Credit  Rating"  means,  in relation to the Initial LC
        Bank or any Relevant Bank, A3 "with negative  credit watch" by Moodys or
        A- by Standard & Poor's;

        "month" means a period beginning in one (1) calendar month and ending in
        the next calendar month on the day numerically  corresponding to the day
        of the  calendar  month on which it  started,  provided  that (a) if the
        period  started on the last Banking Day in a calendar  month or if there
        is no such  numerically  corresponding  day,  it  shall  end on the last
        Banking  Day in such next  calendar  month  and (b) if such  numerically
        corresponding  day is not a Banking  Day,  the  period  shall end on the
        preceding  Banking Day and  "months"  and  "monthly"  shall be construed
        accordingly;

        "Moodys"  means Moodys  Investors  Services  Inc. or its  successors  in
        title;

        "Net  Debt"  means,  on a  consolidated  basis,  an amount  equal to the
        aggregate  of all  Borrowed  Money of the  Golar Gas  Group  other  than
        Subordinated Debt minus Free Available Cash;

        "Net Sale Proceeds" means, in relation to a sale of the Ship, the amount
        of all consideration actually received by the Lessor from a purchaser on
        the sale of the Ship and any non-refundable  deposit irrevocably paid to
        the Lessor by a person  acquiring or proposing to acquire the Ship under
        a contract or offer to purchase or otherwise  acquire the Ship which has
        been withdrawn,  terminated or cancelled or has lapsed,  less any VAT in
        respect  of the sale of the Ship for which the  Lessor  is  required  to
        account,  the  Lessor's  expenses  (excluding  Recoverable  VAT on  such
        expenses)  reasonably  incurred in connection  with such sale including,
        without limitation,  (where applicable) broker's  commissions,  Lessor's
        marketing expenses, legal costs, agency fees and port charges, insurance
        premiums and stamp duties,  registration  fees and any expenses relating
        to the repair of the Ship (including putting the Ship in class) intended
        to restore the Ship to the condition  required by this Lease or pursuant
        to the  provisions of any sale and purchase  agreement in respect of the
        sale of the Ship;

        "Net  Total  Loss  Proceeds"  means the  Total  Loss  Proceeds  actually
        received by the Lessor from the  insurers  following a Total Loss of the
        Ship,  less any expenses  (excluding  Recoverable VAT on such expenses),
        taxes or duties incurred by the Lessor in connection with the collection
        of such proceeds;

        "Notified  Termination Date" has the meaning given to that expression in
        clause 3.3.1;

        "Other Lessor" means:

        (a)     Golar Freeze  (Bermuda)  Limited (whose name shall be changed to
                Sovereign Freeze Limited) in respect of "GOLAR FREEZE";

        (b)     Golar Gimi  (Bermuda)  Limited  (whose  name shall be changed to
                Sovereign Gimi Limited) in respect of "GIMI";

        (c)     Golar Hilli  (Bermuda)  Limited  (whose name shall be changed to
                Sovereign Hilli Limited) in respect of "HILLI"; and

        (d)     Golar Khannur  (Bermuda) Limited (whose name shall be changed to
                Sovereign Khannur Limited) in respect of "KHANNUR",

        and "Other Lessors" means all of them;

        "Other Ships" means "GOLAR  FREEZE",  "GIMI",  "HILLI" and "KHANNUR" and
        "Other Ship" means any of them;

        "Other Ship Leases" means the lease  agreements  made or (as the context
        may  require)  to be made  between  the Other  Lessors and the Lessee in
        respect of the Other Ships;

        "Other Ship Relevant Documents" means all of the "Relevant Documents" as
        that expression is defined in each of the Other Ship Leases;

        "Other  Sub-Lessees"  has the meaning  given to that  expression  in the
        Proceeds Deed;

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

        "Original Time Charter" means the time charter dated 9 September 1983 as
        amended by Addendum No. 1 dated as of 2 July 1986,  Addendum No. 2 dated
        20 February  1990 and  Addendum No. 3 dated 1 February  2003,  each made
        between the Time  Charterer and Golar Gas  Cryogenics  Inc.  pursuant to
        which the Time Charterer has taken the Ship on time charter for a period
        from the Ship's delivery thereunder and expiring within a forty-five day
        period  of 1  December  2006 with an option  for the Time  Charterer  to
        extend the term thereof for an additional two (2) year period;

        "Permitted Encumbrance" means:

        (a)     any Lessor's Encumbrance;

        (b)     any  Encumbrance  for  Taxes  either  not yet  assessed  or,  if
                assessed,  not yet due and  payable or being  contested  in good
                faith by appropriate  proceedings  (and for the payment of which
                adequate  reserves  have  been  provided)  so long  as any  such
                proceedings  or the continued  existence of such  Encumbrance do
                not involve any  likelihood of the sale,  forfeiture or loss of,
                or of any interest in the Ship;

        (c)     liens  arising in the ordinary  course of business by statute or
                by  operation  of law in  respect of  obligations  which are not
                overdue  or  which  are  being   contested   in  good  faith  by
                appropriate  proceedings  (and for the payment of which adequate
                reserves have been provided) so long as any such  proceedings or
                the  continued  existence  of  such  lien  do  not  involve  any
                likelihood  of  the  sale,  forfeiture  or  loss  of,  or of any
                interest in the Ship;

        (d)     any  Encumbrance  arising  out of  claims,  judgments  or events
                against the Lessee  which are being  contested  in good faith or
                which are the  subject of a pending  appeal (and for the payment
                of which  adequate  reserves  have been provided or, as the case
                may be, which the Lessor is satisfied are covered by Insurances)
                so long as any such claims, judgments or the continued existence
                of such Encumbrance do not involve in the reasonable  opinion of
                the Lessor any likelihood of the sale, forfeiture or loss of, or
                of any interest in the Ship;

        (e)     Permitted Liens;

        (f)     any Encumbrance  granted pursuant to the Transaction  Documents;
                or

        (g)     any other Encumbrance,  the creation of which has been expressly
                permitted in writing by the Lessor;

        "Permitted Liens" means:

        (a)     any Ship repairer's or outfitter's possessory lien for a sum not
                (except with the prior written consent of the Lessor)  exceeding
                the Casualty  Amount unless the Lessor has received  evidence to
                its  satisfaction  that the cost of the work in respect of which
                the  lien  may  arise  is   covered  by   insurances   on  terms
                satisfactory to the Lessor (in its absolute discretion) or;

        (b)     any lien on the Ship for  Master's,  officer's  or crew's  wages
                outstanding in the ordinary course of trading; and

        (c)     any lien for salvage or general average;

        "Pollutant"  means  and  includes  oil  and  its  products,   any  other
        polluting,  toxic or hazardous  substance and any other  substance whose
        release into the  atmosphere is regulated or penalised by  Environmental
        Laws;

        "Primary  Period"  means the period from and including the Delivery Date
        and  terminating,  subject to the terms and conditions of this Lease, on
        the earlier of (a) the date falling twenty (20) years after the Delivery
        Date and (b) the date of  termination  of the  leasing of the Ship under
        this Lease;

        "Primary  Rental"  has  the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Primary  Rental Date" has the meaning  given to that  expression in the
        Financial Schedule;

        "Proceeds  Deed"  means the  agreement  entered or (as the  context  may
        require)  to be entered  into  between  (inter  alios) the  Lessor,  the
        Lessee, the Sub-Lessee,  the Account Bank, the Lessor Agent, the Standby
        Purchaser, the First Security Agent and the Second Security Agent in the
        agreed form;

        "Protocol of Delivery and Acceptance" means the protocol of delivery and
        acceptance in relation to the Ship in the form of Schedule 3;

        "Qualifying  Replacement  Bank"  means a Bank  incorporated  in a Zone A
        country (as the terms  "Bank" and "Zone A" are  defined in the  Guidance
        Notes to Bank of England  Return BSD2) with a Credit  Rating of not less
        than the Minimum LC Bank Credit Rating and otherwise approved in writing
        by the  Lessor  (such  approval  not  to be  unreasonably  withheld  but
        withholding  of  such  approval  it is  agreed  shall  be  deemed  to be
        reasonable where, inter alia, for internal credit reasons, the Lessor is
        unable to  accept  any  additional  credit  exposure  to such bank in an
        amount  equal to the  liability  which  such  bank will be  assuming  in
        relation to the transactions contemplated by this Lease);

        "Quarterly Financial Statements" means quarterly:

        (a)     financial  statements of the Lessee, the Manager, the Sub-Lessee
                and each of the Other Sub-Lessees;

        (b)     consolidated financial statements of the Golar LNG Group; and

        (c)     pro-forma  consolidated and combined financial statements of the
                Golar Gas Group,

        prepared as at 31 March,  30 June and 30 September (but not 31 December)
        in each year (or three (3),  six (6) or nine (9) (but not  twelve  (12))
        months after the commencement of the Lessee's  accounting  period should
        its accounting reference date be changed, with the prior written consent
        of the Lessor from 31 December) comprising a profit and loss account and
        a balance sheet and a cash flow statement;

        "Rated Time  Charterer"  has the  meaning  given to that  expression  in
        clause 25.6;

        "Recoverable VAT" means Value Added Tax which is not Irrecoverable VAT;

        "Registered   Owner's   Undertaking"   means  the   registered   owner's
        undertaking  executed or (as the context may  require) to be executed by
        the Lessor in favour of the Time Charterer;

        "Relevant  Bank"  means  the LC Bank  and/or,  as the case  may be,  any
        Additional Security Provider (other than an Additional Security Provider
        which is a member of the Lessee Group);

        "Relevant  Bank Change of Law Event"  means,  in respect of any Relevant
        Bank,  an event or  circumstance  arising  by  virtue of a Change of Law
        which  requires or, in the reasonable  opinion of the Lessor,  will when
        implemented   require  the  Relevant  Bank  to  make  any  deduction  or
        withholding  in  respect  of Taxes  from any  payment  to be made to the
        Lessor under any of the Relevant  Bank  Documents to which such Relevant
        Bank is a party and/or which would  otherwise  cause the amounts payable
        by such  Relevant  Bank to the Lessor  under any of such  Relevant  Bank
        Documents  to be less than the amount  which would have been payable but
        for such event or circumstance (save where such event or circumstance is
        due to a Relevant Bank Event);

        "Relevant Bank Documents"  means, in relation to any Relevant Bank, each
        of the  documents  executed  from time to time by such  Relevant Bank as
        security for the  obligations  and  liabilities of the Lessee under this
        Lease or otherwise in connection with this Lease;

        "Relevant Bank Event" means, in respect of any Relevant Bank, any of the
        following events:

        (a)     any Relevant  Bank is unable to pay its debts within the meaning
                of section 123(1)(a), (b), (e) or (2) of the Insolvency Act 1986
                or  becomes  insolvent  or stops  or  suspends  making  payments
                (whether of principal  or  interest)  with respect to all or any
                class of its debts or announces an intention to do so; or

        (b)     any petition is presented or other step is taken for the purpose
                of  winding  up  such  Relevant  Bank  or an  order  is  made or
                resolution passed for the winding up of such Relevant Bank which
                remains  unstayed or a notice is issued  convening a meeting for
                the  purpose  of  passing  any  such  resolution  which  remains
                unstayed; or

        (c)     any petition is presented or other step is taken for the purpose
                of the  appointment  of an  administrator  of such Relevant Bank
                which  remains  unstayed or an  administration  order is made in
                relation to such Relevant Bank; or

        (d)     any  administrative  or  other  receiver  is  appointed  of such
                Relevant  Bank or any part of its assets and/or  undertaking  or
                any other steps are taken to enforce any Encumbrance over all or
                any material (in the  reasonable  opinion of the Lessor) part of
                the assets of such Relevant Bank; or

        (e)     any steps are taken, or negotiations commenced, by such Relevant
                Bank  or by any  of its  creditors  with a view  to the  general
                readjustment or rescheduling of all or part of its  indebtedness
                or  to  proposing  any  kind  of   composition,   compromise  or
                arrangement   involving  such  Relevant  Bank  and  any  of  its
                creditors; or

        (f)     there  occurs,  in relation to such Relevant Bank in any country
                or  territory  in  which  it  carries  on  business  or  to  the
                jurisdiction  of whose courts any part of its assets is subject,
                any  event  which,  in the  reasonable  opinion  of the  Lessor,
                appears in that country or territory to correspond with, or have
                an effect  equivalent  or similar to, any of those  mentioned in
                paragraphs  (a) to (d)  (inclusive)  above or otherwise  becomes
                subject,  in any such country or territory,  to the operation of
                any law relating to insolvency, bankruptcy or liquidation; or

        (g)     such  Relevant Bank fails to pay any sum payable by it under the
                Relevant  Bank  Documents to which it is a party at the time, in
                the currency and in the manner  stipulated in such Relevant Bank
                Documents  (having  regard to any grace  periods  applicable  to
                payments contained in such Relevant Bank Documents) and such sum
                remains unpaid;

        "Relevant Bank Illegality Event" means, in respect of any Relevant Bank,
        an event or circumstance  which causes or, in the reasonable  opinion of
        the  Lessor,  will  when  implemented  cause  any of the  Relevant  Bank
        Documents  executed by such  Relevant Bank to become at any time and for
        any reason illegal,  invalid or  unenforceable  or otherwise to cease to
        remain  in full  force or  effect  or makes it  illegal,  impossible  or
        unlawful  at any  time  for  such  Relevant  Bank to  fulfil  any of the
        covenants and obligations  expressed to be assumed by such Relevant Bank
        in the Relevant Bank Documents executed by such Relevant Bank or for the
        Lessor to  exercise  the rights or any of them vested in it under any of
        the Relevant  Bank  Documents  executed by such Relevant Bank but in any
        such case other than in circumstances where, in relation to the Relevant
        Bank, the relevant event or circumstance  arises by reason of a Relevant
        Bank Event in respect of the Relevant Bank;

        "Relevant Bank Security" means:

        (a)     in relation to the LC Bank, the Letter of Credit; and

        (b)     in relation to any Additional  Security  Provider which is not a
                member of the Lessee Group, the Additional  Security provided by
                such Additional Security Provider;

        "Relevant  Documents" means the Lease Documents,  the Standby Documents,
        the Management  Agreement,  the Lessee Parent  Guarantee,  the Manager's
        Undertaking,  the Third Sub-Lessee Share Security, the Letter of Credit,
        any Additional Security Documents,  the Registered Owner's  Undertaking,
        the Third Earnings Account Security,  the Supplemental Agreement and any
        other  document or instrument  from time to time executed as a guarantee
        and/or  security for the  obligations  of the Lessee  and/or any sums of
        money from time to time owing whether actually or contingently, under or
        pursuant to this Lease or any of the other Lease Documents and any other
        documents  supplemental  to any of them of which the parties  agree from
        time to time shall be Relevant  Documents  for the purpose of this Lease
        and  all  notices,  consents,   certificates  and  other  documents  and
        agreements  issued or, as the case may be, to be issued  pursuant to any
        of the foregoing;

        "Relevant Event" means any Termination Event or any Mandatory Prepayment
        Event or any event  which after the giving of notice or lapse of time or
        the  satisfaction of any other  condition (or any  combination  thereof)
        would constitute a Termination Event or a Mandatory Prepayment Event;

        "Relevant  GAAP"  means  accounting  principles,   concepts,  bases  and
        policies generally adopted and accepted in the respective  jurisdictions
        in which the  Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees  and the
        Lessee  Parent are  required to produce and file  accounts  from time to
        time;

        "Relevant  Jurisdiction"  means any  jurisdiction  in which or where any
        Relevant Party is  incorporated,  resident,  domiciled,  has a permanent
        establishment,  carries on, or has a place of business or to which it is
        otherwise effectively connected;

        "Relevant  Party" means any of the Lessee,  the  Sub-Lessee,  the Lessee
        Parent,  the  Manager or any other party which is a member of the Lessee
        Group who is a party to any of the other Relevant Documents;

        "Relevant Period" means:

        (a)     in relation to a Relevant Bank Illegality  Event,  the period of
                sixty  (60)  days from the  occurrence  or  announcement  of the
                Relevant Bank Illegality  Event or, if shorter,  the period from
                the occurrence or  announcement of such Relevant Bank Illegality
                Event up to the  date  falling  five (5) days  prior to the date
                upon which the Relevant Bank Illegality Event is to take effect;
                and

        (b)     in relation to a Relevant  Bank Change of Law Event,  the period
                of sixty (60) days from the  occurrence or  announcement  of the
                Relevant  Bank  Change of Law Event or, if  shorter,  the period
                from the occurrence or announcement of such Relevant Bank Change
                of Law Event up to the date  falling  five (5) days prior to the
                date upon which  such  Relevant  Bank  Change of Law Event is to
                take place;

        "Relevant  Security  Agent" has the meaning given to that  expression in
        the Proceeds Deed;

        "Relevant  Shareholder"  has the  meaning  given to that  expression  in
        clause 2.2.10;

        "Relevant  Ship" means the Ship,  the Other  Ships and any other  vessel
        from  time to time  (whether  before  or after  the date of this  Lease)
        owned,  managed or crewed by, or leased to the Lessee or the  Sub-Lessee
        for which that person has or may have  responsibility for liabilities or
        claims resulting from  non-compliance with Environmental Laws and/or the
        occurrence of an Environmental Incident;

        "Rental"  has the  meaning  given to that  expression  in the  Financial
        Schedule;

        "Required LC Amount" means an amount equal during each  Security  Period
        shown in the Applicable  Security Table to the Total Security Amount for
        and during each such  Security  Period minus the  corresponding  Maximum
        Unsecured  Strip  Liability  Amount  for and during  each such  Security
        Period;

        "Required  Letter of Credit Expiry Date" means the date falling ten (10)
        days after the expiry of the Primary Period;

        "Required  Security  Amount"  means,  in relation to each new Additional
        Security Table provided in accordance  with paragraph 9 of the Financial
        Schedule, the amount shown in column (6) of that new Additional Security
        Table and, where additional security is required to be provided pursuant
        to clause 25.2 by reference  to such  amount,  ignoring for this purpose
        the fact that such amount is shown as a negative  figure for the purpose
        of that new Additional Security Table;

        "Requisition Compensation" means all sums of money or other compensation
        from time to time payable in respect of the  Compulsory  Acquisition  of
        the Ship;

        "RPI"  has  the  meaning  given  to  that  expression  in the  Financial
        Schedule;

        "Secondary  Period"  means the  period  for  which  the Lease  Period is
        extended in accordance with clause 3.2;

        "Secondary  Rental"  has the  meaning  given to that  expression  in the
        Financial Schedule;

        "Second  Security Agent" means Nordea Bank Norge ASA of  Middlethunsgate
        17, 0107 Oslo, Norway and includes its successors in title;

        "Security  Period"  has the  meaning  given  to that  expression  in the
        Financial Schedule;

        "Ship" means the liquefied  natural gas carrier  "GOLAR  SPIRIT"  having
        International  Maritime  Organisation  Number 7373327  registered in the
        name of the Lessor under the British flag with  Official  Number  905529
        and includes any share or interest  therein and her engines,  machinery,
        boats,   tackle,   outfit,   equipment,   spare  gear,   belongings  and
        appurtenances  whether on board or ashore, (but excluding  consumable or
        other stores and provisions,  bunkers, domestic fuel, lubricants, rented
        or leased equipment and charterer's and sub-charterer's additions) which
        are property of the Lessor on the Delivery  Date or become  installed on
        the Ship thereafter or which, having been removed therefrom,  remain the
        property of the Lessor pursuant to this Lease, together with any and all
        substitutions therefor and all additions,  improvements and replacements
        and removals  thereof from time to time made in or to her in  accordance
        with the provisions of this Lease and, where the context  permits "Ship"
        shall include the Manual and Technical Records;

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

        "Spill" means any emission,  spill,  release or discharge of a Pollutant
        from any Relevant Ship into the environment;

        "Standard & Poor's" means Standard & Poor's Rating Services and includes
        its successors in title;

        "Standby  Documents" means the Standby Put Option  Agreement,  the Third
        Standby  Purchaser   Assignment,   the  Third  Standby  Purchaser  Share
        Security,  the Standby Lease Agreement,  the Standby Rental  Assignment,
        the Third Standby  Mortgage and any other  document,  notice,  letter or
        instrument  entered  into or given  pursuant  to the terms of any of the
        foregoing  or any  document  which it is  agreed  should  be a  "Standby
        Document" for the purpose of this Lease;

        "Standby Lease Agreement"  means the standby lease agreement  entered or
        to be entered into between the Lessee and the Standby Purchaser pursuant
        to which the Standby Purchaser shall, following the purchase of the Ship
        or by the Standby Purchaser, lease the Ship to the Lessee;

        "Standby  Option Notice" has the meaning given to that expression in the
        Standby Put Option Agreement;

        "Standby  Purchaser"  means LNG Shipping Co., a Cayman  Islands  company
        having its principal place of business at P.O. Box 694GT, CIBC Financial
        Centre, 11 Dr Roys Drive, George Town, Grand Cayman,  Cayman Islands, or
        any other  person who may from time to time,  with the  approval  of the
        Lessor,  replace  that  person as Standby  Purchaser  and  includes  its
        successors in title;

        "Standby Put Option Agreement" means the agreement entered into or to be
        entered  into between the Lessor and the Standby  Purchaser  pursuant to
        which  the  Lessor  may sell  its  interest  in the Ship to the  Standby
        Purchaser on the terms and conditions set out therein;

        "Standby  Rental  Assignment"  means the assignment  executed or (as the
        context may require) to be executed by the Lessee, the Standby Purchaser
        and the Lessor in the agreed  form  pursuant  to which the Lessee  shall
        assign in favour of the Standby  Purchaser its rights under clause 5.1.1
        of the Proceeds Deed and the Standby Purchaser shall assign in favour of
        the Lessor the Initial  Rental (as defined in the Standby Lease) and the
        property assigned by the Lessee in favour of the Standby Purchaser under
        this assignment;

        "Sterling",  "Pounds" and  "(pound)"  means the lawful  currency for the
        time being of the United  Kingdom  and in respect of all  payments to be
        made under this Lease in Sterling  mean  immediately  available,  freely
        transferable cleared funds in Sterling;

        "Strip  Liability  Amount"  means,  at any date,  an amount equal to the
        difference  between the Total  Security  Amount and the aggregate of the
        Letter of Credit Amount and the Additional Security Amount at that date;

        "Sub-Lease"  means a lease made or (as the  context  may  require) to be
        made between the Lessee and the  Sub-Lessee  for a period of twenty (20)
        years in the agreed form;

        "Sub-Lease Period" means the period during which the Sub-Lessee shall be
        entitled to the use and  possession of the Ship in  accordance  with the
        Sub-Lease;

        "Sub-Lessee" means Golar Spirit UK Ltd., an English company with company
        number 04679402 having its principal place of business at 30 Marsh Wall,
        London E14 9TP and includes its successors in title;

        "Subordinated Debt" means any Indebtedness of the Lessee, the Manager or
        any of their  Subsidiaries which is a Relevant Party owing to the Lessee
        Parent which is subject to the Subordination Deed;

        "Subordination  Deed" means a deed dated  April 2003  entered or (as the
        context  may  require)  to be entered  into  between  (inter  alios) the
        Lessee,  the  Sub-Lessee,  the Other  Sub-Lessees,  the Manager,  Gotaas
        Larsen,  the Lessee  Parent and the First  Security  Agent in the agreed
        form;

        "Subsidiary" of any person means:

        (a)     in respect of a person  incorporated  outside  England and Wales
                means any company or entity directly or indirectly controlled by
                such  person,  and for this purpose  "control"  means either the
                ownership  of more than fifty per cent (50%) of the voting share
                capital (or  equivalent  rights of ownership) of such company or
                entity  or the  power to  direct  its  policies  and  management
                whether by contract or otherwise; and

        (b)     in respect of a person  incorporated  in  England  and Wales,  a
                subsidiary within the meaning of section 736 Companies Act 1985;

        "Supplemental  Agreement" means the Supplemental  Agreement of even date
        herewith  relating to a certain tax deed made  between the Lessor  Agent
        and the Lessee;

        "Swap  Liabilities"  means  Indebtedness  incurred  in respect of swaps,
        foreign exchange  contracts,  futures and other derivatives (but so that
        when  calculating  the  value of any  derivative  transaction,  only the
        marked to market value shall be taken into  account) and  guarantees  in
        respect of such Indebtedness;

        "Tax  Authority"  has  the  meaning  given  to  that  expression  in the
        Financial Schedule;

        "Tax  Contest  Letter"  means a side  letter to this Lease to be entered
        into by the  Lessor and the Lessee  and  regulating  the  conduct of tax
        disputes;

        "Tax Written Down Value" has the meaning given to that expression in the
        Financial Schedule;

        "Taxes" includes all present and future taxes, levies, imposts,  duties,
        fees or charges in the nature of a tax  including,  without  limitation,
        corporation, capital gains, income, gross receipts, franchise, transfer,
        sales, use, business,  occupation,  transaction,  purchase, value added,
        excise, personal property, real property, stamp,  documentary,  national
        insurance  or  other  taxes at the rate  applicable  for the time  being
        imposed by any national or local taxing or fiscal authority or any other
        agency or  government,  together with interest  thereon and penalties in
        respect thereof and "Tax" and "Taxation" shall be construed accordingly;

        "Termination"  means the  termination  of the  leasing of the Ship under
        this Lease otherwise than by the expiry of the Lease Period by effluxion
        of time;

        "Termination  Event" means any of the events or circumstances  described
        in clause 26.1;

        "Termination  Fee" means a sum  calculated  pursuant to paragraph 6.3 of
        the Financial Schedule;

        "Termination  Notice"  means a notice served by the Lessor on the Lessee
        pursuant to clause 27.1;

        "Termination  Payment Date" has the meaning given to that  expression in
        the Financial Schedule;

        "Termination  Sum"  has the  meaning  given  to that  expression  in the
        Financial  Schedule  and shall  include,  for the  purpose of this Lease
        (except the Financial Schedule), any Termination Fee;

        "Third  Earnings  Account  Security"  means  third  priority  deed(s) of
        assignment  executed or (as the  context may  require) to be executed by
        any person in favour of the Lessor  Agent in respect of (inter  alia) an
        Earnings  Account as security  for the  obligations  of the Lessee under
        (inter  alia) this Lease in the agreed form or in such other form as the
        Lessor may  reasonably  require for the  purpose of  creating  effective
        security over such account under any applicable laws;

        "Third Priority Three Party Deed" means the third priority assignment of
        (a) the Lessee's rights, title and interest in and to (i) all Insurances
        and  Requisition  Compensation of the Ship, (ii) the Lease and (iii) the
        Sub-Lease and (b) the Sub-Lessee's  rights, title and interest in and to
        (i) all Insurances and Requisition Compensation of the Ship and (ii) the
        Time Charter  executed or (as the context may require) to be executed by
        the  Lessee  and the  Sub-Lessee  in favour of the  Lessor  Agent in the
        agreed form;

        "Third Standby Mortgage" means any third priority mortgage in respect of
        the Ship  executed  by the  Standby  Purchaser  in favour of the  Lessor
        pursuant to clause 5.2.5 of the Proceeds Deed;

        "Third Standby Purchaser Assignment" means the third priority assignment
        executed or (as the  context may  require) to be executed by the Standby
        Purchaser in favour of the Lessor Agent in the agreed form in respect of
        the rights, title and interest of the Standby Purchaser in and to (inter
        alia) the Insurances and Requisition Compensation;

        "Third Standby Purchaser Share Security" means the third priority charge
        of the issued and  outstanding  share  capital of the Standby  Purchaser
        executed  or  (as  the  context  may  require)  to be  executed  by  the
        shareholder  of the Standby  Purchaser  in favour of the Lessor Agent in
        the agreed form;

        "Third Sub-Lessee Share Security" means the third priority charge of the
        issued and outstanding  share capital of the Sub-Lessee  executed or (as
        the context may  require) to be executed by the Manager in favour of the
        Lessor Agent in the agreed form;

        "Time  Charter"  means the Original  Time Charter as novated by the Time
        Charter  Novation  Agreement  and as further  amended  and  supplemented
        pursuant to Addendum No. 4 dated 4 April 2003 and Addendum No. 5 of even
        date herewith including any extensions and replacement  thereof pursuant
        to the terms thereof and including any other time charter(s) approved by
        the Lessor pursuant to clause 25.6;

        "Time  Charter  Novation  Agreement"  means  the  consent  and  novation
        agreement  dated 4 April  2003  made  between  (inter  alios)  the  Time
        Charterer,  Golar Gas  Cryogenics  Inc. and the  Sub-Lessee  pursuant to
        which the rights,  title and interest and all  obligations  of Golar Gas
        Cryogenics  Inc.  under the  Original  Time Charter have been novated in
        favour of the Sub-Lessee;

        "Time  Charterer"  means  Perusahaan  Pertambangan  Minyak  Dan Gas Bumi
        Negara (Pertamina),  a State Enterprise of the Republic of Indonesia and
        includes its  successors in title and includes any other person which is
        a party to a Time Charter as charterer from time to time;

        "Total Loss" means:

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

        (b)     the Compulsory Acquisition of the Ship; or

        (c)     the hijacking,  theft,  condemnation,  capture, seizure, arrest,
                detention or confiscation of the Ship (other than where the same
                amounts to Compulsory  Acquisition  of the Ship) by any persons,
                unless  the Ship be  released  and  restored  to the  Lessee or,
                during the Sub-Lease Period, the Sub-Lessee from such hijacking,
                theft,  condemnation,  capture,  seizure,  arrest,  detention or
                confiscation   within  sixty  (60)  days  after  the  occurrence
                thereof; or

        (d)     the expiry of one hundred and eighty  (180) days (or such longer
                period as the Lessor, the Lessee and the Relevant Security Agent
                may agree) after the Ship shall have been requisitioned for hire
                by a Government Entity or other competent authority,  whether de
                jure or de facto;

        "Total  Loss Date"  means the date upon which the Ship is deemed to have
        become a Total Loss pursuant to clause 22.2.2;

        "Total Loss  Payment  Date" means the  earliest of any of the  following
        dates next occurring after the Total Loss Date:

        (a)     the date  falling one  hundred  and twenty  (120) days after the
                Total  Loss Date (or such later day as the Lessor may agree from
                time to time); or

        (b)     the first Banking Day after the day on which the Lessor receives
                the Total Loss Proceeds or Requisition Compensation;

        "Total Loss  Proceeds"  means the  proceeds of any policy or contract of
        insurance arising in respect of a Total Loss;

        "Total Security  Amount" has the meaning given to that expression in the
        Financial Schedule;

        "Transaction  Documents" has the meaning given to that expression in the
        Proceeds Deed;

        "Transaction  Fees"  means the  Arrangement  Fee,  the Lease Fee and the
        Legal Fee;

        "United Kingdom" means Great Britain and Northern Ireland;

        "Value Added Tax" or "VAT" means value added tax as provided for in VATA
        and legislation (whether delegated or otherwise) supplemental thereto or
        in any primary or  subordinate  legislation  promulgated by the European
        Union or any body or agency thereof and any tax similar or equivalent to
        value added tax imposed by any country other than the United Kingdom and
        any similar or turnover Tax  replacing or  introduced in addition to any
        of the same;

        "Variable  Liability Amount" has the meaning given to that expression in
        the Letter of Credit;

        "Variable  Assumption"  has the meaning given to that  expression in the
        Financial Schedule;

        "VATA" means the Value Added Tax Act 1994; and

        "WDA Letter" means a side letter to this Lease to be entered into by the
        Lessor  and  the  Lessee  in  relation  to  the  rate  of  writing  down
        allowances.

1.3     Insurance definitions

        In clause 16:

1.3.1   "excess  risks"  means the  proportion  (if any) of claims  for  general
        average,  salvage and salvage  charges and under the ordinary  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;

1.3.2   "protection and indemnity risks" means:

        (a)     the usual risks  (including oil  pollution)  covered by a United
                Kingdom protection and indemnity association or a protection and
                indemnity association which is managed in London or Norway or is
                otherwise a member of the  "International  Group" of  protection
                and indemnity associations (including,  without limitation,  the
                proportion  (if any) of any sums  payable to any other person or
                persons in case of collision which are not recoverable under the
                hull and  machinery  policies  by  reason  of the  incorporation
                therein of clause 8 of the Institute  Time Clauses  (1/11/95) or
                the  Institute  Amended  Running  Down clause  (1/10/71)  or any
                equivalent provision); or

        (b)     (if placed on Norwegian  terms) means  protection  and indemnity
                risks as defined in the Norwegian  Marine Insurance Plan of 1964
                as amended; and

1.3.3   "war risks" includes those risks covered by the standard form of English
        marine policy with  Institute War and Strike  Clauses  (Time)  (1/11/95)
        attached or similar  cover (or if placed on Norwegian  terms,  means the
        war risks described in The Norwegian  Maritime Insurance Plan of 1966 as
        amended).

1.4     Headings

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

1.5     References

        In this Lease, unless the context otherwise requires:

1.5.1   references to Clauses and Schedules are to be construed as references to
        Clauses of, and  Schedules  to, this Lease and  references to this Lease
        include its Schedules;

1.5.2   references to (or to any specified provision of) this Lease or any other
        document shall be construed as references to this Lease,  that provision
        or that  document  as in force  for the time  being  and as  amended  in
        accordance  with the terms  thereof,  or,  as the case may be,  with the
        agreement of the relevant parties;

1.5.3   references to a "regulation"  include any present or future  regulation,
        rule,  directive,  requirement,  request or  guideline  (whether  or not
        having  the  force of law) of any  agency,  authority,  central  bank or
        government  department  or any  self-regulatory  or  other  national  or
        supra-national authority;

1.5.4   words importing the plural shall include the singular and vice versa;

1.5.5   references to a time of day are to London time;

1.5.6   references   to  a  person  shall  be  construed  as  references  to  an
        individual, firm, company,  corporation,  unincorporated body of persons
        or any Government Entity;

1.5.7   references to a "guarantee"  include references to an indemnity or other
        assurance  against  financial loss  including,  without  limitation,  an
        obligation to purchase  assets or services as a consequence of a default
        by any other person to pay any Indebtedness  and  "guarantees"  shall be
        construed accordingly;

1.5.8   references to an  "obligation"  include,  for the avoidance of doubt, an
        obligation to make a payment;

1.5.9   except in the Financial  Schedule  references to any enactment  shall be
        construed as  references  to such  enactment as  re-enacted,  amended or
        extended; and

1.5.10  references to any person include the successors and permitted assigns of
        such person.

1.6     Value added tax

        Any Value Added Tax or any similar tax properly chargeable in respect of
        supplies  of goods or  services  under the terms of this Lease or any of
        the other Relevant  Documents shall be payable (subject to production of
        an  appropriate  Value  Added Tax  invoice)  in  addition to the amounts
        otherwise payable hereunder or thereunder,  which amounts are determined
        exclusive of Value Added Tax.

1.7     Conflicts

        In the event of any  conflict  between  this  Lease and any of the other
        Lease  Documents,  the provisions of this Lease shall prevail but in the
        event of any conflict  between a Lease  Document and the Proceeds  Deed,
        the provisions of the Proceeds Deed shall prevail.

1.8     Agreed forms

        In this Lease, any document expressed to be "in the agreed form" means a
        document  in a form agreed by (and for the  purposes  of  identification
        signed by or on behalf  of) the Lessee and the Lessor or (in the case of
        any of the Relevant  Documents) a document in the form actually executed
        by both the Relevant Party or Relevant Parties and the Lessor.

1.9     Contracts (Rights of Third Parties) Act 1999

        With the  exception of any  Indemnified  Persons,  no term of this Lease
        shall be enforceable pursuant to the Contracts (Rights of Third Parties)
        Act 1999 by a person who is not a party to this Lease. For the avoidance
        of doubt however it shall not be necessary for the parties to this Lease
        to obtain  the  consent  of the  Indemnified  Persons in order to amend,
        supplement or modify the terms of this Lease.

2       Lessee's representations and warranties

2.1     Continuing representations and warranties

        The Lessee represents and warrants to the Lessor that:

2.1.1   Due incorporation

        each Relevant Party is duly  incorporated and validly existing under the
        laws of its  country or state of  incorporation  as a limited  liability
        company  and has  power  to  carry on its  business  as it is now  being
        conducted and to own its property and other assets;

2.1.2   Corporate power

        each  Relevant  Party has power to  execute,  deliver  and  perform  its
        obligations  under  the  Relevant  Documents  to which it is or is to be
        party and all necessary corporate, shareholder and other action has been
        taken to authorise the execution, delivery and performance of the same;

2.1.3   Binding obligations

        this Lease  constitutes and each other of the Relevant  Documents,  upon
        execution and delivery  thereof,  will  constitute the legal,  valid and
        binding  obligations  of each Relevant  Party  enforceable in accordance
        with its terms except as such enforcement may be limited by any relevant
        bankruptcy,   insolvency,   administration  or  similar  laws  affecting
        creditors' rights generally and by general principles of equity;

2.1.4   No conflict with other obligations

        the  execution  and  delivery  of, and the  performance  of the Relevant
        Documents to which any Relevant Party is a party will not (a) contravene
        any  existing  applicable  law,  statute,  rule  or  regulation  or  any
        judgment,  decree or permit to which any Relevant Party is subject,  (b)
        conflict  with,  or  result  in any  breach  of any of the  terms of, or
        constitute a default under,  any agreement or other  instrument to which
        any Relevant Party is a party or is subject or by which it or any of its
        property is bound,  (c) contravene or conflict with any provision of the
        memorandum and articles of  association/articles  of  incorporation  and
        by-laws or other  constitutional  documents of any Relevant Party or (d)
        result in the creation or imposition of or oblige any Relevant  Party to
        create any  Encumbrance  (other  than a  Permitted  Encumbrance)  on the
        undertakings, assets, rights or revenues of any Relevant Party;

2.1.5   Choice of law

        the choice by the Relevant Parties of English law to govern the Relevant
        Documents and, where applicable,  the submission by the Relevant Parties
        to the  non-exclusive  jurisdiction  of the English courts are valid and
        binding;

2.1.6   No immunity

        no  Relevant  Party nor any of its assets is entitled to immunity on the
        grounds of  sovereignty or otherwise from any legal action or proceeding
        (which shall include,  without  limitation,  suit,  attachment  prior to
        judgment, execution or other enforcement);

2.1.7   Financial statements correct and complete

        the unaudited proforma consolidated and combined financial statements of
        the Lessee and its Subsidiaries (excluding Oxbow Holdings Inc. and Golar
        Maritime (Asia) Inc.) and the audited consolidated  financial statements
        of the  Lessee  Group  in  respect  of the  financial  year  ended on 31
        December  2001 and the  financial  statements  of the Golar Gas Group in
        respect of the nine (9) months ended as of 30 September  2002  (prepared
        on a pro-forma  consolidated  and  combined  basis) as  delivered to the
        Lessor have been prepared in accordance with Relevant GAAP  consistently
        applied and present fairly and accurately the  consolidated and combined
        financial  position of the Lessee and its Subsidiaries  (excluding Oxbow
        Holdings Inc. and Golar  Maritime  (Asia) Inc.) and the Lessee Group and
        the consolidated and combined  financial position of the Golar Gas Group
        as at the relevant date and the  consolidated  results of the operations
        of the Lessee and its  Subsidiaries  (excluding  Oxbow Holdings Inc. and
        Golar Maritime  (Asia) Inc.) and the Lessee Group for the financial year
        ended as at the relevant date and the  consolidated and combined results
        of the operations of the Golar Gas Group  respectively  for the nine (9)
        months ended as at the  relevant  date,  and, as at the  relevant  date,
        neither the Lessee nor any of its Subsidiaries (excluding Oxbow Holdings
        Inc. and Golar Maritime (Asia) Inc.) nor any of the Lessee Group nor any
        of the Golar Gas Group had any  significant  liabilities  (contingent or
        otherwise)  which are not  disclosed  by, or  reserved  against in, such
        financial  statements and neither the Lessee nor any of its Subsidiaries
        (excluding  Oxbow Holdings Inc. and Golar Maritime  (Asia) Inc.) nor any
        of the Lessee Group nor any of the Golar Gas Group had any unrealised or
        anticipated  losses which are not disclosed  by, or reserved  against or
        provided for in, such financial statements; and

2.1.8   Tax residence

        the Sub-Lessee is resident in the United Kingdom and is not resident for
        Tax purposes in any jurisdiction other than the United Kingdom.

2.2     Initial representations and warranties

        The Lessee further represents and warrants to the Lessor that:

2.2.1   Consents obtained

        every consent,  authorisation,  licence or approval of, or  registration
        with or declaration to,  governmental or public bodies or authorities or
        courts required by each Relevant Party to authorise, or required by such
        Relevant Party in connection  with, the execution,  delivery,  validity,
        enforceability or admissibility in evidence of the Relevant Documents to
        which it is a party or the  performance  by each  Relevant  Party of its
        obligations under the Relevant Documents to which it is a party has been
        obtained  or made and is in full  force and effect and there has been no
        default in the observance of any of the conditions or  restrictions  (if
        any) imposed in, or in connection with, any of the same;

2.2.2   Pari passu

        the obligations of each Relevant Party under the Relevant  Documents are
        direct, general and unconditional obligations of such Relevant Party and
        rank at least pari passu with all other present and future unsecured and
        unsubordinated  Indebtedness of each Relevant Party save for obligations
        mandatorily preferred by law and not by contract;

2.2.3   No default under other Indebtedness

        no Relevant Party is (nor would be with the giving of notice or lapse of
        time or the  satisfaction of any other condition or combination  thereof
        be) in material breach of or in default under any agreement  relating to
        (a) Borrowed Money or (b)  Indebtedness in respect of amounts  exceeding
        one million Dollars ($1,000,000),  to which it is a party or by which it
        may be bound;

2.2.4   Information

        the  information,  exhibits  and reports  furnished by the Lessee to the
        Lessor in  connection  with the  matters  contemplated  by the  Relevant
        Documents or in connection  with the  negotiation and preparation of the
        Relevant  Documents  are true and accurate in all material  respects and
        not misleading,  do not omit material facts and all reasonable enquiries
        have been made to verify the facts and statements contained therein;

2.2.5   No withholding taxes

        (a)     no Taxes are imposed by  withholding or otherwise on any payment
                to be made  by any  Relevant  Party  under  any of the  Relevant
                Documents  or are  imposed on or by virtue of the  execution  or
                delivery by any Relevant Party of the Relevant  Documents or any
                other  document or instrument to be executed or delivered  under
                any of the Relevant Documents;

        (b)     the Lessee is exempt from tax in the Republic of Liberia;

        (c)     neither the Lessee nor any of its  Subsidiaries or affiliates is
                a division,  bureau,  office, agency,  department,  committee or
                political  subdivisions  of the  Government  of the  Republic of
                Liberia or another sovereign jurisdiction;

        (d)     the Lessee is not regularly engaged in the conduct of activities
                pursuant  to  contractual  arrangements  with  the  Republic  of
                Liberia or any division,  bureau,  office,  agency,  department,
                committee or political subdivisions thereof;

        (e)     the Lessee is not:

                (i)     regularly  engaged in the ownership,  use or disposition
                        of real  property  located in the Republic of Liberia or
                        agricultural or mineral products derived therefrom; nor

                (ii)    regularly engaged in the conduct of activities  pursuant
                        to  a  contractual  arrangement  with  the  Republic  of
                        Liberia or any agency or political subdivision thereof;

                (iii)   a corporation  in respect of which more than twenty five
                        percent  (25%) of the total  combined  voting  power and
                        more than twenty five  percent  (25%) of the total value
                        of  outstanding   equity  stock  is  owned  directly  or
                        indirectly by Liberian resident persons; nor

                (iv)    carrying  on  business  operations  in the  Republic  of
                        Liberia;

2.2.6   No Relevant Event

        no Relevant Event has occurred and is continuing;

2.2.7   The Ship

        the Ship on the Delivery Date will:

        (a)     be in the absolute ownership of the Lessor;

        (b)     maintain  the  Classification   free  of  all  requirements  and
                recommendations of the  Classification  Society that are overdue
                or have not been complied with in accordance with their relevant
                terms; and

        (c)     save in respect of or  pursuant  to the  Sub-Lease  and the Time
                Charter,  not be  subject  to any  lease or  contract  or to any
                agreement  to enter  into any  charter  or  contract  which,  if
                entered  into by the Lessee  after the date of any or all of the
                Lease Documents, would have required the consent of the Lessor;

2.2.8   Freedom from Encumbrances

        neither  the  Lessee's  interest  in the  Ship,  the  Insurances  or any
        Requisition  Compensation  nor any part  thereof will be on the Delivery
        Date subject to any Encumbrances save for any Permitted Encumbrances;

2.2.9   Environmental matters

        to the best of the knowledge and belief of the Lessee and its officers:

        (a)     all Environmental Laws applicable to the Ship have been complied
                with and all  consents,  licences and approvals  required  under
                such Environmental Laws have been obtained and complied with;

        (b)     no Environmental Claim has been made, or is pending, against the
                Lessee or the Ship and not fully satisfied;

        (c)     no Environmental Claim has been made, or is pending, against any
                Relevant  Party  (other  than the Lessee) or any  Relevant  Ship
                (other than the Ship) and not fully satisfied which  constitutes
                or may give rise to a Termination Event of the type specified in
                clause 26.1.18; and

        (d)     there has been no Environmental Incident;

2.2.10  Share ownership

        (a)     Gotaas  Larsen  is the sole  legal and  beneficial  owner of the
                whole of the issued  share  capital of the Lessee as at the date
                of this Lease;

        (b)     the Lessee Parent is the sole, legal and beneficial owner of the
                whole of the issued  share  capital  of Gotaas  Larsen as at the
                date of this Lease; and

        (c)     not less  than  twenty  five  percent  (25%) of the  issued  and
                outstanding  share  capital of the Lessee  Parent is directly or
                indirectly,   legally  and   beneficially   owned  by  Mr.  John
                Fredriksen (the "Relevant Shareholder");

2.2.11  Copies true and complete

        the  copies  of the  Management  Agreement  and such of the  Transaction
        Documents to which the Lessor is not a party  delivered by the Lessee to
        the Lessor are true and complete copies of such documents,  each of such
        documents   constitutes  the  valid,  legally  binding  and  enforceable
        obligations of the Relevant  Parties which are parties  thereto,  are in
        full  force and effect and there  have been no  material  amendments  or
        variations thereof or defaults thereunder;

2.2.12  No litigation

        no litigation, arbitration or administrative proceeding is taking place,
        pending or, to the  knowledge of the officers of the Lessee,  threatened
        against any Relevant Party which could, if adversely determined,  have a
        material adverse effect on the business,  assets or financial  condition
        of the Lessee Group taken as a whole; and

2.2.13  No filings required

        save for the filing of the Third  Priority  Three Party Deed,  the Third
        Standby  Purchaser Share Security,  the Third Sub-Lessee Share Security,
        the Standby Rental Assignment and the Third Standby Purchaser Assignment
        and the Third Earnings Account  Security with the Companies  Registry in
        England and Wales and the filing of the Third  Standby  Purchaser  Share
        Security,  the Standby Rental Assignment and the Third Standby Purchaser
        Assignment with the Companies Registry in the Cayman Islands,  it is not
        necessary  to  ensure  the   legality,   validity,   enforceability   or
        admissibility in evidence of the Relevant  Documents that any of them or
        any other  instrument  be  notarised,  filed,  recorded,  registered  or
        enrolled  in any  court,  public  office or  elsewhere  in any  Relevant
        Jurisdiction or that any stamp, registration or similar tax or charge be
        paid in any  Relevant  Jurisdiction  on or in relation  to the  Relevant
        Documents  and the  Relevant  Documents  are,  or will,  upon  execution
        thereof by any Relevant Party,  be in proper form for their  enforcement
        in the courts of each Relevant Jurisdiction.

2.3     Repetition of representations and warranties

        On  and  as of  the  Delivery  Date  and  (except  in  relation  to  the
        representations  and  warranties  in clause 2.2) on each Primary  Rental
        Date the  Lessee  shall be  deemed  to repeat  the  representations  and
        warranties in clause 2.1 (and so that the representation and warranty in
        clause  2.1.7 shall for this  purpose  refer to the then latest  audited
        financial   statements  of  the  Lessee,   the  Sub-Lessee,   the  Other
        Sub-Lessees  and  the  Manager,  the  audited   consolidated   financial
        statements  of the  Lessee  Group  and  the  consolidated  and  combined
        financial  statements  of the Golar Gas Group  delivered  to the  Lessor
        under  clause  11.1.4)  as if  made  with  reference  to the  facts  and
        circumstances existing on such day.

2.4     Not prejudiced by Lessor's investigation

        The   rights  and   remedies   of  the   Lessor  in   relation   to  any
        misrepresentation  or breach of warranty on the part of the Lessee shall
        not be  prejudiced  by any  investigation  by or on behalf of the Lessor
        into the affairs of any person  (other than the Lessor) being a party to
        any of the Relevant Documents, by the performance of any of the Relevant
        Documents,  or by any other act or thing which may be done or omitted to
        be done by the Lessor under any of the Relevant Documents which would or
        might, but for this clause 2.4, prejudice such rights and remedies.

3       Term of Lease

3.1     Primary Period

        The Lessor shall let and demise to the Lessee and the Lessee shall lease
        the Ship,  subject to the terms and  conditions  of this Lease,  for the
        Primary Period.

3.2     Secondary Period

        The  Lessee  shall be  entitled,  provided  that no  Relevant  Event has
        occurred  and is  continuing,  on giving  to the  Lessor  notice  (which
        notice, when given, shall be irrevocable) not less than thirty (30) days
        prior  to the  end  of (a)  the  Primary  Period  and  (b)  (subject  as
        hereinafter  provided) each succeeding period of twelve (12) months from
        the end of the Primary  Period,  to extend the Lease Period for a period
        of twelve (12) months or, if less, up to a maximum period  equivalent to
        any  remaining  useful life of the Ship.  The  Lessee's  entitlement  to
        extend the Lease  Period in the manner  referred  to above is subject to
        the Lessee providing evidence reasonably satisfactory to the Lessor that
        the Ship remains  seaworthy and has a remaining useful life equal to the
        term for which  the Lease  Period  is to be  extended  pursuant  to this
        clause 3.2.

3.3     Voluntary termination and expiry

3.3.1   Notice of termination

        The Lessee  shall,  subject to clause 25.5, be entitled to terminate the
        Lease Period on any date provided that:

        (a)     the Lessee shall have given to the Lessor notice of the proposed
                date of  termination  not less than thirty (30) days before such
                date; or

        (b)     if the Lessee  becomes liable to make a payment in respect of an
                increased  cost to the Lessor under clause 31.1 or if the Lessee
                certifies  in  writing  that it  wishes to  terminate  the Lease
                Period because it has become Economically Burdensome, the Lessee
                shall be entitled to give to the Lessor  notice of the  proposed
                termination  not less than five (5)  Banking  Days  before  such
                date.

                A voluntary termination under this clause 3.3 will also occur in
                the  circumstances  contemplated  by clauses  3.8,  25, 27.3 and
                31.3.  For the purpose of this clause 3.3, the date specified as
                the proposed date of any  termination  in any notices  delivered
                pursuant  to  sub-clauses  (a) and (b)  above or the date of any
                notices given pursuant to clause 3.8, 25 or, as the case may be,
                the date five (5) Banking Days  following  the issue of a notice
                of  termination  pursuant  to  clauses  27.3 or  31.3,  shall be
                referred to as the "Notified Termination Date".

3.3.2   Continuation of Lease Period

        Notwithstanding  anything to the  contrary in this Lease where the Lease
        Period  expires by  effluxion  of time or if the Lessee  gives notice to
        terminate the Lease Period pursuant to this clause 3.3, the Lease Period
        shall  continue on the terms set out in clause 18.3 until and end on the
        date on  which  the Ship  shall  be  delivered  to a  purchaser  thereof
        pursuant to a sale of the Ship as contemplated  by clause 3.4,  whenever
        such delivery shall take place.

3.3.3   Termination payments

        On the Notified  Termination  Date the Lessee shall pay to the Lessor an
        amount  equal to the  Termination  Sum on such  date  together  with all
        amounts of Rental and other  moneys  then due and owing by the Lessee to
        the Lessor under this Lease or any of the other Lease Documents.

3.3.4   Mitigation

        Where the Lease Period is terminated because it has become  Economically
        Burdensome  to the  Lessee,  the Lessor  and the Lessee  agree that they
        shall,  at the cost of the  Lessee,  use all  reasonable  endeavours  to
        arrange for a termination of the Lease Period in an efficient  manner so
        as to try and minimise  the  after-tax  cost to the Lessee  arising from
        such  termination.  It is  acknowledged  and agreed,  however,  that the
        Lessor  shall not be  obliged  to agree to any  arrangement  or take any
        action in connection with the above mitigation  arrangements if to do so
        would give rise to any  additional  cost or liabilities to the Lessor in
        respect of any such termination of the Lease Period unless the Lessor is
        indemnified or otherwise secured in a manner  satisfactory to it, in its
        absolute  discretion,  in  respect  of  any  such  additional  costs  or
        liabilities.

3.4     Sale of Ship on expiry or voluntary termination

        During the period commencing ninety (90) days before the last day of the
        Lease Period (or, as the case may be,  commencing  on the date of notice
        being  given  under  clause  3.3) and  ending  on the date on which  the
        completion  of the sale or  disposal  of the Ship takes place the Lessor
        shall,  subject to the  provisions  of the Proceeds Deed relating to the
        sale or other transfer or disposal of the Ship and provided it shall not
        be prevented from so doing for any reason whatsoever which is beyond its
        reasonable  control,  endeavour  to sell all of its  rights,  title  and
        interest in and to the Ship with an intended  delivery or completion on,
        or as soon as practicable  after,  the Notified  Termination Date or, as
        the case may be, the date of expiry of the Lease  Period by effluxion of
        time.  The Net Sale  Proceeds  arising  in  respect of any sale shall be
        applied,  subject to clause 10.4 and the  provisions  of clauses 3.1 and
        3.3 of the Proceeds Deed, as follows:

3.4.1   first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the amount of the Net Sale Proceeds;

3.4.2   secondly,  in or towards  retention  by the Lessor of an amount equal to
        all or any part of the Termination Sum which the Lessee shall not, on or
        before the date of application  of the Net Sale  Proceeds,  have paid to
        the Lessor in accordance with clause 3.3;

3.4.3        thirdly, in or towards settlement of any other amounts owing by the
             Lessee to the Lessor under this Lease or any of the other Lease
             Documents (including any interest due in respect thereof);

3.4.4   fourthly,  in or  towards  refunding  to the  Lessee by way of rebate of
        Rental  an  amount  not   exceeding  all  Rental   (including,   without
        limitation,  any Termination Sum) paid to the Lessor by the Lessee under
        this Lease; and

3.4.5   fifthly,  to the  Lessee,  by  way of  sales  commission  determined  in
        accordance   with  the  provisions  of  clause  3.6.4  or  otherwise  as
        appropriate.

3.5     Redelivery voyage

        Should the Ship be upon a voyage (other than under requisition for hire)
        at the time the  Lease  Period  would  (but for the  provisions  of this
        clause 3.5) have  terminated  the Lease Period shall (if required by the
        Lessee)  continue for such  additional  time as may be necessary for the
        completion of such voyage. The Lease Period shall also continue for such
        additional time as may be necessary in order to bring the Ship to a port
        of  re-delivery  as  provided  in clause  18.1 The Lessee  shall use all
        reasonable  endeavours to bring the Ship to such port of  re-delivery as
        soon as practicable following completion of the relevant voyage. Nothing
        in this clause 3.5 shall, where the Lease Period is terminated following
        the issue of a Termination Notice,  operate to modify the dates on which
        the Lessee is required to make any payments  (whether of any Termination
        Sum or otherwise) under this Lease.

3.6     Sales agency

        In respect of any sale of the Ship in  accordance  with clause 3.4,  the
        Lessor hereby appoints the Lessee (and such appointment  shall,  without
        prejudice to clause 3.4.5,  constitute a full discharge by the Lessor of
        its obligation under clause 3.4 to endeavour to sell the Ship) to act as
        the  sole  and  exclusive  agent  of  the  Lessor  for  the  purpose  of
        negotiating the sale of the Ship on the following terms:

3.6.1   the Lessee will (if and to the extent it is permitted to do so under the
        Proceeds  Deed)  endeavour  to  arrange  the sale of the Ship for a cash
        consideration  payable by the  purchaser in full on  completion  of such
        sale in Pounds, Dollars or such other currency as the Lessor may approve
        (such  approval  not to be withheld  in the case of a currency  which is
        then freely convertible into Pounds) on the best terms (including price)
        reasonably  obtainable  on the open market (and in any event for no less
        than the Tax Written Down Value of the Ship as at the date of such sale)
        provided that the Ship shall not be sold to:

        (a)     the Lessee or the Sub-Lessee; or

        (b)     any person  acting in trust for,  as  nominee  of, as agent,  or
                otherwise  as  representative  of,  or on  behalf  of any of the
                persons referred to in (a) above,

        and the Lessee  will keep the Lessor  informed  from time to time of its
        progress;

3.6.2   the Lessee's  authority will not extend to concluding a contract for the
        sale of the Ship for which the Lessor's  specific written authority will
        be required (which  authority shall not be withheld or delayed where (a)
        the sale complies with the other  provisions of this clause 3.6, (b) the
        resulting  Net Sale  Proceeds  will equal or exceed the Tax Written Down
        Value as at the proposed  date of sale and (c) the  aggregate of the Net
        Sale  Proceeds  which can be retained by the Lessor  pursuant to clauses
        3.1 and 3.3 of the Proceeds Deed and the Applicable  Security  Amount as
        at the  proposed  date of sale will exceed the  aggregate  amount of the
        Termination  Sum and all other amounts owing by the Lessee to the Lessor
        under this Lease and any amounts  due but unpaid  under any of the other
        Lease  Documents  (including any interest due in respect  thereof) as at
        the proposed  date of sale or that, to the extent that either (b) or (c)
        above do not apply,  the Lessee has satisfied the Lessor that the Lessee
        and/or  the  Lessee  Parent  will  have  adequate  financial   resources
        available  to enable  the Lessee to pay the  balance  of such  aggregate
        amount to the Lessor in accordance with clause 3.4));

3.6.3   the Ship shall be offered  for sale on an "as is where is" basis and for
        delivery on, or as soon as practical after, termination or expiry of the
        Lease Period and any contract  for its sale shall  include  terms to the
        following effect:

        (a)     that  all  terms,  conditions,  representations  or  warranties,
                expressed or implied by statute or otherwise,  whether as to the
                state or quality of the Ship or as to  description,  fitness for
                purpose,   merchantable   quality,   satisfactory   quality   or
                otherwise,  are,  so  far  as is  permitted  by  law,  expressly
                excluded  as between the Lessor and the buyer save in respect of
                the warranty  that the Lessor shall be passing such title to the
                Ship as the Lessor  received from Golar Gas Cryogenics Inc. free
                from any Lessor's Encumbrances;

        (b)     that, if the proposed sale contract provides for delivery of the
                Ship by the Lessor, such obligation is conditional upon the Ship
                first being redelivered to the Lessor;

        (c)     that the purchase  moneys shall be paid to the Lessor in full in
                cash on completion of the sale to the relevant  Lessor  Proceeds
                Account and otherwise, where applicable, in accordance with, the
                provisions of the Proceeds Deed;

3.6.4   if the Net Sale Proceeds exceed the aggregate of:

        (a)     any  sums  which  the  Lessor  may  be  entitled  to  retain  in
                accordance with clauses 3.4.1, 3.4.2 and 3.4.3; and

        (b)     any sums which the Lessor  shall be obliged to pay to the Lessee
                by way of rebate of Rental in  accordance  with clause 3.4.4 and
                as determined pursuant to clause 3.4 then,

        subject to clause 10.4 the Lessor  shall  promptly  pay to the Lessee by
        way of sales commission, an amount equal to such excess;

3.6.5   the Lessee  shall be entitled to  delegate  its rights and duties  under
        this clause 3.6 to any member of the Lessee Group or to any other person
        as  the  Lessor  may  approve,  such  approval  not  to be  unreasonably
        withheld; and

3.6.6   the sales  agency  rights  under this clause shall not apply or shall be
        terminated if at the time the sales agency appointment would arise or at
        any time thereafter a Termination Event occurs and is continuing and the
        Lessor has served a Termination Notice.

3.7     Credit review

        The Lessor shall be entitled during the period between the dates falling
        one  hundred  and eighty  (180) and ninety (90) days prior to the Credit
        Review Date (in this clause 3.7 the "Credit Review Period") to carry out
        a  review  of the  security  arrangements  constituted  by the  Relevant
        Documents and the  creditworthiness  of the Lessee and the Lessee Parent
        (taking into  account the  exposure of the Lessee and the Lessee  Parent
        under  the  Relevant  Documents  having  regard  to  any  Relevant  Bank
        Documents  which will continue in full force and effect after the Credit
        Review  Date,  any new  valuations  of the  Ships  and the  Other  Ships
        provided to the Lessor at such time and any surplus amounts available in
        respect of the Ships and the Other  Ships as  security to the Lessor and
        the Other  Lessors at that time) and, at the absolute  discretion of the
        Lessor,   to  determine  whether  such  security   arrangements   and/or
        creditworthiness  are adequate to secure the Strip Liability  Amount and
        any other  unsecured  obligations of the Lessee under this Lease and the
        other Lease  Documents in respect of the period falling after the Credit
        Review  Date.  The Lessor  agrees that it shall  consult with the Lessee
        during the Credit  Review  Period  when  considering  the  matters to be
        considered by the Lessor pursuant to this clause.

        Following such review the Lessor shall notify the Lessee of its decision
        on or before the expiry of the Credit Review Period and, if it considers
        that such security arrangements and/or  creditworthiness are inadequate,
        the Lessor  will  initially  notify the Lessee in writing and during the
        period from the date of such  notification  up to the date falling forty
        five (45) days  prior to the  Credit  Review  Date and if the  Lessee so
        requests,  the  Lessor  and the  Lessee  shall  discuss  in  good  faith
        alternative  arrangements which, if implemented,  would cause the Lessor
        to be comfortable with the security arrangements and/or creditworthiness
        of the Lessee and the Lessee Parent and if agreement in principle can be
        reached  on  such   alternative   arrangements   then  such  alternative
        arrangements  shall be documented  on terms and in a form  acceptable to
        the Lessor on or prior to the Credit Review Date.

        If, notwithstanding the said good faith discussions, the Lessor is still
        not satisfied that the security arrangements and/or  creditworthiness of
        the  Lessee  and the  Lessee  Parent,  even  on a  modified  basis,  are
        adequate, the Lessee will be entitled at the Lessee's option to either:

3.7.1   issue a notice of the type  referred to in clause 3.8 under  clause 3.8;
        or

3.7.2   constitute to the  satisfaction of the Lessor prior to the Credit Review
        Date, such additional  security as shall be acceptable to the Lessor and
        having a value for security  purposes (as  determined  by the Lessor) at
        the date upon which such further  security  shall be  constituted as the
        Lessor  shall in its  absolute  discretion  require  to secure the Strip
        Liability Amount and any other unsecured obligations of the Lessee under
        this  Lease  and  the  other  Lease  Documents   having  regard  to  the
        circumstances  in which  such  additional  security  is  required  to be
        provided under this clause.

        The Lessor  agrees that for the purpose of clause 3.7.2 the provision by
        the  Lessee of a letter of credit or bank  guarantee  from a  Qualifying
        Replacement Bank on terms acceptable to the Lessor in an amount equal to
        the amount of the Strip  Liability  Amount and/or such other  additional
        security   requirement  to  be  provided  under  this  clause  shall  be
        acceptable  additional  security for the relevant amount secured for the
        purpose of this clause.

3.8     Credit review notice

        If the Lessee  shall,  pursuant  to clause 3.7 elect to give a notice of
        the type referred to in this clause 3.8, the Lessee shall be immediately
        obliged to give a notice pursuant to clause 3.3 (other than with respect
        to the  period of such  notice)  to  terminate  the Lease  Period on the
        Credit  Review Date.  The  provisions  of clauses 3.4, 3.5 and 3.6 shall
        apply to such termination of the Lease Period.

4       Conditions

4.1     Lessee's conditions precedent

        The obligation of the Lessor (in each case as between the Lessor and the
        Lessee  pursuant to clause 4.5) to pay the  Transaction  Fees and to let
        and  demise  the Ship to the  Lessee  under this Lease is subject to the
        condition  that on the Delivery  Date the Lessor shall have received the
        documents  and evidence  specified in Schedule 1, in each case,  in form
        and substance  satisfactory  to the Lessor (and that,  unless  otherwise
        agreed by the Lessor and the Lessee, Delivery shall occur on or prior to
        11 April 2003).

4.2     Further conditions

        The obligation of the Lessor to pay the  Transaction  Fees and to demise
        the Ship to the Lessee  under this Lease shall be subject to the further
        condition that the Lessor shall have received a Delivery  Request Notice
        not less than two (2) Banking Days (or such shorter period as the Lessor
        and the Lessee may agree) prior to the required  date for payment of the
        Transaction  Fees and the  proposed  date of delivery of the Ship to the
        Lessee under this Lease and to the further  conditions  that at the time
        of the giving of the Delivery  Request Notice and  immediately  prior to
        the time when Delivery is to take place:

        (a)     the  representations  and  warranties set out in clauses 2.1 and
                2.2 (and so that the representation and warranty in clause 2.1.7
                shall  for  this  purpose  refer  to  the  then  latest  audited
                financial  statements delivered to the Lessor under clause 11.1)
                and the  representations  and  warranties set out in clauses 4.1
                and  4.2 of  the  Lessee  Parent  Guarantee  (and  so  that  the
                representation and warranty in clause 4.1.6 of the Lessee Parent
                Guarantee  shall  for this  purpose  refer  to the  then  latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause  5.1.4  of the  Lessee  Parent  Guarantee)  are  true and
                correct  as if each was  made  with  respect  to the  facts  and
                circumstances existing at such time;

        (b)     no Relevant Event shall have occurred and be continuing or would
                arise by reason of payment of the Transaction  Fees or by reason
                of Delivery taking place; and

        (c)     no  Relevant  Bank Event,  Relevant  Bank Change of Law Event or
                Relevant  Bank  Illegality  Event  shall  have  occurred  and be
                continuing.

4.3     Temporary waivers

        The  conditions  specified  in clauses 4.1 and 4.2 are  inserted for the
        sole  benefit  of the  Lessor  and may be waived in whole or in part and
        with or without  conditions by the Lessor provided always that if any of
        the said  conditions are  outstanding  after  Delivery then,  unless the
        Lessor shall have given a specific written waiver or deferral in respect
        thereof, the Lessee shall ensure that each such outstanding condition is
        fulfilled  within  thirty (30) days of the  Delivery  Date and  provided
        further  that the Lessor  shall be  entitled to treat the failure of the
        Lessee to perform  such  outstanding  conditions  within  such period of
        thirty (30) days as a Termination  Event and as a repudiatory  breach of
        this Lease by the Lessee.

4.4     Payment of Transaction Fees

4.4.1   Subject to  satisfaction  of the conditions  precedent to the payment of
        the  Transaction  Fees referred to in clause 4, the Lessor agrees to pay
        the Arrangement Fee to the Arranger,  the Lease Fee to Sovereign Finance
        Plc and the Legal Fee to Messrs Norton Rose.

4.4.2   The  Lessor  shall  not be  entitled  to set off or  withhold  from  the
        Transaction  Fees payable by the Lessor  pursuant to this clause 4.4 any
        amounts due or expressed  to be due from any  Relevant  Party under this
        Lease or any of the Relevant Documents.

4.5     Lessor's conditions precedent

        The obligations of the Lessee under this Lease are conditional  upon the
        Lessee  having  received on or prior to the Delivery  Date the following
        documents and evidence to its satisfaction:

4.5.1   a copy,  certified by a director of the Lessor,  of  resolutions  of the
        board of directors of the Lessor approving the transactions contemplated
        by the Relevant Documents and the execution of the Relevant Documents to
        which the Lessor is a party; and

4.5.2   the  Proceeds  Deed,  the  WDA  Letter,  the  Tax  Contest  Letter,  the
        Indexation  Relief  Letter,  the Lessor  Mortgage,  the Lessor  Proceeds
        Accounts Assignment and the Registered Owner's Undertaking duly executed
        by the Lessor,  the Lessor  Support  Letters duly executed by the Lessor
        Parent and the Supplemental Agreement duly executed by the Lessor Agent.

5       Delivery and acceptance

5.1     Commencement of Lease Period

        On or before the date  falling  three (3) Banking Days after the service
        of the Delivery Request Notice,  the Lessor  confirming its satisfaction
        with the  conditions  set out in clauses 4.1 and 4.2, the Lessor  shall,
        subject to the  provisions  of clauses 4.1 and 4.2,  deliver the Ship to
        the Lessee  under this  Lease and the Ship shall  become  subject to and
        governed by this Lease,  the Lease Period shall  commence and the Lessee
        shall be deemed to have accepted  delivery of the Ship under this Lease.
        Delivery  shall  be  conclusively  evidenced  by  the  execution  of the
        Protocol of Delivery and Acceptance by the Lessor and the Lessee.

5.2     Condition of Ship Lessee's responsibility

        The Lessee  acknowledges  that the  condition of the Ship on delivery to
        the Lessee shall be the sole responsibility of the Lessee.  Accordingly,
        the Lessee shall not be entitled for any reason  whatsoever to refuse to
        accept  delivery of the Ship under this Lease once the Delivery  Request
        Notice has been served on the Lessor and the Lessor shall have confirmed
        its satisfaction  with the conditions set out in clauses 4.1 and 4.2 and
        the Lessor  shall not be liable for any loss or expense,  or any loss of
        profit,  resulting  directly  or  indirectly  from any defect or alleged
        defect in the Ship.

5.3     Delays in Delivery

        The Lessor shall not be responsible for any loss or expense, or any loss
        of  profit,  arising  from any delay in the  delivery  of, or failure to
        deliver,  the Ship to the Lessee  under  this Lease  where such delay or
        failure is not caused by the wilful  misconduct  or gross  negligence of
        the Lessor or breach of its express obligations under this Lease.

5.4     Cancellation before Delivery

        If for any reason,  other than a default by the  Lessor,  the Ship shall
        not have been delivered to and accepted by the Lessee in accordance with
        clause 5 by 11 April 2003 then the  Lessor  may  cancel  its  obligation
        under this Lease to lease the Ship to the Lessee by giving notice to the
        Lessee to that effect.

5.5     Indemnity for delay and non-delivery

        The Lessee shall (in addition to any other  obligation  it may then have
        under  clause 9 to  indemnify  and hold  harmless  the Lessor as therein
        provided)  indemnify  the Lessor in respect of any  liabilities,  losses
        (other than the loss of profit which, had such delivery occurred without
        delay or at all,  would have accrued to the Lessor as a  consequence  of
        the payment by the Lessee of the Rentals  payable  hereunder),  costs or
        expenses reasonably incurred by the Lessor as a consequence of any delay
        in the  delivery or  non-delivery  of the Ship to the Lessee  under this
        Lease  following  the  Lessor   confirming  its  satisfaction  with  the
        conditions  set  out in  clauses  4.1 and 4.2  (including,  but  without
        prejudice to the generality of the foregoing,  any amounts of principal,
        interest,  fees or other sums  whatsoever  paid or payable on account of
        any funds borrowed and any loss,  premium,  penalty or expense which may
        be incurred in  liquidating  or employing  funds acquired to purchase or
        finance any or all of the Ship and to maintain or fund such  amounts (or
        any part  thereof)  or any other  amount due or to become due under this
        Lease)   save  and  to  the  extent  that  such  delay  in  delivery  or
        non-delivery  arises as a direct consequence of the wilful misconduct or
        gross  negligence  of the  Lessor or breach of its  express  obligations
        under this Lease.

6       Extent of Lessor's liability

6.1     Quiet enjoyment

        The Lessor:

6.1.1   warrants and  undertakes  to the Lessee that,  subject to clauses 17 and
        27, the Lessor shall not interfere during the Lease Period with the use,
        possession and quiet enjoyment of the Ship by the Lessee on the terms of
        this Lease,  provided  that the Lessor shall not be liable to the Lessee
        for or in respect of any interruption to the Lessee's use, possession or
        quiet enjoyment of the Ship which results directly or indirectly, wholly
        or partly,  from any act or omission of any person other than the Lessor
        and which does not,  subject to clause 29, arise in  consequence  of any
        acts of Lessor or any member of the Lessor  Group and which are not acts
        of the  Lessee  acting as agent on behalf of the Lessor or any member of
        the Lessor Group); and

6.1.2   the Lessor further undertakes,  if reasonably  requested to do so by the
        Lessee and at the Lessee's expense,  to take such action as is available
        to it to protect the use,  possession  and quiet  enjoyment  of the Ship
        during  the  Lease  Period  by the  Lessee  from  interference  by third
        parties.

6.2     Limitation of Lessor's liability

        The Lessee expressly agrees and acknowledges that, save only as provided
        in clause 6.1, no condition,  warranty or  representation of any kind is
        or has been  given by or shall be deemed to be or to have been  given by
        or on behalf of the Lessor in respect of the Ship, and  accordingly  the
        Lessee confirms that it has not, in entering into this Lease,  relied on
        any condition, warranty, representation or covenant by or deemed to have
        been made by the Lessor or any person on the  Lessor's  behalf  (whether
        authorised or not), express or implied,  whether arising by law, statute
        or otherwise  in relation to the Ship,  including,  without  limitation,
        warranties  or  representations  as to the  description,  seaworthiness,
        quality,  construction,   suitability,   merchantability,   satisfactory
        quality,  fitness for any purpose, value, state, condition,  appearance,
        finish, safety, durability, design or operation of any kind or nature of
        the  Ship,  and  the  benefit  of  any  such   condition,   warranty  or
        representation by the Lessor is hereby  irrevocably and  unconditionally
        waived by the Lessee.  To the extent  permissible  under applicable law,
        the Lessee also waives any rights which it may have in tort or otherwise
        (including,  without  limitation,  negligence)  in respect of any of the
        matters  referred to above and irrevocably  agrees that the Lessor shall
        have no  greater  liability  in tort or  otherwise  (including,  without
        limitation, negligence) in respect of any such matter than it would have
        in contract  after taking  account of all the foregoing  exclusions.  No
        third party making any  representation  or warranty relating to the Ship
        or any part of the  Ship is the  agent  of the  Lessor  nor has any such
        third party authority to bind the Lessor thereby.

6.3     Unfair Contract Terms Act 1977

        Notwithstanding  the foregoing  provisions of this clause 6 (but without
        prejudice to the indemnities contained in this Lease and the other Lease
        Documents),  nothing  herein  shall  afford  to  the  Lessor  any  wider
        exclusion of any  liability  of the Lessor for death or personal  injury
        than the Lessor may effectively  exclude having regard to the provisions
        of the Unfair Contract Terms Act 1977.

7       Rental

7.1     Rental amounts

        During the Primary  Period the Lessee shall pay  instalments  of Primary
        Rental to the Lessor on each Primary Rental Date and, where  applicable,
        during the Secondary Period instalments of Secondary Rental for the Ship
        and,  throughout the Lease Period, any other Rental in each such case in
        the amounts,  at the times and in the manner  provided in the  Financial
        Schedule.

7.2     Unconditional payment obligations

        The  Lessee's  obligation  to pay  Rental  and make  other  payments  in
        accordance  with any of the Lease  Documents  shall,  subject  to clause
        22.3,  be absolute and  unconditional  irrespective  of any  contingency
        whatsoever  including  (but not  limited  to) (a) any right of  set-off,
        counterclaim,  recoupment,  defence or other  right which  either  party
        hereto may have against the other,  (b) any  unavailability  of the Ship
        for any reason, including, but not limited to, any lack or invalidity of
        title or any other defect in the title, seaworthiness,  merchantability,
        satisfactory  quality,  fitness for any purpose,  condition,  design, or
        operation of any kind or nature of the Ship, or the ineligibility of the
        Ship  for  any  particular  use  or  trade,   or  for   registration  or
        documentation under the laws of any relevant jurisdiction,  or the Total
        Loss of, or any  damage to,  the Ship,  (c) any  failure or delay on the
        part of either party hereto,  whether with or without fault on its part,
        in performing  or complying  with any of the terms or conditions of this
        Lease,  (d) any  insolvency,  bankruptcy,  winding  up,  administration,
        reorganisation,   arrangement,   readjustment   of  debt,   dissolution,
        liquidation  or  similar  proceedings  by or  against  the Lessor or the
        Lessee or (e) any lack of due authorisation of, or other defect in, this
        Lease or any of the other Lease Documents.

7.3     Rental adjustments

        The  calculation  and payment of Rental  during the  Primary  Period are
        subject to adjustment in accordance with the provisions of the Financial
        Schedule.

7.4     Advance payments

        No Rental paid in advance shall (except as expressly contemplated by the
        provisions of this Lease or the  Financial  Schedule) be repayable by or
        recoverable from the Lessor.

7.5     Extent of restriction of Lessee's rights

        Nothing  contained in clause 7.2 shall constitute a waiver by the Lessee
        of any  right  giving  rise to a claim  by the  Lessee  for  damages  or
        specific  performance or any other injunctive  relief against the Lessor
        arising  out of a breach by the  Lessor of its  obligations  under  this
        Lease.

8       Payments, interest and calculations

8.1     Manner of payment

        All  payments  to be made by the  Lessee  under this Lease or any of the
        other  Lease  Documents  shall be made  (unless  specifically  otherwise
        provided  in this  Lease or any of the other  Lease  Documents)  without
        prior demand and in full, without any set-off or counterclaim whatsoever
        and,  subject  as  provided  in  clause  10.3,  free  and  clear  of any
        deductions  or  withholdings  in Sterling  (or, in the case of indemnity
        payments,  in the  currency  in which the cost or  expense  which is the
        subject of the  indemnity  payment is incurred)  for value on the day on
        which  payment is due to the bank  account of the Lessor at Girobank Plc
        of Bridle Road,  Bootle,  Merseyside GIR 0AA,  Account Number  01007246,
        reference Sovereign Finance plc - Payments Account or to such other bank
        account as the Lessor may from time to time have  notified to the Lessee
        in writing not less than five (5) Banking Days prior to the due date for
        payment.

8.2     Payments on Banking Days

        When any payment  under this Lease or any of the other  Lease  Documents
        would otherwise be due on a day which is not a Banking Day, the due date
        for payment shall be extended to the next  following  Banking Day unless
        such Banking Day falls in the next calendar  month in which case payment
        shall be made on the immediately preceding Banking Day.

8.3     Interest on delayed payments

        If the Lessee fails to pay any sum (including,  without limitation,  any
        sum  payable  pursuant  to this  clause 8.3) on its due date for payment
        under this Lease or any of the other Lease  Documents,  the Lessee shall
        pay to the Lessor on demand interest on such sum from the due date up to
        the  date of  actual  payment  (after  as well as  before  any  relevant
        judgment) at the Default Rate.

8.4     Calculation of interest

        All interest and other  payments of an annual nature under this Lease or
        any of the other Lease  Documents shall accrue from day to day and shall
        be  calculated  on the  basis of the  actual  days  elapsed  and a three
        hundred and sixty-five  (365) day year in the case of a Sterling payment
        and  payments  in other  currencies  where that is the normal  basis for
        interest  calculations  by banks in such  currencies and a three hundred
        and  sixty  (360)  day  year  in the  case  of  payments  in  all  other
        currencies.

8.5     Certificates

        Any  certificate  or  determination  of the  Lessor  as to any  rate  of
        interest or any other amount  payable  under any of the Lease  Documents
        shall,  in the absence of manifest  error,  be conclusive and binding on
        the Lessee but such certificate or determination  shall not override the
        express provisions of the Financial  Schedule.  The Lessor shall provide
        the  Lessee  with such  information  pertaining  to any  certificate  or
        determination referred to in this clause 8.5 (including any calculations
        set out therein and the basis upon which  those  calculations  have been
        prepared)  as  it  considers,  acting  reasonably,  appropriate  in  the
        circumstances existing at such time.

8.6     Currency indemnity

        If any sum due from the  Lessee  under  this  Lease or any of the  other
        Lease Documents or under any order or judgment given or made in relation
        thereto has to be converted from the currency (the "first  currency") in
        which  the  same is  payable  under  this  Lease or the  relevant  Lease
        Documents  or under such order or judgment  into another  currency  (the
        "second  currency")  for the  purpose of (a) making or filing a claim or
        proof  against the  Lessee,  (b)  obtaining  an order or judgment in any
        court or other  tribunal or (c) enforcing any order or judgment given or
        made in  relation  to such Lease  Document,  the Lessee  shall on demand
        indemnify  and  hold  harmless  the  Lessor  from and  against  any loss
        suffered as a result of any difference  between (i) the rate of exchange
        used for such  purpose to  convert  the sum in  question  from the first
        currency into the second currency and (ii) the rate or rates of exchange
        at which the Lessor may in the ordinary course of business  purchase the
        first currency with the second currency upon receipt of a sum paid to it
        in satisfaction, in whole or in part, of any such order, judgment, claim
        or proof.  Any amount due from the Lessee under this clause 8.6 shall be
        due as a  separate  debt and shall not be  affected  by  judgment  being
        obtained for any other sums due under or in respect of this Lease or any
        of the other Lease  Documents  and the term "rate of exchange"  includes
        any  premium  and  costs of  exchange  payable  in  connection  with the
        purchase of the first currency with the second currency.

8.7     Double recovery

        Notwithstanding anything to the contrary contained in this Lease and any
        of the Lease Documents,  to the extent that the Lessor has recovered any
        liability from the Lessee pursuant to the terms of any particular  Lease
        Document  the same  liability  shall not also be  recoverable  under the
        provisions of any of the other Lease Documents.

9       Costs and indemnities

9.1     Ship and corporate administration related expenses

        Subject to clause 9.10,  the Lessee shall  promptly pay and discharge or
        cause to be paid or  discharged,  as soon as the same become payable and
        indemnify and keep the Lessor fully  indemnified  at all times on a full
        indemnity  basis from and against all costs or expenses  (other than the
        payment to the  Arranger of the  Arrangement  Fee,  payment to Sovereign
        Finance  Plc of the Lease Fee,  payment of the Legal Fee and Taxes which
        are  otherwise the subject of clause 10 or which would be so subject but
        for the operation of clause 10.8)  reasonably  incurred by the Lessor in
        respect of, or arising from:

9.1.1   the delivery, import, export, registration,  classification,  ownership,
        possession,   control,  use,  management,   manning,   victualling,  the
        provision  of  bunkers  and  lubricating   oils,   leasing,   insurance,
        maintenance,  repair,  dry-docking,   survey,  refurbishment,   service,
        overhaul,  modification,  change,  alteration,  loss,  damage,  storage,
        laying-up,   removal,   redelivery,   transfer  to  required  redelivery
        location,  sale or  disposal  of,  in or to the  Ship,  and all costs or
        expenses which are reasonably incurred by the Lessor and which otherwise
        arise in  connection  with the Ship or the  performance  of the Lessee's
        obligations under this Lease or any of the other Lease Documents; and

9.1.2   the corporate administration in Bermuda of the Lessor including, without
        limitation,  any amounts payable by the Lessor to Codan Services Limited
        pursuant to the  administration  agreement executed on or about the date
        hereof between Cedar Services Limited, the Lessor and the Lessor Agent.

9.2     Transaction related expenses

        Whether  or not the Ship is  delivered  to the Lessee  pursuant  to this
        Lease,  the Lessee shall (to the extent that the same has not been taken
        into account in accordance with the Financial  Schedule in computing the
        amount of any Rental or any  adjustments  thereto or would be taken into
        account  but for  paragraph  10 of the  Financial  Schedule)  pay to the
        Lessor on demand:

9.2.1   all expenses  (including  legal,  advisory,  printing and  out-of-pocket
        expenses)  reasonably  incurred  by the  Lessor in  connection  with the
        negotiation, preparation and execution of the Transaction Documents (but
        provided  that  Delivery  does  occur,  excluding  such  amount  of such
        expenses paid by the Lessor as referred to in Variable Assumption 1.19.3
        in the Financial Schedule);

9.2.2   all expenses (including the Cost of Lessor's Management Time) reasonably
        incurred by the Lessor in respect of any  amendment or extension  of, or
        the  granting  of any  waiver  or  consent  under,  any of the  Relevant
        Documents  and/or in accordance with any action required to be taken, or
        documents  required to be provided,  pursuant to clauses 3.3.4, 3.6, 12,
        14.2 or 32 (it being agreed  that,  for the purpose of  determining  the
        entitlement  of the Lessor to recover  the Cost of  Lessor's  Management
        Time,  such  entitlement   shall  arise  in  respect  of  any  event  or
        circumstance  which is not  contemplated  by the  Relevant  Documents or
        which arises  otherwise than in the ordinary  course of managing a lease
        transaction  of the  type  contemplated  by  this  Lease  (and,  for the
        avoidance of doubt,  actions required to be taken, or documents required
        to be produced  pursuant to clauses 3.3.4, 3.6, 12, 14.2 or 32 shall not
        be treated as having  arisen in the ordinary  course of managing  such a
        lease transaction)); and

9.2.3   all expenses  (including the Cost of Lessor's  Management  Time,  legal,
        survey and other costs)  properly  incurred by the Lessor  following the
        occurrence and during the continuance of a Termination Event or Relevant
        Event or in  contemplation  of, or otherwise  in  connection  with,  the
        enforcement  of, or  preservation  of any  rights  under,  the  Relevant
        Documents,  or in respect of a breach  (other  than by the Lessor or the
        Lessor  Agent)  of any  representation,  warranty,  consent,  agreement,
        condition  or  stipulation  therein  contained,  or in  respect  of  the
        repossession of the Ship.

        The Lessor shall notify the Lessee as soon as practicable after any Cost
        of Lessor's  Management  Time has started to accrue in  accordance  with
        this Lease and the other  Relevant  Documents  (advising the Lessee,  if
        practicable,  which of its  personnel  are  senior  officers  and junior
        officers) and the Lessor agrees that it shall not invoice the Lessee for
        the first two  thousand  Pounds  ((pound)2,000)  of the Cost of Lessor's
        Management Time.

        All expenses  payable pursuant to this clause 9.2 shall be paid together
        with any  Irrecoverable  VAT,  and in the currency in which the same are
        incurred by the Lessor.

9.3     Indemnity for non-payment by Lessee

        The Lessee  shall on demand  indemnify  and hold  harmless  the  Lessor,
        without  prejudice to any of the Lessor's  other rights under any of the
        Relevant Documents,  from and against (other than to the extent that the
        Financial  Schedule  specifically  provides,  or would  provide  but for
        paragraph 10 thereof, for there to be a corresponding  payment of Rental
        or to the extent  that the Lessor has not been  compensated  pursuant to
        the provisions of clause 8.3):

9.3.1   any costs or expenses which the Lessee has agreed to pay and which shall
        be claimed  from or  assessed  against or paid by the Lessor and against
        any  liability  incurred by the Lessor by reason of any delay or failure
        of the Lessee to pay any such costs or expenses; and

9.3.2   any  Taxes   which  the  Lessee  has  agreed  to  pay  and  which  shall
        nevertheless  be claimed from or assessed  against or paid by the Lessor
        and against any liability  incurred by the Lessor by reason of any delay
        or  failure  of the  Lessee  to pay any such  Taxes  including,  without
        limitation,  any  delay  or  failure  of the  Lessee  to make  any  such
        deduction or  withholding  as is referred to in clause 10.3 or by reason
        of any increased payment as is referred to in clause 10.3 not being made
        on the due date for such payment.

9.4     Indemnities relating to the Ship

        Subject  to  clause  9.10,   but  without   prejudice  to  the  Lessee's
        obligations under clauses 9.1 to 9.3 inclusive, the Lessee agrees at all
        times,  whether  before,  during or after the Lease Period (but if after
        the Lease  Period to the extent  that the same arise by matters  arising
        out of or in  respect  of the  Lease  Period),  to  indemnify  and  hold
        harmless the Lessor and each of the other  Indemnified  Persons from and
        against  all costs,  expenses,  payments  (other than the payment to the
        Arranger of the Arrangement Fee, payment to Sovereign Finance Plc of the
        Lease Fee and  payment  of the Legal  Fee),  charges,  losses,  demands,
        liabilities,  claims, actions,  proceedings (whether civil or criminal),
        penalties,  fines, damages, judgments, orders or other sanctions, liens,
        salvage and general  average  (other than Taxes which are  otherwise the
        subject of clause 10 (or which would be so subject but for the operation
        of clause  10.6 or 10.8))  (in this  clause 9  together  referred  to as
        "Indemnity  Losses")  which  may be  incurred  by,  or made or  asserted
        against, the Lessor or any other Indemnified Person at any time:

9.4.1   relating to, or arising  directly or indirectly in any manner or for any
        cause or reason  whatsoever  out of, the  design,  nature,  description,
        manufacture,   construction,   testing,  delivery,  acceptance,  import,
        export, registration,  flag, classification,  certification,  ownership,
        possession,  control,  use,  management,  operation,  manning,  crewing,
        navigation,  victualling,  supply or servicing  (whether at sea or not),
        provision  of  bunkers  and  lubricating  oils,  leasing,   sub-leasing,
        insurance,   maintenance,   repair,  overhaul,   dry-docking,   surveys,
        refurbishment,  condition,  service,  modification,  change, alteration,
        loss, damage,  storage, laying up, removal,  repossession,  re-delivery,
        return,  sale  or  disposal  of,  in or to the  Ship,  or  otherwise  in
        connection  with the Ship or which arise out of the use or  operation of
        any other  vessel  owned by or  chartered  to the Lessee or any  company
        associated  with,  the Lessee or which arise out of any other  claims of
        whatsoever  nature made  against the Lessee,  or any company  associated
        with the Lessee,  or relating to loss or destruction of or damage to any
        property,  or death or injury  of, or other  loss of  whatsoever  nature
        suffered by, any person  caused by,  relating to, or arising from or out
        of (in each case whether  directly or  indirectly)  any of the foregoing
        matters;

9.4.2   which may at any time be made or brought on the ground  that any design,
        article  or  material  in the  Ship  or  the  operation  or use  thereof
        constitutes an  infringement of patent,  intellectual  property right or
        any other right whatsoever;

9.4.3   in  preventing  or  attempting  to  prevent  the  arrest,  confiscation,
        seizure, taking in execution, impounding, forfeiture or detention of the
        Ship,  or in securing or  attempting  to secure the release of the Ship;
        and

9.4.4   as a  consequence  of any  default  in  payment by the Lessee of any sum
        under any of the Lease  Documents  when due or any other  default by the
        Lessee in the due and punctual  performance of its obligations under any
        of the Lease  Documents  (to the extent  that the Lessor has not already
        been compensated  pursuant to any of the other provisions of this Lease)
        including,  without limitation, any exercise by the Lessor of its rights
        under the Standby  Documents and any action  required to be taken by the
        Lessor  in  connection  with the  exercise  of any such  rights  and the
        Standby Loan (as defined in the Proceeds  Deed)  required to be provided
        to the  Standby  Purchaser  in  connection  with the  Standby Put Option
        Agreement.

9.5     Conduct of claims

        Unless  and until a Relevant  Event  shall have  occurred,  and  without
        prejudice to, or constituting a pre-condition  to, the Lessor's right to
        be indemnified pursuant to, this Lease:

9.5.1   the Lessor shall notify the Lessee upon  receiving a claim in respect of
        which the Lessor is or may become  entitled to an indemnity under clause
        9.4 as soon as practicable following receipt of such claim;

9.5.2   subject to the prior written  approval of the Lessor (such  approval not
        to be unreasonably withheld or unreasonably  delayed),  the Lessee shall
        be  entitled  to take,  in the name of the  Lessor,  such  action as the
        Lessee shall see fit to defend or avoid any such Indemnity Losses as are
        referred to in clauses  9.4.1,  9.4.2,  9.4.3 or 9.4.4 or to recover the
        same from any third party, subject to the Lessee first ensuring that the
        Lessor is  indemnified  and, if the Lessor so  requires,  secured to its
        reasonable satisfaction against all Indemnity Losses thereby incurred or
        to be incurred and all Taxes incurred or to be incurred as a consequence
        thereof; and

9.5.3   the Lessor shall,  to the extent that it is practical so to do,  consult
        with the Lessee before making any payment to a third party in respect of
        such Indemnity Losses as are referred to in clauses 9.4.1,  9.4.2, 9.4.3
        or 9.4.4 and,  to the extent  that the Lessee is entitled to take action
        to avoid such  Indemnity  Losses in  accordance  with  clause  9.5.2 and
        subject to the Lessee first ensuring that the Lessor is indemnified  and
        secured to the Lessor's  reasonable  satisfaction  against all Indemnity
        Losses  thereby  incurred or to be incurred and all Taxes incurred or to
        be incurred as a consequence  thereof,  the Lessor shall at the Lessee's
        request co-operate with the Lessee in taking such action.

        Notwithstanding  the above,  the Lessor shall not be obliged to take any
        such action  where the Lessor  notifies  the Lessee that it considers in
        its  conclusive  opinion but acting in good faith that it is or would be
        materially  prejudicial  to the  interests  of the  Lessor  Group or any
        member  thereof  for such  action to be taken.  The Lessor  shall not be
        obliged to give any reasons for such  notification  but, when  providing
        the Lessee with such  notification,  the Lessor will  provide the Lessee
        with  written  confirmation  from a board member of (a) the Lessor Agent
        where the claim  referred  to in clause  9.5.1 shall be in respect of an
        amount less than or equal to five million Pounds  ((pound)5,000,000)  or
        (b) the Lessor Parent where the claim  referred to in clause 9.5.1 shall
        be  in  respect  of  an  amount  in  excess  of  five   million   Pounds
        ((pound)5,000,000),  that the  decision  not to take any such action was
        taken after  consideration by the senior  management of the Lessor Agent
        or, as the case may be, the Lessor Parent. Any amount or any increase in
        any amount  payable  by the  Lessor as a result of any delay  consequent
        upon the operation of clauses  9.5.2 and 9.5.3 shall,  for the avoidance
        of doubt, be for the account of the Lessee.

9.6     VAT and indemnity claims

        Any amounts  payable  pursuant to clause 9.4 and/or  clause 9.5 shall be
        paid together with any  Irrecoverable  VAT, and in the currency in which
        the same are incurred by the Lessor.

9.7     Environmental Indemnity

        Subject to clauses 9.5 and 9.10,  the Lessee shall  indemnify the Lessor
        on demand in respect of all costs, claims,  expenses,  losses,  demands,
        liabilities,  penalties and fines of whatever nature (including, without
        limitation,  those  arising  under  Environmental  Laws)  which  may  be
        incurred or made against the Lessor) at any time relating to, or arising
        directly  or  indirectly  in any  manner  or for  any  cause  or  reason
        whatsoever out of an  Environmental  Claim made or asserted  against the
        Lessor  which would or could not have been brought if the Lessor had not
        entered into this Lease or any of the other Relevant Documents.

9.8     Survival of indemnities

        Notwithstanding  anything to the contrary contained in this Lease or any
        of the other  Lease  Documents  and  without  prejudice  to any right to
        damages or other claim which the Lessee may have at any time against the
        Lessor under this Lease,  the indemnities by the Lessee in favour of the
        Lessor and the other Indemnified Persons contained in this Lease and the
        other  Lease   Documents   shall  continue  in  full  force  and  effect
        notwithstanding  any  breach  of the  terms of this  Lease or any of the
        other Lease Documents  (including any fundamental or repudiatory breach)
        by the Lessor or the Lessee,  the termination of the leasing of the Ship
        to the Lessee  under this Lease,  the  repudiation  by the Lessor or the
        Lessee of this Lease,  or the  expiration  or  termination  of the Lease
        Period by effluxion of time or otherwise.

9.9     Interest on indemnity payments

        Moneys  becoming due by the Lessee to the Lessor  under the  indemnities
        contained  in this  clause 9 or  elsewhere  in this  Lease or any of the
        other  Lease  Documents  shall be paid on demand  made by the Lessor and
        shall be paid  together  with  interest  thereon at the Default  Rate in
        respect of the  period  from the date on which the  Lessor  suffered  or
        incurred the  Indemnity  Loss until the date of payment by the Lessee to
        the Lessor (after as well as before judgment) and the Lessor agrees that
        it will issue a demand hereunder as soon as reasonably practicable after
        determining  that it has suffered or incurred any such  Indemnity  Loss,
        and will make such determination as soon as reasonably practicable after
        becoming aware that it may have suffered or incurred an Indemnity Loss.

9.10    Exclusions from general indemnity

        The  indemnities  contained in clauses 9.1, 9.4 and 9.7 shall not extend
        to any costs, expenses,  payments,  charges, losses, demands,  statutes,
        claims, actions, proceedings (whether and or criminal) penalties, fines,
        damages,  judgments,  orders  or other  sanctions,  liens,  salvage  and
        general average:

9.10.1  to the  extent  that the same  arises  from any act or  omission  of the
        Lessor or any  other  Indemnified  Person  which  constitutes  the gross
        negligence or wilful  misconduct of the Lessor or such other Indemnified
        Person;

9.10.2  to the  extent it is caused by any  failure on the part of the Lessor to
        comply with any of its express  obligations under any of the Transaction
        Documents to which the Lessor is a party Provided that any breach by the
        Lessor of its obligations  under any of the Transaction  Documents shall
        not be  included  within the ambit of this  clause  9.10.2 to the extent
        that such breach is itself  caused by, or arises by means of, any act or
        omission  of the Lessee or any other  member of the Lessee  Group of any
        Transaction Document;

9.10.3  in respect of which the Lessor  and/or any other  Indemnified  Person is
        expressly  indemnified  under any other Lease  Document or to the extent
        that the Lessor  and/or any other  Indemnified  Person has actually been
        indemnified by any other person;

9.10.4  to the extent that the Lessor or any  Indemnified  Person has  recovered
        such liability pursuant to clause 10; or

9.10.5  to  the  extent  that  such  liability  is  taken  into  account  in the
        calculations contained in the Financial Schedule in computing the Rental
        payable under this Lease.

9.11    Mitigation

        If the Lessee shall become  liable to indemnify  the Lessor or any other
        Indemnified  Person pursuant to this clause 9, the Lessor and the Lessee
        shall,  provided  no  Relevant  Event has  occurred  and is  continuing,
        consult in good faith for a period not  exceeding  the earlier of thirty
        (30)  days and the date the  Lessor  or such  other  Indemnified  Person
        is/are  obliged  to satisfy or  discharge  such  losses and each of them
        shall, at the cost of the Lessee, use all reasonable endeavours to avoid
        (or  reduce   the   amount)   of  the   losses   giving   rise  to  such
        indemnification.

9.12    Lessor as trustee

        The Lessor shall, to the extent that clause 9.13 is not  applicable,  be
        the agent and trustee of each of the other  Indemnified  Persons for the
        purpose of the  indemnities  given in their  favour under this Lease and
        any amounts  received by the Lessor in such  capacity  shall be held for
        the other Indemnified Persons severally.

9.13    Pass through of indemnity benefits

        Without  duplicating  the  liabilities  of the Lessee  under this Lease,
        where in this clause 9 an  indemnity  is expressed to be for the benefit
        of any  Indemnified  Person,  the Lessor  shall be entitled to indemnify
        such  Indemnified  Person  on the same  terms  mutatis  mutandis  as the
        indemnities  expressed to be for the benefit of such Indemnified  Person
        in this clause 9 and the Lessee shall  indemnify the Lessor and hold the
        Lessor  harmless on a full indemnity  basis from and against each amount
        paid or payable by the Lessor to such Indemnified  Person under any such
        indemnity.

10      Taxation

10.1    General

        The Lessee shall on demand  indemnify the Lessor from and against all or
        any Taxes  imposed on or  payable by the Lessor  arising by reason or in
        consequence  (whether alone or in  conjunction  with any other reason or
        circumstance) of this Lease or any of the other Relevant  Documents,  or
        in respect of  instruments  delivered  hereunder or  thereunder,  or the
        manufacture,  purchase, sale, disposal,  supply,  delivery,  management,
        control,  possession,  ownership,  leasing,  use, operation,  existence,
        design,  condition,  construction,   testing,  alteration,  maintenance,
        service,  repair,  overhaul,  import or export from any country or area,
        return,  recovery,  storage  or sale of the  Ship  or  upon  receipt  of
        earnings  arising  therefrom  or on or in respect of any  profits of any
        other party to any of the  Relevant  Documents  or which arise or become
        payable  as a result  (whether  alone or in  conjunction  with any other
        matter or  circumstance)  of anything done in response to any request by
        the Lessee.

10.2    Gross-up of indemnity payments

10.2.1  Sums payable to the Lessor under this Lease or any of the other Relevant
        Documents by way of indemnity or reimbursement shall be calculated on an
        after-tax  basis.  Accordingly,  if and to the extent  that any such sum
        payable to the Lessor is determined by the Lessor, acting in good faith,
        to be taxable  in the hands of the  Lessor,  such sum  shall,  where the
        payment is to be made by the Lessee,  be increased  to, or where payment
        is to be made by any other  person,  the Lessee shall pay to the Lessor,
        such amount which (after subtracting any Taxation suffered by the Lessor
        on the  increased  payment  or, as the case may be,  the  payment by the
        Lessee,  and after  taking  into  account  any  deduction  for  Taxation
        purposes available to the Lessor and the timing of any such deduction in
        respect of the discharge by the Lessor of any corresponding liability to
        a third  party)  shall  equal the  amount  which the  Lessor  would have
        received had the sum payable by the Lessee or such other person not been
        taxable in the hands of the Lessor.  If any sum payable to the Lessor is
        initially  paid on the basis that it is not  taxable in the hands of the
        Lessor and it is  subsequently  determined  to be taxable or vice versa,
        such  adjustment  and payment  shall be made  between the Lessor and the
        Lessee as the  Lessor  shall  certify  as  appropriate  to  restore  the
        after-tax  position  of the  Lessor to that which it would have been had
        the adjustment not been necessary.

10.2.2  If and to the extent  that any sum (the  "indemnity  sum")  constituting
        (directly  or  indirectly)  an  indemnity  to the Lessor but paid by the
        Lessee to any person other than the Lessor,  shall be treated as taxable
        in the hands of the Lessor,  the Lessee shall pay to the Lessor such sum
        (the "compensating  sum") as (after subtracting any Taxation suffered by
        the Lessor on the  compensating  sum and after  taking into  account any
        deductions  for Taxation  purposes  which in the  Lessor's  sole opinion
        acting  reasonably  in good faith are available to the Lessor in respect
        of any  corresponding  payment  treated  as made by the  Lessor  to such
        person) shall  reimburse  the Lessor for any Taxation  suffered by it in
        respect of the indemnity sum.

10.2.3  For the purposes of this clause 10.2 a sum shall be deemed to be taxable
        in the  hands of the  Lessor  if it falls to be taken  into  account  in
        computing  the  profits  or  gains of the  Lessor  for the  purposes  of
        Taxation and if so the Lessor shall be deemed to have suffered  Taxation
        thereon at the rate of Taxation  applicable  to the Lessor's  profits or
        gains for the period in which the payment falls to be taken into account
        for the purposes of such Taxation.

10.3    Withholding Taxes

10.3.1  If at any time any applicable law, regulation or regulatory requirement,
        (whether  or not  having  the  force  of law  but in  respect  of  which
        compliance by banks or other financial institutions or institutions of a
        similar nature to the Lessor in the relevant  jurisdiction  is generally
        customary) or any  governmental  authority,  monetary  agency or central
        bank requires any deduction or  withholding in respect of Taxes from any
        payment  due to the Lessor or any other  Indemnified  Person  under this
        Lease or any of the other  Relevant  Documents  the Lessee shall (unless
        otherwise agreed under or pursuant to any Relevant Document):

        (a)     if the payment is to be made by the Lessee, increase the payment
                in respect of which the deduction or  withholding is required to
                the extent  necessary to ensure  that,  after the making of such
                deduction or  withholding,  the Lessor  receives on the due date
                for such  payment a net sum equal to the sum which it would have
                received had no such deduction or  withholding  been required to
                be made;

        (b)     if the  payment  is to be  made by any  person  other  than  the
                Lessee,  pay  directly  to the  Lessor  such sum as will,  after
                taking  into  account  any  deduction  or  withholding  which is
                required to be made in respect of such sum, enable the Lessor to
                receive  on the due date for  payment a net sum equal to the sum
                which the  Lessor  would  have  received  in the  absence of any
                obligation to make a deduction or withholding;

        (c)     if  paragraph  (a) applies the Lessee  shall pay to the relevant
                authority within the period for payment  permitted by applicable
                law the full amount of the deduction or withholding  (including,
                but without  prejudice to the generality of the  foregoing,  the
                full amount of any deduction or  withholding  from any increased
                amount paid pursuant to this clause 10.3); and

        (d)     if paragraph  (a) applies the Lessee shall furnish to the Lessor
                within the period  for  payment  permitted  by  applicable  law,
                appropriate   receipts   evidencing   payment  to  the  relevant
                authority of all amounts deducted or withheld as aforesaid.

10.3.2  If the Lessor  determines  acting  reasonably and in good faith that the
        Lessor or a member of the Lessor  Group has  retained and utilised a tax
        benefit by reason of any deduction or  withholding as aforesaid (and the
        Lessor shall endeavour to realise or receive such a tax benefit provided
        it is not otherwise  disadvantaged  by doing so), which, in the Lessor's
        determination  acting  reasonably  and in good faith is referable to any
        deduction or  withholding  as  aforesaid,  subject to the Lessee  having
        complied  with clause  10.3.1,  the Lessor will,  as soon as  reasonably
        practicable  thereafter,  reimburse to the Lessee the  payment,  or such
        part of the payment as will leave the Lessor or such Indemnified  Person
        (after such  reimbursement)  in no better and no worse  position than it
        would have been in if no such deduction or withholding had been required
        to be made, provided always that:

        (a)     the  Lessor  shall be sole judge  (acting in good  faith) of the
                amount of any such benefit and of the date on which such benefit
                is received or realised and it shall give a certificate  setting
                out  the  basis  of the  computation  of the  amount  of any tax
                benefit referred to in clause 10.3.2;

        (b)     the  Lessor  and each  such  Indemnified  Person  shall  have an
                absolute  discretion  as to  the  arrangement  of  its  Taxation
                affairs  and,  in  particular,  the order in which it employs or
                claims credits, refunds and allowances available to it;

        (c)     if,  following  any such  reimbursement  by the Lessor,  the tax
                benefit  in  respect  of which  such  reimbursement  was made is
                disallowed in whole or in part by any applicable taxing or other
                authority,  the Lessee shall, upon demand, pay to the Lessor the
                amount necessary to restore the after tax position of the Lessor
                or such Indemnified  Person to that which it would have been had
                no adjustment under this proviso (c) been necessary; and

        (d)     the Lessor  shall not be obliged to make any such  reimbursement
                if, by doing so, it would contravene the terms of any applicable
                notice, direction or requirement (having the force of law).

        Provided that if the Lessee requests the Indemnified Person, in writing,
        to make an  application  for  relief  (whether  in  whole or in part) in
        respect of any deduction or withholding  required by law pursuant to the
        provisions of a double tax treaty,  the Indemnified Person shall (at the
        cost of the  Lessee)  take such  action as the Lessee  shall  reasonably
        request  to  make  such  application  to an  applicable  Tax  Authority.
        Provided that in  determining  whether any request under this proviso is
        reasonable,  the Lessor, in its capacity as an Indemnified Person, shall
        be entitled to take into account the interests of the other customers of
        the Lessor Group, in its absolute  discretion  acting in good faith, and
        the future  liability to Tax of the members of the Lessor Group.  If the
        Indemnified Person subsequently obtains a repayment (whether in whole or
        in part) of such  deduction or  withholding  from that Tax  Authority in
        circumstances  where the Lessee has made an increased  payment or paid a
        compensating  sum under this clause 10.3 the  Indemnified  Person shall,
        provided that the Indemnified  Person has received all amounts which are
        then due and  payable  to it under any  provisions  of this Lease or the
        other Relevant Documents pay to the Lessee such amount as will leave the
        Indemnified  Person  in no  better  and in no  worse  position  than the
        Indemnified  Person would have been in if the  deduction or  withholding
        had not been required.

10.4    Non-deductibility

        If the Lessor is  required to pay any sum under this Lease or any of the
        other Relevant  Documents and such sum is payable out of or represents a
        reimbursement  of an amount  which is brought  into account in computing
        the profits or gains of the Lessor for the  purposes of Taxation and the
        Lessor  Determines  acting in good faith that such  payment  will not be
        allowed to the Lessor as a deductible trading expense or as a basis for,
        or otherwise  as, a deduction  or off-set for  Taxation  purposes in the
        Accounting  Period of the Lessor in which it is required to be paid, the
        Lessee  shall  (without  prejudice  to the  generality  of clause  1.7),
        subject to any  restrictions  set out in the Proceeds  Deed,  pay to the
        Lessor  such  amount  as shall  put the  Lessor  in the  same  after-tax
        position as the Lessor  would have been in had the payment  been allowed
        as a deductible  trading  expense or as a basis for, or otherwise  as, a
        deduction or off-set as aforesaid. If any such payment is initially made
        on the basis that it is a deductible trading expense, or that it will be
        allowed as a basis for, or  otherwise  as, a deduction or off-set of the
        Lessor for Taxation  purposes in the Accounting  Period of the Lessor in
        which it is incurred and it is subsequently determined that it is not so
        deductible or allowed, or vice versa, such adjustments and payments,  if
        any,  shall be made  between the Lessor and the Lessee as the Lessor may
        certify as appropriate in order to restore the after-tax position of the
        Lessor  to that  which it would  have been had the  adjustment  not been
        necessary.

10.5    Undertakings concerning Taxation

        The Lessee  undertakes that it will,  taking into account any time limit
        for the production of information imposed by any Tax Authority,  furnish
        when the Lessor shall so require, such information as may be required to
        be so  furnished  by the  Lessor to the Board of  Inland  Revenue  or an
        Inspector of Taxes regarding the leasing of the Ship or the use to which
        it is being or has been put,  and  promptly  upon request by the Lessor,
        furnish  to  the  Lessor  such  information,  books,  records  or  other
        documents  in the  possession  of or under the control of the Lessee (or
        photocopies  thereof)  as the Lessor may  request in order to enable the
        Lessor to comply with the provisions of sections 118, 119 and 120 CAA or
        to  respond  to a request  for  information  given to the  Lessor by the
        Inland Revenue.

10.6    No double counting

        Notwithstanding  the  preceding  provisions  of  this  clause  10,  if a
        liability to Taxation of the Lessor arises (or would have arisen but for
        an  insufficiency  of taxable profits) or an event giving rise to such a
        liability  occurs  (which would not have been,  or given rise to, such a
        liability had all of the Variable  Assumptions  proved to be correct) by
        reason of which the  Lessee is (or  would,  but for this  provision  be)
        liable to make a payment under the  preceding  provisions of this clause
        10 and, in consequence of any such Variable  Assumptions  proving not to
        be correct,  the amount of Rental  payable  under this Lease is adjusted
        upwards (or would be so adjusted but for the  provisions of paragraph 10
        of  the  Financial   Schedule)   then  the  Lessee  shall  not  in  such
        circumstances  be liable to make any payments to the Lessor or otherwise
        in respect of Taxes  under this  clause 10 to the extent that the Lessor
        is (or, as the case may be, would be) fully  compensated (or would be so
        compensated  but for the  provisions  of paragraph  10 of the  Financial
        Schedule)  in  respect  of  such  liability  or  event  by  such  upward
        adjustment to the amount of such Rental.

10.7    Duties and other taxes

        The Lessee shall pay all stamp, documentary,  registration or other like
        duties or Taxes (including any such Taxes payable by the Lessor) imposed
        on or in  connection  with  any  of the  Relevant  Documents  and  shall
        indemnify  the Lessor  against  any  liability  arising by reason of any
        delay or omission by the Lessee to pay such duties or Taxes.  The Lessor
        by way of covenant but not as a condition  precedent to the liability of
        the Lessee  hereunder  shall,  except to the extent that its business or
        taxation  interests  are  otherwise   prejudiced,   use  its  reasonable
        endeavours to avoid unnecessarily rendering the Lessee liable under this
        clause.

10.8    Exclusion from tax indemnities

        The Lessee  shall not be obliged to  indemnify  the Lessor  under clause
        10.1 in respect of any Taxes in respect of the following  (including any
        interest, penalties or fines thereon):

10.8.1  any Tax  liability  which is imposed by way of deduction or  withholding
        from any  payment  due from the  Lessee  under  this Lease or any of the
        other Relevant Documents to the Lessor in circumstances where the Lessee
        is required to make any payment or increased  payment in respect thereof
        under  clause  10.3 (the  Lessee's  liability  for which shall be as set
        forth in clause 10.3); or

10.8.2  Taxes  which are  imposed  by reason of the wilful  misconduct  or gross
        negligence of the Lessor, or any affiliate thereof or to the extent they
        result  from any  breach  of, or a failure  on the part of the Lessor to
        comply with, any of the terms of this Lease or any of the other Relevant
        Documents to which the Lessor is a party; or

10.8.3  any Taxes  assessed  against  the  Lessor by  reference  to its  overall
        income,  profits or gains  attributable to any Rental or Termination Sum
        or any adjustment thereto actually  receivable  hereunder or its overall
        income,  profits  or gains,  if any,  realised  in  connection  with the
        ultimate  disposal of the Ship or arising out of a Total Loss.  Provided
        that, for the avoidance of doubt,  the interest (if any) accruing by the
        Lessor in  respect  of  amounts  held from time to time in the  Lessor's
        Proceeds  Accounts  and/or any foreign  exchange  gain  relating to such
        amounts shall not be treated as realised in connection with the ultimate
        disposal of the Ship or arising out of a Total Loss; or

10.8.4  any Taxes to the  extent  that they  would not have  arisen  but for the
        reasonably avoidable delay or failure by the Lessor in the filing of tax
        returns or any other  documents  or the payment of Taxes  assessed on or
        payable by the Lessor in the United  Kingdom  which delay or failure has
        not been  expressly  consented  to, or requested by the Lessee or unless
        such a failure  or delay by the  Lessor  results  from a failure  by the
        Lessee  promptly  to  provide  the Lessor  with  correct,  suitable  and
        adequate  information  to enable  the  Lessor to file the  relevant  tax
        return or pay such Taxes or other amounts; or

10.8.5  where the  Lessee is liable to  compensate  the Lessor in respect of the
        liability under any other provision of this Lease and has discharged its
        obligation in respect thereof; or

10.8.6  any Taxes  which  would not have been  imposed but for, or to the extent
        increased  by reason of an  assignment  or  transfer  by an  Indemnified
        Person of its rights or  obligations  under  this Lease or any  Relevant
        Document or by reason of the  bankruptcy or insolvency of an Indemnified
        Person; or

10.8.7  any Taxes or Tax Liability to the extent that the same has resulted in a
        change of Assumption  for the purposes of the Financial  Schedule  which
        has  either   resulted  in  an  adjustment  to  any  Primary  Rental  or
        Termination  such or which  would have given rise to such an  adjustment
        but for the  limitations on adjustment  contained in paragraph 10 of the
        Financial Schedule.

10.9    VAT

10.9.1  If the  Lessor  makes any  supply  to the  Lessee  for  Value  Added Tax
        purposes  pursuant  to or in  connection  with this  Lease or any of the
        other Relevant  Documents or any  transaction  or document  contemplated
        herein or therein, the Lessee shall promptly upon receipt of a valid VAT
        invoice (or other  evidence  that the Lessor has been obliged to account
        for VAT in respect of that supply in accordance with applicable law) pay
        to the Lessor an amount equal to any Value Added Tax which is payable in
        respect of that supply.

10.9.2  If and to the extent that any payment or other  consideration to be made
        or  furnished  by the  Lessor  to any  person,  other  than the  Lessee,
        pursuant  to or in  connection  with  this  Lease  or any  of the  other
        Relevant Documents or any transaction or document contemplated herein or
        therein may be  increased or added to by reference to (or as a result of
        any  increase in the rate of) any Value Added Tax,  the Lessee shall pay
        to the  Lessor  within  ten (10) days of  demand an amount  equal to any
        Value Added Tax in relation thereto that proves to be Irrecoverable VAT.

10.9.3  No payment or other  consideration to be made or furnished by the Lessor
        to the Lessee pursuant to or in connection with this Lease or any of the
        other Relevant  Documents or any  transaction  or document  contemplated
        herein or therein may be  increased  or added to by  reference to (or as
        the  result of any  increase  in the rate of) any Value  Added Tax which
        shall be or may become  chargeable  in respect of the taxable  supply in
        question  provided that if the Lessor  determines in good faith that any
        amount  of such  Value  Added  Tax is not  Irrecoverable  VAT it  shall,
        promptly following such determination, pay to the Lessee an amount equal
        to the amount of that Value Added Tax determined not to be Irrecoverable
        VAT, and on presentation of a valid VAT invoice by the Lessee.

10.9.4  The Lessee and the Lessor agree to co-operate  with a view to minimising
        any  Irrecoverable VAT suffered by either party under any transaction or
        document contemplated by any Relevant Document but so that neither party
        shall be  required  to do  anything  which  would  not be good  business
        practice and legal or which would  involve any adverse  consequences  to
        it.

10.10   Tonnage Tax

10.10.1 The Lessee  undertakes  that it has not,  as at the date of this  Lease,
        made a tonnage tax election or been  included in a tonnage tax group for
        the  purposes  of Section 82 and  Schedule 22 of the Finance Act 2000 (a
        "Tonnage Tax Election").

10.10.2 If any member of the Lessee Group, or any Time  Charterer,  or any other
        charterer  makes a Tonnage Tax Election or becomes a member of a tonnage
        tax group then the Lessee  will give the  Lessor  written  notice of the
        making of that election or its membership of a tonnage tax group and the
        date from which that election is effective or such membership  commenced
        within thirty (30) Banking Days after the making of that election or the
        commencement of such membership.

10.10.3 The Lessee will enter into the joint certificate required to be provided
        by the Lessor and the Lessee  under  paragraph  93 of Schedule 22 to the
        Finance Act 2000.

10.10.4 The Lessee  agrees that it will  provide the Lessor on an ongoing  basis
        with such information as may be properly required to be furnished by the
        Lessor to any Tax Authority  regarding the  transaction  contemplated by
        the  Transaction  Documents as may be required to be furnished under the
        provisions  of Schedule 22 to the Finance Act 2000,  including,  without
        limitation,  any information to be provided by the Lessor and the Lessee
        to the Inland  Revenue  pursuant to  paragraph  93 of Schedule 22 to the
        Finance Act 2000.

11      General undertakings

11.1    Information and compliance undertakings

        The Lessee  undertakes  with the Lessor that from the date of this Lease
        and  thereafter  so long as any moneys are owing under this Lease or any
        of the other Lease Documents it will:

11.1.1  Notification of Relevant Event

        promptly  inform the Lessor of any  occurrence of which it becomes aware
        which would or is  reasonably  likely to  adversely  affect any Relevant
        Party's  ability to perform its  obligations  under any of the  Relevant
        Documents and,  without  limiting the generality of the foregoing,  will
        inform the Lessor of any Relevant  Event  promptly upon  becoming  aware
        thereof and will from time to time,  if so requested by the Lessor where
        the Lessor has good reason to believe that a Termination  Event may have
        occurred,  confirm  to the  Lessor in writing  that,  save as  otherwise
        stated in such  confirmation,  no Termination  Event has occurred and is
        continuing; 11.1.2 Consents and authorisations

        without  prejudice to clauses 2.2 and 4, obtain or cause to be obtained,
        maintain  in full force and effect and comply in all  material  respects
        with  the  conditions  and  restrictions  (if  any)  imposed  in,  or in
        connection  with, every consent,  authorisation,  licence or approval of
        governmental  or public bodies or authorities or courts and do, or cause
        to be done, all other acts and things,  which in each case may from time
        to time be necessary or desirable under applicable law for the continued
        due performance of all of any Relevant Party's obligations under each of
        the Relevant Documents;

11.1.3  Pari passu

        ensure  that its  obligations  under  this  Lease  and the  other  Lease
        Documents  shall all times rank at least pari passu with all its present
        and future  unsecured  and  unsubordinated  Indebtedness  other than any
        obligations which are mandatorily preferred by law and not by contract;

11.1.4  Financial statements

        prepare  Annual  Financial  Statements in accordance  with Relevant GAAP
        consistently  applied in respect  of each  financial  year and cause the
        same to be reported on by the Lessee's  Auditors  and prepare  Quarterly
        Financial   Statements  on  the  same  basis  as  the  Annual  Financial
        Statements  and  deliver  a copy of the  same to the  Lessor  as soon as
        practicable but not later than one hundred and eighty (180) days (in the
        case of Annual Financial  Statements) or sixty (60) days (in the case of
        Quarterly  Financial  Statements)  (or,  in any such case,  such  longer
        period as may be agreed in writing by the  Lessor)  after the end of the
        financial  period to which they relate  provided always that in the case
        of the Annual  Financial  Statements the Lessee shall deliver  unaudited
        draft Annual  Financial  Statements no later than one hundred and twenty
        (120) days after the end of the financial period to which they relate if
        the audited Annual Financial Statements are not ready at that time;

11.1.5  Delivery of reports

        deliver to the Lessor a copy of every material report, circular,  notice
        or like document  issued by the Lessee to its  shareholders or creditors
        generally, in each case at the time of issue thereof;

11.1.6  Provision of further information

        provide the Lessor with such financial and other information  concerning
        the Lessee,  the Sub-Lessee  and the Lessee Parent and their  respective
        affairs  as the  Lessor  may from  time to time  reasonably  request  in
        writing;

11.1.7  Obligations under Lease Documents

        duly and  punctually  perform  each of its  obligations  under the Lease
        Documents;

11.1.8  No merger or consolidation

        not  without  the  prior  written   consent  (such  consent  not  to  be
        unreasonably withheld) of the Lessor merge or consolidate with any other
        company  or  person  which is not a member  of the  Lessee  Group and to
        notify the Lessor of any merger or  consolidation  with another  company
        which is a member of the Lessee Group;

11.1.9  Financial Ratios

        ensure that:

        (a)     Free Available Cash

                at all times the Free  Available Cash shall not be less than the
                Minimum Free  Available  Cash at the relevant  time.  The Lessor
                agrees  that for the purpose of  satisfying  this  covenant  the
                requirement to evidence  Minimum Free Available Cash for amounts
                or Free  Available  Cash in excess of  fifteen  million  Dollars
                ($15,000,000) may be satisfied by the Lessee providing  evidence
                to the Lessor that the Lessee  Parent has made  available to the
                Lessee an  unconditional  on demand  loan in an amount  equal to
                such  excess  amounts  and which loan is capable of being  drawn
                down on an unqualified and  unrestricted  basis by the Lessee at
                any time;

        (b)     Working Capital

                as at the end of each quarterly  period during and at the end of
                each financial  year of the Lessee,  the ratio of Current Assets
                to  Current  Liabilities   (excluding  the  current  portion  of
                long-term  debt)  shall not be less than one point five (1.5) to
                (1); and

        (c)     Leverage

                as at 31  March  2003  and as at  the  end  of  each  subsequent
                quarterly period during and at the end of each financial year of
                the  Lessee,  the ratio of Net Debt as at the end of such period
                to  Annualised  EBITDA  calculated  by reference to such quarter
                shall not exceed:

                (i)     six point  five (6.5) to one (1) for  quarterly  periods
                        ending during or at the end of 2003;

                (ii)    six (6) to one (1) for quarterly  periods  ending during
                        and at the end of 2004; and

                (iii)   five  (5)  to  one  (1)  for  all  subsequent  quarterly
                        periods;

11.1.10 Dividends

        at any time  after the date  falling  five (5) days  after the  Delivery
        Date,  not without the prior written  consent of the Lessor,  declare or
        pay any  dividends  unless  the  Lessee  can  evidence  to the  Lessor's
        satisfaction  that the Free  Available Cash is not less than thirty five
        million Dollars ($35,000,000); and

11.1.11 Certificate of compliance with clause 11.1.9

        at the same time as the  Lessee  delivers  to the  Lessor,  pursuant  to
        clause 11.1.4,  a copy of the Annual  Financial  Statements or Quarterly
        Financial  Statements  (as the case may be) the Lessee  shall  provide a
        statement  signed by the  Chief  Financial  Officer  or  another  senior
        officer of the Lessee (in  substantially the form set out in Schedule 6)
        confirming:

        (a)     the respective amounts of:

                (i)     the Cash Balances and Minimum Free Available Cash;

                (ii)    Current  Assets,  Current  Liabilities  and the  current
                        portion of long-term debt;

                (iii)   Annualised EBITDA and Interest Expense; and

                (iv)    Net Debt,

                in  respect  of or,  as the  case  may be,  as at the end of the
                financial  period  expiring  on the date as at and for which the
                relevant financial  statements were prepared (or, in the case of
                Annualised  EBITDA,  calculated  by  reference  to the three (3)
                month period expiring on such date) (or, in the case of Interest
                Expense, for the twelve (12) month period expiring on such date)
                and that such amounts were  calculated in  accordance  with this
                Lease and Relevant GAAP;

        (b)     that such Annual  Financial  Statements  or Quarterly  Financial
                Statements were prepared in accordance with Relevant GAAP or, if
                not so prepared,  setting forth full details of the  adjustments
                required to be made to such statements to reflect  Relevant GAAP
                as  necessary  to  calculate  the amounts  referred to in clause
                11.1.9;

        (c)     that as at the date to which the relevant  financial  statements
                are made up, the Lessee was in compliance with the covenants and
                undertakings set out in clause 11.1.9 (or, if it was not in such
                compliance,  indicating  the  extent of the breach and the steps
                intended to be taken to remedy the same); and

        (d)     that,  as at the date not more than  seven (7) days prior to the
                delivery of the certificate,  no Relevant Event has occurred and
                is  continuing  (or,  if such is not the  case,  specifying  the
                same).

11.2    Protection of Lessor's rights

        The Lessee hereby further  undertakes with the Lessor that from the date
        of this Lease until the end of the Lease Period it will:

11.2.1  Disposal of the Ship

        not  attempt or hold  itself  out as having any power to sell,  agree to
        sell,  transfer or otherwise dispose of or (except to avoid loss of life
        or personal injury or as otherwise agreed pursuant to clause 22) abandon
        the Ship or any share or interest therein;

11.2.2  Encumbrances

        not create or agree or purport to create any Encumbrance  over the Ship,
        any  share or  interest  therein  or in the  Insurances  or  Requisition
        Compensation   or  any  part   thereof   (other   than   for   Permitted
        Encumbrances);

11.2.3  Notification of arrest

        notify the Lessor  promptly by  facsimile  of any arrest or detention of
        the Ship or any exercise or purported  exercise of a lien or other claim
        on the Ship or the Insurances or any part thereof;

11.2.4  Prevention of and release from arrest

        without  prejudice to clause 29.3  promptly pay and discharge or procure
        that  there is paid or  discharged  (by  settlement,  providing  bail or
        procuring  the  provision of security or otherwise as the  circumstances
        may allow or require)  all debts,  damages,  liabilities  and  outgoings
        whatsoever  which have given or may give rise to maritime,  statutory or
        possessory  liens  on,  or claims  enforceable  against  the Ship or the
        Insurances  or any part  thereof  and,  in the  event of a writ or libel
        being filed against the Ship or the  Insurances or any part thereof,  or
        of any of the same being  arrested,  attached or levied upon pursuant to
        legal process or purported legal process or in the event of detention of
        the Ship in exercise or purported  exercise of any such lien or claim as
        aforesaid,  procure the release of the Ship and the Insurances from such
        arrest,  detention,  attachment  or levy or,  as the  case  may be,  the
        discharge of the writ or libel  promptly  (and, in the case of an arrest
        of the Ship, within the period provided therefor in clause 26.1.17) upon
        receiving notice thereof by providing bail or procuring the provision of
        security or otherwise as the circumstances may require;

11.2.5  No pledging of Lessor's credit

        not  pledge  the  credit of the  Lessor  for any  maintenance,  service,
        repairs,  drydocking, or modifications to, or changes or alterations in,
        the Ship or for any other purpose whatsoever;

11.2.6  Protection of Lessor's rights in relation to the Ship

        not do or permit to be done any act or thing which might  jeopardise the
        title,  rights and  interest of the Lessor in the Ship or omit or permit
        to be omitted  to be done any act  within  the  control of the Lessee or
        other  member of the Lessee  Group  which might  prevent  that title and
        those rights and interest from being jeopardised; and

11.2.7  Ownership of Ship

        generally on all  occasions  when the  ownership of the Ship is relevant
        make clear to third  parties  that the same is not the  property  of the
        Lessee.

12      Sub-leasing

12.1    Restrictions on sub-leasing

        Save for the  Sub-Lease,  the Lessee will not and will  procure that the
        Sub-Lessee will not at any time without the prior written consent of the
        Lessor  (which  the  Lessor  shall have full  liberty  to  withhold  its
        consent) and, if such consent is given,  only subject to such conditions
        as the Lessor  may  require,  part with the  possession  or  operational
        control of the Ship  (except to the Manager  pursuant to the  Management
        Agreement or for the purpose of maintenance, service, repair or overhaul
        work or any modifications,  changes or alterations  permitted under this
        Lease) or sub-let the Ship.  The Lessee shall  provide the Lessor with a
        certified  copy of any  sub-lease  consented  to pursuant to this clause
        promptly following execution of the same.

12.2    Terms of sub-lease

        The Lessee will not and will procure that the Sub-Lessee will not at any
        time sub-let the Ship on a bareboat or demise  charter basis pursuant to
        any sub-lease unless:

12.2.1  the relevant  sub-lease shall contain such terms and provisions as shall
        ensure that the sub-lessee thereunder,  if complying with the said terms
        and  conditions,  will  not  do  anything  which  would  contravene  the
        provisions of this Lease (including,  without limitation, the provisions
        of clause 13.2.4  relating to qualifying  purpose  during the designated
        period as therein  referred  to and  clause  13.1) and not  prevent  the
        Lessee from complying with the provisions of this Lease;

12.2.2  any such  sub-lease  will not result in any of the Variable  Assumptions
        becoming incorrect;

12.2.3  by its terms such  sub-lease  prohibits  sub-leasing  by the  sub-lessee
        without the prior written  consent of the Lessor (which the Lessor shall
        not unreasonably withhold);

12.2.4  the  sub-lease  shall not involve or purport to involve any  transfer of
        title or  interest  in the Ship and  shall not in any way  discharge  or
        diminish any of the Lessee's obligations to the Lessor under this Lease;

12.2.5  any such  sub-lease  will not be  capable  of  expiring  after the Lease
        Period,  will be expressed to be subject and  subordinate  to this Lease
        and any  sub-lessee  will confirm  such  subordination  arrangements  in
        writing to the Lessor on terms satisfactory to the Lessor; and

12.2.6  any  sub-lessee  shall  as a  condition  to the  effectiveness  of  such
        sub-lease  agree to adhere to the  provisions  of the  Proceeds  Deed or
        otherwise  agree  to  the  provisions  of  this  Lease  relating  to the
        application of proceeds of Insurances in respect of the Ship.

12.3     Undertakings concerning the Sub-Lease

        The Lessee hereby  undertakes  with the Lessor that throughout the Lease
        Period:

12.3.1  it will not,  except with the  previous  written  consent of the Lessor,
        agree to any variation of the Sub-Lease or release the  Sub-Lessee  from
        any of the  Sub-Lessee's  obligations  under the  Sub-Lease or waive any
        breach of the Sub-Lessee's obligations thereunder or consent to any such
        act or omission of the  Sub-Lessee as would  otherwise  constitute  such
        breach;

12.3.2  it will not claim or  exercise  any lien upon  sub-freights  which might
        otherwise be available to it under the Sub-Lease;

12.3.3  it will perform its  obligations  under the  Sub-Lease  and use its best
        endeavours to procure that the Sub-Lessee  shall perform its obligations
        under the Sub-Lease;

12.3.4  the  Sub-Lease  shall not in any  circumstances  be  determined by it by
        reason of any breach or alleged  breach thereof by the Lessee unless the
        Lessor   shall   first  have  given  its  consent  in  writing  to  such
        determination provided always that any determination of the Sub-Lease by
        the Lessee after such  consent is given shall be without  responsibility
        on the part of the Lessor who shall be under no liability  whatsoever in
        event that such  determination  be  thereafter  adjudged to constitute a
        repudiation of the Sub-Lease by the Lessee; and

12.3.5  at the  request  of  the  Lessor  it  will  supply  to  the  Lessor  all
        information, accounts and records that may be reasonably necessary or of
        assistance  to enable the Lessor to verify the amount of all payments of
        charterhire and other amounts payable under the Sub-Lease.

13      Use and trade of the Ship

13.1    Permitted use

        Subject to the other  terms and  conditions  of this Lease and the other
        Lease  Documents,  the Lessee shall (save as herein  provided)  have the
        full and exclusive use, control and command of the Ship during the Lease
        Period and may operate or employ it within any lawful trade for which it
        is suitable.

13.2    Undertakings concerning use

        The Lessee hereby  undertakes  with the Lessor that throughout the Lease
        Period it will:

13.2.1  Ship's registration

        not to do or suffer to be done anything whereby the documentation of the
        Ship for the time being in accordance with the provisions of clause 14.2
        may be forfeited or imperilled;

13.2.2  Employment

        not employ the Ship or permit its  employment  in any  manner,  trade or
        business which is forbidden by  international  law, or which is unlawful
        or illicit under the law of any relevant jurisdiction,  or in any manner
        whatsoever   which  may  render  it  liable  to  destruction,   seizure,
        confiscation,  penalty or sanctions  and, in the event of hostilities in
        any part of the world  (whether  war be declared  or not),  not enter or
        trade to or  continue  to trade in any zone which is declared a war zone
        by any  Government  Entity or by the insurers  unless the prior  written
        consent of the Lessor is obtained  and such special  insurance  cover as
        the Lessor may require shall have been effected by the Lessee and at its
        expense;

13.2.3  Payment of outgoings and evidence of payments

        pay in accordance with good business  practice all tolls, dues and other
        outgoings  whatsoever in respect of the Ship and the Insurances and keep
        proper  books of account  in  respect  of the Ship and,  as and when the
        Lessor  may  so  reasonably  require,  make  such  books  available  for
        inspection  on behalf of the Lessor and  furnish  satisfactory  evidence
        that  the  wages  and   allotments   and  the   insurance   and  pension
        contributions  of the Master and crew are being  promptly and  regularly
        paid and that all  deductions  from  crew's  wages in  respect of United
        Kingdom 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;

13.2.4  Use for a qualifying purpose

        not use the Ship or permit the Ship to be used and procure that the Ship
        is not used during the designated period (as defined in section 106 CAA)
        so as to result in the  application  of sections 109, 110, 111, 112, 113
        and 117 CAA and  shall  immediately  notify  the  Lessor  if at any time
        within  such  designated  period  the  Ship is  used  for  leasing  to a
        non-resident  within the  meaning of section 105 (2) CAA and also notify
        the Lessor of any event or matter which under  sections 118, 119 and 120
        CAA ought to be notified by the Lessor to the Board of Inland Revenue or
        any  Inspector  of Taxes  in  connection  with  the Ship or the  leasing
        thereof  and shall  promptly  furnish to the Lessor  when the Lessor may
        require  such  information  as may be required to be so furnished by the
        Lessor  to the  Board  of the  Inland  Revenue  or  Inspector  of  Taxes
        regarding the leasing of the Ship or the use to which it is being put or
        has  been  put,  in  order to  enable  the  Lessor  to  comply  with the
        provisions  of  sections  118,  119 and 120 CAA or to  respond to such a
        request;

13.2.5  Anti-Drug Abuse

        without  prejudice  to clause  13.2.2,  take all  necessary  and  proper
        precautions to prevent any  infringements  of the Anti-Drug Abuse Act of
        1986  of  the  United  States  of  America  or any  similar  legislation
        applicable to the Ship in any jurisdiction in or to which the Ship shall
        be employed or trade; and

13.2.6  Bills of Lading

        except as otherwise required pursuant to the Time Charter,  procure that
        all Bills of  Lading  issued  for  carriage  of goods by the Ship  shall
        contain a Paramount  clause  incorporating  any legislation  relating to
        carrier's  liability for cargo compulsorily  applicable in the trade or,
        if  no  such  legislation  exists,  that  such  Bills  of  Lading  shall
        incorporate the British  Carriage of Goods by Sea Acts 1971 and that all
        such Bills of Lading  shall also contain the amended New Jason clause as
        approved by the Baltic International  Maritime Council from time to time
        and the  Both-to-Blame  Collision  clause and without  prejudice  to the
        provisions  of clause 33.5,  provide that the General  Average,  if any,
        shall be settled according to the York-Antwerp Rules of 1994 in London.

14      Title, registration, name and house flag

14.1    Title

        The Lessee  shall have no right,  title or interest in or to the Ship or
        any part  thereof  except  the  right to use the same upon the terms and
        conditions contained in this Lease. It is hereby expressly declared that
        the Lessee shall not have any option or right to acquire title to or any
        proprietary  interest in the Ship or any part thereof.  The Lessee shall
        not sell or purport to sell the Ship  otherwise  than in exercise of its
        rights under clause 3.6.  Subject to clauses 6.1 and 6.2, nothing herein
        contained  shall be construed as imposing any liability on the Lessor to
        the Lessee in respect of or arising out of the acts or  omissions of any
        third party  (including  any  charterer or lessee of any other vessel or
        assets of the Lessor  unless  that third party is a member of the Lessor
        Group) affecting the Lessee or the Ship or otherwise.

14.2    The  Lessee  may at any time  and from  time to time  during  the  Lease
        Period,  request the Lessor to transfer  the register of the Ship to any
        port and/or to re-document the Ship under laws of any jurisdiction other
        than  the port  and/or  jurisdiction  at which  the Ship is for the time
        being registered  and/or under whose laws the Ship is for the time being
        documented.  If the Lessor  approves of such transfer of register and/or
        re-documentation  of the Ship,  the Lessor shall,  at the request of the
        Lessee,  co-operate  with and permit  the  Lessee to take all  necessary
        steps to comply with such request and thereafter  shall during the Lease
        Period  co-operate with the Lessee to take such action as the Lessee may
        reasonably require to maintain the documentation of the Ship at the port
        to which the  register of the Ship is so  transferred  and/or  under the
        laws of the jurisdiction  under whose laws the Ship is so re-documented.
        For the  purposes of this clause 14.2,  the Lessor  shall in  accordance
        with the provisions of this Lease and the Proceeds Deed not unreasonably
        withhold its approval to the transfer of the register of the Ship to any
        port  and/or  the  re-documentation  of the Ship  under  the laws of any
        jurisdiction  and/or  under whose flag the Lessor is  entitled,  without
        breach of any applicable laws, to register and/or re-document the Ship.

        The Lessee  undertakes that if at any time it requests a transfer of the
        register and/or the  redocumenting  of the Ship following a request from
        the Time Charterer, and if the Lessor agrees to such request, the Lessee
        shall  use its best  endeavours  to  obtain  the  agreement  of the Time
        Charterer  that the consent to such  transfer is given on the basis that
        the Time  Charterer  agrees to a  subsequent  transfer  of the  register
        and/or  the  redocumenting  of  the  Ship  under  British  flag  in  the
        circumstances described below in this clause 14.2.

        If the Ship is, in accordance  with the provisions of this Lease and the
        Proceeds Deed, no longer  registered at any time under British flag and,
        in the reasonable  opinion of the Lessor acting in good faith,  it shall
        become impossible, unlawful, impracticable or undesirable for the Lessor
        to  maintain  the  documentation  of the  Ship  under  the  laws  of any
        jurisdiction  under  which the Ship is then  documented  (other than the
        United Kingdom),  the Lessor shall give notice thereof to the Lessee and
        the Lessor and the Lessee shall  forthwith  enter into  negotiations  in
        good faith with a view to agreeing upon an alternative  jurisdiction for
        the documentation of the Ship, but if no such agreement shall be reached
        within thirty (30) days after the Lessor shall have given such notice to
        the Lessee,  the Lessor  shall be at liberty to take and/or  require the
        Lessee to take such action to re-document  the Ship as a British ship in
        the United  Kingdom  and/or to transfer  the registry of the Ship to the
        United  Kingdom and in any such case the Lessee shall do all that may be
        necessary  on its part to give  effect to such  re-documentation  and/or
        transfer of register. Where the Lessee has complied with its obligations
        under the second  paragraph of this clause 14.2,  the Lessor agrees that
        it shall not  require the  reflagging  or  redocumenting  of the Ship to
        British  flag where it shall be  impracticable  or  undesirable  for the
        Lessor to  maintain  the  documentation  of the Ship under the flag of a
        particular  jurisdiction  where such reflagging or  redocumenting of the
        Ship shall  result in a breach of the Time  Charter or any  sub-charters
        entered into by the Time Charterer pursuant to the Time Charter.

        Without  prejudice to the  generality of the provisions of clause 9, the
        Lessee shall  indemnify and hold harmless the Lessor against all losses,
        costs,   expenses  and  liabilities  of  whatsoever   nature  (including
        penalties,  claims,  demands,  orders or judgments) which the Lessor may
        suffer  or incur and  which  arise  directly  or  indirectly  out of the
        re-documentation of the Ship in accordance with this clause 14.2.

14.3    Name and house flag

        The Ship shall be painted in such colours, display such insignia and fly
        such house flag as the Lessee may  require.  The Lessee shall notify the
        Lessor of any intended change in the name of the Ship.

14.4    Proceeds Deed

        The arrangements  concerning the transfer of flag or registry  contained
        in this  clause 14 shall be subject to the  provisions  of clause 8.7 of
        the Proceeds Deed.

15      Maintenance and operation

15.1    Possession and control of Ship by Lessee

        During  the  Lease  Period  the Ship  shall,  subject  to the  terms and
        conditions of this Lease, be in the full and exclusive possession and at
        the  absolute  disposal  of the  Lessee for all  purposes  and under its
        complete  control in every respect and the Master,  officers and crew of
        the Ship shall be the  servants of the Lessee,  or during the  Sub-Lease
        Period,  the  Sub-Lessee  (or any other  permitted  sub-lessee)  for all
        purposes whatsoever.

        Notwithstanding any other provision of this Lease, and without prejudice
        to any of the  obligations  of the Lessee under this Lease or any of the
        other Lease Documents  imposing any higher standard of performance  upon
        the Lessee,  the Lessee shall make,  and shall have sole  responsibility
        for making, all such arrangements as may be necessary to ensure that the
        Ship is fit to operate at sea without serious danger to human life.

15.2    Undertakings concerning maintenance and operation during Lease Period

        The Lessee further  undertakes with the Lessor that throughout the Lease
        Period and thereafter, whilst the Lessee continues to have possession of
        the Ship, until the sale of the Ship it will:

15.2.1  Maintenance of classification; compliance with regulations

        maintain the  Classification as the class of the Ship and to comply with
        and ensure that the Ship at all times  complies  with the  provisions of
        the  Merchant   Shipping  Acts  and  all  regulations  and  requirements
        (statutory  or  otherwise)  from  time to  time  applicable  to  vessels
        registered  under British flag or otherwise  applicable to the Ship, her
        Master,  officers  and crew  wherever  the Ship may proceed or trade and
        (without  prejudice  to the  generality  of the  foregoing)  at its  own
        expense maintain in force for the Ship all safety,  radio,  loadline and
        other  certificates  whatsoever  and all licences and permits  which may
        from  time to time be  prescribed  by any  legislation  in  force in the
        United Kingdom or other applicable jurisdiction;

15.2.2  Supply and crewing

        by its  own or the  Sub-Lessee's  procurement  (which  may  include  the
        engagement  of  the  Manager  to  provide  certain  services  under  the
        Management Agreement),  man, victual,  navigate,  operate, supply, fuel,
        and repair the Ship whenever required during the Lease Period;

15.2.3  Surveys

        submit  the Ship to  continuous  surveys  and such  periodical  or other
        surveys as may be required for classification purposes,  comply with all
        recommendations  and  requirements  of  the  Classification  Society  in
        accordance  with  their  terms and  supply to the  Lessor  copies of all
        survey reports issued in respect thereof;

15.2.4  Repair

        keep the  Ship and  every  part of it in a good and  efficient  state of
        repair, in efficient operating condition,  seaworthy in all respects and
        in  accordance  with  good  maintenance  practice  (fair  wear  and tear
        excepted and having  regard to the type and age of the Ship) and procure
        that all repairs to, or replacement of, any damaged,  worn or lost parts
        or equipment  are  effected in such manner (both as regards  workmanship
        and quality of materials) as not to materially diminish the value of the
        Ship without the prior written consent of the Lessor;

15.2.5  Drydocking

        drydock the Ship and clean and paint her underwater  parts in accordance
        with good  commercial  practice  for  vessels of the type and age of the
        Ship and, in any event, in accordance with the requirements from time to
        time of the Classification Society;

15.2.6  Inspection of the Ship

        permit the Lessor by surveyors or other persons appointed by it for such
        purpose to board the Ship at annual  intervals  during the Lease  Period
        and after the  occurrence of a Termination  Event which is continuing at
        such intervals as the Lessor  considers  appropriate  for the purpose of
        inspecting her and afford all proper facilities for such inspections and
        for this  purpose  give the  Lessor  reasonable  advance  notice  of any
        intended   dry  docking  of  the  Ship   (whether  for  the  purpose  of
        classification,  survey or otherwise).  The cost of such inspections and
        surveys properly  incurred by the Lessor shall be paid by the Lessee (if
        a Relevant  Event has occurred and is continuing  or if such  inspection
        reveals any  material  failure to comply with the  Lessee's  maintenance
        obligations under this Lease) or by the Lessor (if no Relevant Event has
        occurred and is continuing or no such material failure is revealed.)

        All time taken in respect of such  inspection  or survey shall form part
        of the Lease Period.  All  inspections  and surveys of the Ship prior to
        the  occurrence  of a  Termination  Event which is  continuing  shall be
        carried  out at such  times  and  places  and in such  manner  as not to
        interfere with the use,  operation,  maintenance  and repair as required
        under the Time  Charter  or other  contractual  arrangements  with third
        parties,  of the Ship but the  Lessor  shall not be obliged to carry out
        such inspections only during periods of drydocking;

15.2.7  Verification reports

        provide   to  the   Lessor   certified   copies  of  all   reports   and
        recommendations  of any safety  inspector or other  regulatory body from
        time to time issued in respect of the  compliance or otherwise  with any
        statutes and  regulations  from time to time in force regarding the safe
        operation, management, maintenance and integrity of the Ship;

15.2.8  Manuals and technical records

        maintain all such other records, logs, manuals, technical data and other
        materials and  documents  which are required to be maintained in respect
        of the Ship to comply with any applicable  laws or the  requirements  of
        the  Classification  Society and keep accurate,  complete and up to date
        logs and records of all voyages made by the Ship and of all maintenance,
        repairs,  alterations,  modifications  and additions to the Ship and, on
        reasonable  advance  notice  from the  Lessor,  permit the Lessor or its
        representatives  at any time to examine and take copies of such logs and
        records and other records;

15.2.9  Information regarding casualties

        furnish the Lessor with full  information  regarding any single casualty
        or other  accident  or damage to the Ship which  shall  involve  repairs
        costing more than the Casualty Amount;

15.2.10 Modification; removal of parts; equipment owned by third parties

        not  without the prior  written  consent of the Lessor (and then only on
        and subject to such terms as the Lessor may agree):

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

        (b)     permanently  remove  any  material  part  of  the  Ship  or  any
                equipment  the value of which is such that its removal  from the
                Ship  would  materially  reduce  the  value of the Ship  without
                replacing the same with equivalent  parts or equipment which are
                owned by the Lessor free from Encumbrances (other than Permitted
                Encumbrances); or

        (c)     install on the Ship any  equipment  owned by a third party which
                cannot be  removed  without  causing  significant  or  permanent
                damage to the structure or fabric of the Ship;

15.2.11 Information

        promptly  furnish  the Lessor with all such  information  as it may from
        time to time  reasonably  require  regarding the Ship,  her  employment,
        position and engagements,  particulars of all towages and salvages,  and
        copies  of all  charters  and other  contracts  for her  employment  and
        related information, or otherwise howsoever concerning her;

15.2.12 Manager

        not without the previous consent in writing of the Lessor (and then only
        on and  subject  to such  terms as the  Lessor  may  agree)  permit  the
        Sub-Lessee  to replace  the  Manager or appoint a manager of the Ship or
        allow a manager of the Ship to be  appointed  (and for the  purposes  of
        this Lease  "manager"  shall  include any  shipmanager  or other  person
        providing to the Lessee or the Sub-Lessee analogous specialised services
        in respect of the Ship);

15.2.13 Notification of certain events

        notify the Lessor forthwith by facsimile  thereafter confirmed by letter
        of:

        (a)     any damage to the Ship requiring repairs the cost of which might
                exceed the Casualty Amount;

        (b)     any  occurrence  in  consequence  of  which  the Ship has or may
                become a Total Loss;

        (c)     any requisition of the Ship for hire;

        (d)     any  requirement  or  recommendation  made by any insurer or the
                Classification  Society or by any competent  authority  which is
                not, or cannot be, complied with in accordance with its terms;

        (e)     any claim in an amount in excess of the Casualty  Amount (or the
                equivalent  in any other  currency)  arising  as a result of any
                serious or  potentially  serious  injury to a third party caused
                by, or in connection with, the Ship;

        (f)     any substantial damage to property in an amount in excess of the
                Casualty Amount (or the equivalent in any other currency) caused
                by, or in connection with, the Ship;

        (g)     any  assistance  which  has been  given to the  Ship  which  has
                resulted or may result in a lien for salvage being acquired over
                the Ship;

        (h)     any other event which occurs in  connection  with the Ship which
                affects or might  materially and adversely  affect the rights of
                the Lessor or involves or might  involve  any  material  loss or
                liability;

        (i)     the making of any Environmental Claim for an amount in excess of
                the Casualty  Amount (or the  equivalent in any other  currency)
                against the Lessee or the Ship;

        (j)     the occurrence of any Environmental Incident which may give rise
                to any such  Environmental  Claim for an amount in excess of the
                Casualty Amount (or the equivalent in any other currency); or

        (k)     any drydocking of the Ship;

15.2.14 Repairer's liens

        not without the previous written consent of the Lessor put the Ship into
        the possession of any person for the purpose of work being done upon her
        in an amount  exceeding or likely to exceed the Casualty  Amount  unless
        (a)  such  person  shall  first  have  given  to  the  Lessor  in  terms
        satisfactory  to it, a written  undertaking  not to exercise any lien on
        the Ship for the cost of such work or  otherwise  or (b) no  Termination
        Event has occurred and is continuing, the cost of the work to be done on
        the Vessel is covered by insurances and the underwriters  have agreed to
        make  payment  direct to the  person who is to carry out the work or (c)
        the Lessee can demonstrate to the Lessor's reasonable  satisfaction that
        it has access to committed  funds in an amount  sufficient  to cover the
        cost of such work;

15.2.15 Health and safety

        take such steps as are  reasonably  practicable  to ensure that the Ship
        and all  constituent  parts  thereof  will be safe and  without  risk to
        health when  properly used and (without  prejudice to the  generality of
        the foregoing):

        (a)     take such steps as are reasonably practicable to ensure that any
                defects  in the Ship and all  constituent  parts  thereof  which
                could be or cause a danger  to  safety  and/or a risk to  health
                shall be made good;

        (b)     for such purpose, have a detailed inspection of the Ship carried
                out from time to time including all electrical,  fluid,  oil and
                gas connections  (being either supplies to, or discharges  from,
                the Ship) and all constituent parts thereof;

        (c)     take  such  action  as is  reasonably  practicable  to see  that
                appropriate safety measures are adopted; and

        (d)     not use or permit the Ship or any  constituent  parts thereof to
                be used beyond their limits and capacities;

15.2.16 No operational interest

        procure that the Lessor is not at any time represented as carrying goods
        or  passengers or providing any other service on or from the Ship, or as
        being in any way connected or associated with any operations or carriage
        or  other  service  which  may  be  undertaken  by  the  Lessee  or  the
        Sub-Lessee,  or as having any operational interest in, or responsibility
        for, the Ship;

15.2.17 Safe operation

        take all  reasonable  steps to  secure  that the Ship is  navigated  and
        operated  in a proper,  safe and  seaman-like  manner  and in the manner
        prescribed  by any  legislation  in force in the  United  Kingdom or any
        other applicable  jurisdiction for the time being and ensure that, where
        applicable,  the Ship is at all times  manned and  operated  by properly
        licensed  and/or  qualified  persons and that such  persons at all times
        comply with all applicable laws relating to such manning and operation;

15.2.18 Fitness to go to sea

        procure  that the Ship  shall at all  times be fit to go to sea  without
        serious  danger  to  human  life (by  reason  of the  condition,  or the
        unsuitability  for its purpose,  of either the Ship or its  machinery or
        equipment  or any  part of the Ship or its  machinery  or  equipment  or
        undermanning  or overloading or unsafe or improper  loading or any other
        matter relevant to the safety of the Ship) unless arrangements have been
        made which are appropriate to ensure that before the Ship goes to sea it
        is made fit to do so without  serious  danger to human life by reason of
        any such matters or it is  reasonable  for such  arrangements  not to be
        made at such time;

15.2.19 Compliance with oil pollution and environmental laws

        comply with,  and procure  compliance in all material  respects with all
        Environmental Laws applicable to all Relevant Ships and the terms of all
        Environmental  Approvals  including,  without  limitation,  requirements
        relating to manning and establishment of financial  responsibility  and,
        promptly  upon  receipt  of the same,  notify  the  Lessor of any claim,
        notice or other  communication  served on it in respect  of any  alleged
        breach   of  any   applicable   Environmental   Law  which   might,   if
        substantiated,  have a material  adverse effect on any Relevant  Party's
        ability  to  perform  its  respective  obligations  under  the  Relevant
        Documents and (without  prejudice to the  generality  of the  foregoing)
        procure  that  (a) no oil,  hazardous  substances  or solid  wastes  are
        disposed of, discharged or otherwise released from or in connection with
        the Ship except in compliance with Environmental  Laws, (b) no hazardous
        substance  will be released  in a quantity  equal to or  exceeding  that
        quantity   which   requires   reporting   pursuant  to  Section  103  of
        Comprehensive  Environmental  Response,  Compensation  and Liability Act
        1980, and (c) no oil or hazardous substance is discharged or released so
        as to pose an imminent and substantial  endangerment to public health or
        welfare  or the  environment  which will  result in damages  recoverable
        under the Oil Pollution Act 1990 of the United States of America;

15.2.20 ISM Code

        (a)     comply  with,  and ensure that the Ship and its  Operator at all
                times comply with the requirements of the ISM Code;

        (b)     immediately  inform  the  Lessor if there is any  threatened  or
                actual withdrawal of its or an Operator's DOC or the Ship's SMC;
                and

        (c)     promptly  inform the Lessor  upon the issue to the  Lessee,  the
                Sub-Lessee or any Operator of a DOC and to the Ship of an SMC or
                the receipt by the Lessee,  the  Sub-Lessee  or any  Operator of
                notification that its application for the same had been refused;
                and

15.2.21 Chartering

        without  prejudice to clause 12 not and will procure that the Sub-Lessee
        will not,  in either  case,  without  the prior  written  consent of the
        Lessor (a request  for which shall be  promptly  responded  to but which
        consent the Lessor shall have full liberty to withhold)  let the Ship on
        time or voyage charter except to:

        (a)     a member  of the  Lessee  Group on terms  whereby  the  relevant
                member  undertakes  that its rights and  interests in respect of
                the Ship are  subordinated  to the rights and  interests  of the
                Lessor; or

        (b)     a Rated Time Charterer; or

        (c)     any other person,

        as long as the chartering of the Ship to any of the persons specified in
        (a),  (b) and (c)  shall  not be  illegal  or  result in a breach by the
        Lessor and/or the Lessee and/or the  Sub-Lessee of any regulation in any
        Relevant   Jurisdiction   and,   where   applicable,   in  the  case  of
        sub-paragraphs  (a) and (c) above,  the  provisions  of clause 25.6 have
        been satisfied in full.

16      Insurance Undertakings: wreck removal

16.1    Insurance undertakings

        The  Lessee  hereby  covenants  with  the  Lessor  and  undertakes  that
        throughout the Lease Period and thereafter,  whilst the Lessee continues
        to have possession of the Ship, until the sale of the Ship (other than a
        sale to the Standby Purchaser), it will:

16.1.1  Insured risks, amounts and terms

        insure and keep the Ship  insured free of cost and expense to the Lessor
        and in the joint names of the Lessee, the Sub-Lessee and the Lessor (but
        without  liability  on the part of the Lessor for  premiums or calls) in
        connection  with the operation of the Ship (each as their  interests may
        appear):

        (a)     against fire and usual marine risks (including excess risks) and
                war risks, on an agreed value basis, in such amounts (but not in
                any event for an amount less than whichever shall be the greater
                of (i) the market  value of the Ship for the time being and (ii)
                such  amount  as shall  from  time to time be not less  than the
                aggregate,  from  time to time,  of (A) the  amount of the Strip
                Liability  Amount  and (B) the  aggregate  amount  of  insurance
                required  to be placed by the Lessee by  persons  other than the
                Lessor  and in whose  favour  the  Lessee  has  created  a prior
                ranking  Encumbrance  in respect of the  Insurances and which is
                determined independently of the market value of the Ship;

        (b)     against  protection  and indemnity  risks  (including  pollution
                risks) for the highest  amount  (but,  in the case of  pollution
                risks,   for  a   minimum   amount   of  one   billion   Dollars
                ($1,000,000,000)  (or such other  amount as is from time to time
                deemed to be the maximum  insurable amount of the  International
                Group of Protection and Indemnity  Associations))  in respect of
                which cover is in accordance  with  customary  insurance  market
                practice  taken out for vessels of the same type,  size, age and
                flag as the Ship) for the full  tonnage of the Ship (as approved
                in writing by the Lessor) and upon such terms as shall from time
                to time be approved in writing by the Lessor; and

        (c)     in  respect  of such  other  matters  of  whatsoever  nature and
                howsoever  arising  in  respect  of  which  insurance  would  be
                maintained by a prudent owner of the Ship,

        and that it will pay to the Lessor the cost (as  conclusively  certified
        by the Lessor) of any (aa) innocent  owner's  insurance which the Lessor
        may from time to time  effect in respect of the Ship upon such terms and
        in such amounts as shall from time to time be approved in writing by the
        Lessor and (bb) any other insurance cover which the Lessor may from time
        to time  require to be effected in respect of the Ship and/or in respect
        of its  interest or potential  liability  as owner and/or  lessor of the
        Ship as the Lessor shall deem desirable having regard to any limitations
        in respect of the amount or extent of cover  which may from time to time
        be applicable in any of the other insurances  referred to in this clause
        16.1.1 and also having regard to such insurance cover which from time to
        time it is customary for finance lessors such as the Lessor to effect in
        respect of similar  transactions to the transaction  constituted by this
        Lease and the other Relevant Documents.

        Notwithstanding  the above, if at any time the Lessor proposes to effect
        any  insurance  of the nature  referred  to at (aa) or (bb)  above,  the
        Lessor shall first notify the Lessee of the insurance  which it proposes
        to effect, the terms on which it requires it to be effected and the date
        from which it  requires  it to be so  effected.  If,  before the date on
        which the Lessor requires that insurance to be effected,  the Lessee can
        demonstrate  to the  Lessor  that a firm  of  insurance  brokers  with a
        reputation  acceptable  to the Lessor is able to arrange that  insurance
        upon those  terms,  before  that date,  for a price  lower than that for
        which any firm of insurance  brokers nominated by the Lessor is prepared
        to  arrange  that  insurance  and with  underwriters  acceptable  to the
        Lessor,  and if that firm of  insurance  brokers  will  enter  into such
        agreements with the Lessor as the Lessor may require taking into account
        the  identity of that firm of  insurance  brokers,  the Lessor shall not
        unreasonably  refuse  to  effect  that  insurance  through  that firm of
        insurance brokers so nominated by the Lessee;

16.1.2  Brokers insurers and general terms of insurance

        effect the  Insurances  aforesaid  in  Sterling or Dollars or such other
        currency as the Lessor may approve  and  through  the  Approved  Brokers
        (other than the said innocent owners and contingent  liability insurance
        which may be effected through brokers  nominated by the Lessor) and with
        such  insurance  companies  and/or  underwriters  or a mutual  insurance
        association or club as shall from time to time be approved in writing by
        the Lessor and upon such terms as shall from time to time be approved in
        writing by the Lessor, such approval not to be unreasonably withheld, it
        being agreed that, without  limitation,  it shall not be unreasonable to
        withhold such approval if withholding  such approval is consistent  with
        the insurance  report referred to in clause 16.1.12 or the advice of the
        brokers producing such report;

16.1.3  Specific terms

        each  policy or entry  with any  mutual  insurance  association  or club
        maintained  by the Lessee in  accordance  with the  provisions of clause
        16.1.1 shall:

        (a)     contain an endorsement  reflecting the interest of the Lessor in
                the Ship or  otherwise  covers  the  Lessor in respect of claims
                which may be forthcoming thereunder;

        (b)     be in the  joint  names  of  the  Lessor,  the  Lessee  and  the
                Sub-Lessee according to their respective interests;

        (c)     provide  that all moneys  payable  thereunder  shall,  after the
                giving of written  notice by the Lessor (which notice the Lessor
                agrees not to give unless a Termination Event has occurred which
                is  continuing)  (and subject to the  provisions of clauses 2.2,
                2.3 and 2.5 of the Proceeds Deed), be payable to or to the order
                of the Lessor;

        (d)     provide  that the Lessor will be given  either  thirty (30) days
                prior written notice of any intention of the Lessee or seven (7)
                days of any intention of the  insurance  company in each case to
                cancel the policy or to materially  alter its terms or not renew
                the policy on materially  the same terms;  or, in the absence of
                such terms,  the Lessee shall cause the Approved Brokers (or, if
                any premium payments in respect of Insurances are financed,  the
                relevant insurance premium finance company),  to give the notice
                required by this  clause and the Lessee  shall  provide  written
                evidence  as to the  Approved  Brokers  or,  as the case may be,
                insurance  premium finance  company's  agreement at all times to
                provide the notice required by this sub-clause;

        (e)     not have an excess or  deductible  under the policy or  policies
                referred to in clause 16.1.1(a)  exceeding two hundred and fifty
                thousand  Dollars  ($250,000)  as the same shall be escalated at
                the rate of RPI from the Delivery  Date,  per occurrence (or the
                equivalent in any other currency); and

        (f)     be in Dollars or Sterling and, if in Dollars, in a Dollar amount
                which at the  commencement  of any  policy  year  satisfies  the
                Sterling  element  of any  minimum  insurance  cover of the type
                referred to in clause  16.1.1(a)(ii)(A)  throughout  the term of
                the policy.

16.1.4  Fleet cover

        if any of the insurances  referred to in clause 16.1.1(a) form part of a
        fleet cover,  procure that the Approved  Brokers shall  undertake to the
        Lessor that they shall  neither set off against any claims in respect of
        the Ship any premiums due in respect of other vessels or equipment under
        such fleet cover or any  premiums due for other  insurances,  nor cancel
        the  insurance for reason of  non-payment  of premiums for other vessels
        under such fleet cover or of premiums for such other insurances, and, if
        the Approved  Brokers are not prepared to provide an  undertaking of the
        type referred to above,  shall  undertake to issue a separate  policy in
        respect of the Ship if and when so requested by the Lessor;

16.1.5  Payment of premiums

        punctually pay all premiums, calls,  contributions or other sums payable
        in respect of all such  insurances and to produce copies of all relevant
        receipts or other evidence of payment when so reasonably required by the
        Lessor;

16.1.6  Renewal

        at least fourteen (14) days before the relevant  policies,  contracts or
        entries expire,  notify the Lessor of the names of the brokers  proposed
        to be employed by the Lessee,  the Sub-Lessee or any other party for the
        purposes of the renewal of such  insurances  and of the amounts in which
        such  insurances  are proposed to be renewed and the risks to be covered
        and,  subject to compliance with  requirements of the Lessor pursuant to
        this clause 16.1, procure that appropriate  instructions for the renewal
        of such  insurances  on the terms so specified are given to the Approved
        Brokers at least ten (10) days (or such shorter period as the Lessor may
        from time to time agree)  before the  relevant  policies,  contracts  or
        entries expire.  In all  circumstances the Lessee shall procure that the
        Approved  Brokers  will at least  seven (7) days  before such expiry (or
        within  such  shorter  period as the Lessor may from time to time agree)
        confirm in writing  to the  Lessor as and when such  renewals  have been
        effected in accordance  with the  instructions so given and, where there
        is no change to the  identity  of the  brokers,  the level of  insurance
        cover or any  material  change  in the terms of the  relevant  policies,
        contracts or entries, confirmation that there has been no such change.

16.1.7  Guarantees

        arrange for the execution and delivery of such guarantees or indemnities
        as may from time to time be required  by any  protection  and  indemnity
        and/or war risks association;

16.1.8  Hull policy  documents,  notices,  loss  payable  clauses  and  brokers'
        undertakings

        deposit with the Approved Brokers (or procure the deposit of) all slips,
        cover notes,  policies,  certificates  of entry or other  instruments of
        insurance  from  time to time  issued  in  connection  with  such of the
        insurances  referred  to in clause  16.1.1 as are  effected  through the
        Approved  Brokers and procure  that the  interest of the Lessor shall be
        endorsed  thereon by  incorporation  of the relevant Loss Payable clause
        and that the Lessor  shall be furnished  with pro forma  copies  thereof
        and, unless insurances are placed on the terms of the Norwegian Maritime
        Insurance  Plan of 1966 as amended,  a letter or letters of  undertaking
        from the  Approved  Brokers  in such form as shall  from time to time be
        reasonably  required  by the  Lessor  having  regard to  current  market
        practice at the time of issue of any such letter of undertaking;

16.1.9  Associations' loss payable clauses, undertakings and certificates

        procure that any protection and indemnity and/or war risks  associations
        in which  the Ship is for the  time  being  entered  shall  endorse  the
        relevant  Loss Payable  clause on the relevant  certificate  of entry or
        policy and shall furnish the Lessor with a copy of such  certificate  of
        entry or policy and a letter or letters of  undertaking  in such form as
        shall from time to time be  reasonably  required  by the  Lessor  having
        regard  to  current  market  practice  at the  time of issue of any such
        letter of undertaking;

16.1.10 Extent of cover and exclusions

        take all  necessary  action and comply with all  requirements  which may
        from time to time be applicable to the  Insurances  (including,  without
        limitation,   the  making  of  all  requisite  declarations  within  any
        prescribed  time  limits and the payment of any  additional  premiums or
        calls) so as to ensure that the  Insurances  are not made subject to any
        exclusions or qualifications to which the Lessor has not given its prior
        written consent and are otherwise maintained on terms and condition from
        time to time approved in writing by the Lessor;

16.1.11 Correspondence with brokers and associations

        to provide to the Lessor, at the time of each such communication, copies
        of all written  communications  between the Lessee or the Sub-Lessee and
        the Approved Brokers and approved war risks and protection and indemnity
        associations  which  relate to  requisite  declarations  and  payment of
        additional  premiums or calls referred to in clause 16.1.10,  notices of
        renewal of the Insurances  and all material  amendments to the terms and
        conditions relating to such Insurances;

16.1.12 Independent report

        the Lessor  shall be  entitled to request the Lessee (at the cost of the
        Lessee),  to furnish  the Lessor  with a  detailed  report  signed by an
        independent  firm of insurance  brokers  appointed by the Lessor dealing
        with the  insurances  maintained  on the Ship and stating the opinion of
        such firm as to the  adequacy  thereof.  The Lessor shall be entitled to
        request  the  furnishing  of a report  under this  clause at the time of
        Delivery  and  thereafter  if  the  insurance  advisors  of  the  Lessor
        recommend  that a report be obtained  following  the annual audit of the
        shipping insurance  portfolio of the Lessor Group or, if earlier, at the
        time of any material  change in the Insurances or in the identity of the
        Approved  Brokers  or the  protection  and  indemnity  and/or  war risks
        association  responsible for such Insurances or if the Lessor reasonably
        believes  that  there has been a  material  change in  insurance  market
        practice in respect of vessels of similar type to the Ship;

16.1.13 Collection of claims

        do  all  things  necessary  and  provide  all  documents,  evidence  and
        information  to enable the Lessor to collect or recover any moneys which
        shall at any time  become  due to the Lessor  pursuant  to this Lease in
        respect of the Insurances;

16.1.14 Compliance with Insurances

        comply with the terms and conditions of the Insurances,  not do, consent
        to or  permit  any act or  omission  which  might  invalidate  or render
        unenforceable  the whole or any part of the  Insurances and not (without
        first  obtaining  the  consent of the  insurers to such  employment  and
        complying with such requirements as to extra premium or otherwise as the
        insurers  may  prescribe)  employ  the  Ship or  permit  the  Ship to be
        employed  otherwise than in conformity  with the terms of the Insurances
        (including any warranties express or implied therein);

16.1.15 Application of recoveries

        apply all sums  receivable  under the  Insurances  which are paid to the
        Lessee,  in accordance  with the Loss Payable  Clauses and clause 22, or
        procure  the  application  of such sums to the  extent  received  by the
        Sub-Lessee,  in repairing all damage and/or in discharging the liability
        in respect of which such sums shall have been received;

16.1.16 Other insurances and assureds

        not,  without  the  prior  written  consent  of  the  Lessor,  take  out
        additional  insurances for the Lessee's or, during the Sub-Lease Period,
        the Sub-Lessee's sole benefit,  or permit the Lessee or the Lessor to be
        named  insured in  insurances  with  respect to the Ship,  other than as
        required under this Lease, where such additional  insurances will or may
        prejudice  the  Insurances  or  recovery  thereunder  or will exceed the
        amount permitted by the warranties or other conditions of the Insurances
        (unless the insurers  under the Insurances  have consented  thereto) and
        will,  upon the Lessor's  request,  immediately  furnish the Lessor with
        particulars of any such additional  insurances  (including copies of any
        cover  notes or  policies)  and of the written  consent of the  insurers
        under the Insurances in any case where such consent is necessary;

16.1.17 Oil Pollution Cover

        ensure  that  the  certificate  of  entry  for the  Ship  issued  by the
        protection and indemnity  association  with which the Ship is entered is
        endorsed  with the U.S.  Oil  Pollution  Clause  20/2/91  (as amended or
        replaced  from time to time) and procure  that written  confirmation  is
        given to the Lessor that the Lessee or, during the Sub-Lease Period, the
        Sub-Lessee,  the Manager has provided all declarations and satisfied all
        other  requirements  of such  association  and  that  the  U.S.  Trading
        Exclusion  Clause  has been  deleted  from the  terms  upon  which  such
        association  covers the Ship  against  protection  and  indemnity  risks
        (including oil pollution risks);

16.1.18 Submission of Protection and Indemnity Declarations

        promptly (and within any applicable time limits)  complete and submit to
        the  protection and indemnity  association  with which the Ship shall be
        entered:

        (a)     a declaration made by or on behalf of the Lessor, the Lessee or,
                during the Sub-Lease Period, the Sub-Lessee, the Manager and any
                other demise or bareboat charterer, manager or other operator of
                the Ship who is named as an assured or  co-assured in the Ship's
                entry  with such  association  that they  will  comply  with all
                special  terms and  conditions  of the  association  (including,
                without   limitation,   payment  of   additional   premiums  for
                additional  voyages)  applying  to any  voyage  (a "US  voyage")
                involving  loading or  discharging  cargo anywhere in the United
                States of America or within the USA Exclusive  Economic Zone (as
                defined in the Oil Pollution Act of 1990 of the United States of
                America); and

        (b)     such quarterly or other  declarations  as such  association  may
                require to be made (including, without limitation,  declarations
                listing  all  voyages  of the Ship) to  ensure  that the Ship is
                covered  for  protection  and  indemnity  risks  (including  oil
                pollution risks) on any US voyage,

        and procure that all such declarations shall be in a form acceptable to,
        and contain all information required by, such association;

16.1.19 Maintenance of Oil Pollution Insurance Cover

        comply  with all other  requirements  of the  protection  and  indemnity
        association  with which the Ship is  entered to ensure  that the Ship is
        fully covered for oil pollution risks;

16.1.20 Evidence of Oil Pollution Insurance Cover

        deliver  to the  Lessor  upon  reasonable  notice at the  expense of the
        Lessee  certified true copies of all  declarations to the protection and
        indemnity  association with which the Ship is entered,  all certificates
        issued by the United  States  Coast  Guard,  all  confirmations  by such
        association of cover for oil pollution risks and such other  information
        and documents relating to oil pollution risks or insurance as the Lessor
        may from time to time reasonably request;

16.1.21 Encumbrances

        not create or permit to exist any Encumbrance over the Insurances or any
        Requisition  Compensation,  or its interest therein save as contemplated
        by this Lease; and

16.1.22 Information concerning Insurances

        supply  to the  Lessor  all  necessary  information,  documentation  and
        assistance which may be required by the Lessor in connection with making
        any claim under the Insurances.

16.2    Further requirements

        Notwithstanding the other provisions of this clause 16, the Lessee shall
        and shall procure that the Sub-Lessee  shall also,  during the Sub-Lease
        Period,  comply with such further requirements  relative to insurance as
        the Lessor  may,  based upon the  insurance  report or the advice of the
        Lessor's  insurance  brokers referred to in clause 16.1.12 and following
        discussions with the Lessee, from time to time reasonably stipulate.

16.3    Wreck removal

        In the event of the Ship  becoming  an  obstruction  to  navigation  the
        Lessee  shall (in  addition  to any other  obligation  it may have under
        clause 9)  indemnify  and hold  harmless  the Lessor  against all costs,
        expenses,  payments, charges, losses, demands, any liabilities,  claims,
        actions,  proceedings  (whether  civil or  criminal)  penalties,  fines,
        damages, judgments, orders or other sanctions which may be incurred, by,
        or made or  asserted  against  the Lessor by reason  that the Ship shall
        have become an obstruction to navigation (including, without limitation)
        in  respect of the  removal  or  destruction  of the  obstruction  under
        statutory powers but only to the extent that such has not been recovered
        from the Ship's insurers.

17      Powers of Lessor to remedy defaults

17.1    Failure to perform insurance undertakings

        If the Lessee fails to comply with any of the provisions of clause 16.1,
        the  Lessor  may,  without  being  in  any  way  obliged  so to  do,  or
        responsible  for so doing,  and without  prejudice to the ability of the
        Lessor to treat that  non-compliance as a Termination Event,  effect and
        thereafter  maintain  all  such  insurances  upon  the  Ship  as in  its
        discretion it may think fit in order to procure the compliance with such
        provisions or alternatively,  require the Ship (at the Lessee's risk) to
        remain in, or to proceed  to and  remain  in, a port  designated  by the
        Lessor until such  provisions are fully  complied with.  17.2 Failure to
        perform maintenance undertakings

        If the  Lessee  fails to comply  with any of the  provisions  of clauses
        15.2.1,  15.2.3.  15.2.4 or 15.2.5, the Lessor may, without being in any
        way obliged so to do, or responsible for so doing, and without prejudice
        to  the  ability  of  the  Lessor  to  treat  that  non-compliance  as a
        Termination Event, arrange for the carrying out of such repairs, changes
        or surveys as it may deem expedient or necessary in order to procure the
        compliance with such provisions.

17.3    Failure to prevent or release from arrest

        If the Lessee fails to comply with the  provisions  of clause 11.2.4 the
        Lessor may,  without  being in any way obliged so to do, or  responsible
        for so doing,  and  without  prejudice  to the  ability of the Lessor to
        treat that  non-compliance as a Termination Event, pay and discharge all
        such debts, damages,  liabilities and outgoings as are therein mentioned
        and/or take any such measures as it may deem  expedient or necessary for
        the purpose of securing  the release of the Ship in order to procure the
        compliance with such provisions.

17.4    Failure to comply with other obligations

        If the Lessee  fails to comply with any of its other  obligations  under
        this Lease any of the other Lease  Documents,  the Lessor  may,  without
        being in any way  obliged  to do so or  responsible  for so  doing,  and
        without   prejudice   to  the  ability  of  the  Lessor  to  treat  that
        non-compliance  as a Termination  Event, take such action as it may deem
        expedient  or  necessary  in order to procure the  compliance  with such
        provisions.

17.5    Costs of remedying defaults

        Without  prejudice  to clause  27.1,  all  losses,  liabilities,  costs,
        charges,   expenses,   damages  and  outgoings  of   whatsoever   nature
        (including,  without limitation,  Taxes, repair costs, registration fees
        and  insurance  premiums)  suffered,  incurred  or paid by the Lessor in
        connection  with the  exercise by the Lessor of any of its powers  under
        clauses  17.1,  17.2,  17.3 and 17.4 and  interest  on all such  losses,
        liabilities,  costs, charges,  expenses,  damages and outgoings from the
        date on which the same were  suffered,  incurred  or paid by the  Lessor
        until the date of receipt or recovery thereof (both before and after any
        relevant  judgment) at the Default Rate shall be repayable by the Lessee
        to the  Lessor on demand  and the  Lessor  agrees  that it will  issue a
        demand hereunder  within a reasonable  period of determining that it has
        suffered or incurred any such amounts.

17.6    Rental still payable

        Notwithstanding  any  exercise  by the  Lessor  of  any  of  the  powers
        contained in this clause 17, Rental shall continue to accrue during such
        time.

18      Redelivery

18.1    Redelivery procedure and condition

        Except  in the  event of a Total  Loss of the Ship  and  subject  to the
        provisions  of clause  24.6,  the  Lessee  shall at the end of the Lease
        Period in relation to the Ship  redeliver the Ship to the Lessor free of
        all Encumbrances (other than Permitted  Encumbrances,  but excluding for
        this  purpose  Permitted  Liens),  and  the  Lessor  shall  accept  such
        redelivery,   and  save  where  different  arrangements  are  agreed  in
        connection  with any sale of the Ship  pursuant to clause 3.6, at a safe
        port to be  mutually  agreed  between  the parties or, in the absence of
        such  agreement,  at such nearby  safe port as the Lessor may  designate
        acting  reasonably  and having regard to the location of the Ship at the
        time of any required  redelivery.  Subject to the  provisions  of clause
        24.5,  the Lessee shall at its expense before such  redelivery  make all
        such  repairs and do all such work as may be  necessary so that the Ship
        at the date of redelivery  shall have  installed the machinery and other
        equipment installed on the Ship at Delivery or replacements for the same
        made in accordance with the provisions of this Lease, shall maintain the
        Classification  unexpired,  shall  otherwise be in  compliance  with any
        applicable rules of the  Classification  Society and shall be in as good
        structure,  state and  condition as at Delivery,  fair wear and tear and
        changes and  alterations  properly made by the Lessee as permitted under
        this Lease excepted and shall be with all required trading and operating
        (and if trading,  appropriate trading related) certificates belonging to
        the Ship in full force and effect for a minimum period of six (6) months
        from the date of redelivery.

18.2    Redelivery survey

        At or about the time of redelivery thereof a survey shall, if the Lessor
        so requires,  be made to determine  the state and condition of the Ship,
        her machinery and  equipment.  In that event,  the Lessee and the Lessor
        shall  each  appoint  surveyors  to be  present  at such  survey and the
        surveyors  present  shall  determine  the  condition  of the  Ship,  her
        machinery and equipment and shall state the repairs or work necessary to
        place  the  Ship  at the  date of  redelivery  in the  structure  state,
        condition  and  classification  referred to in clause 18.1.  If the said
        surveyors  disagree they shall refer the matter to a senior  surveyor of
        the relevant  Classification  Society whose  decision shall be final and
        binding on the parties hereto.  All reasonable  costs  occasioned by any
        such survey  including the costs of the said surveyors  appointed by the
        Lessee  and the  Lessor  and,  if  appointed,  the  costs of the  senior
        surveyor of the  Classification  Society  shall be payable by the Lessee
        but if the Ship is found to be in the condition  provided for in clauses
        18.1, fair wear and tear alone and changes and alterations properly made
        by the Lessee as permitted under this Lease excepted, such cost shall be
        payable by the Lessor.

18.3    Storage until sale

        From the end of the Lease  Period  until the Ship  shall have been sold,
        the Lessee shall, at no cost to the Lessor:

18.3.1  continue to perform all its obligations  under this Lease other than its
        obligations to pay periodic Rental and, in particular, it shall continue
        (a) to perform its undertakings under clauses 11 to 14 (both inclusive),
        (b) to procure that the Ship is maintained in accordance  with clause 15
        (save  that  the  Lessee  shall  not be  required  to  procure  that any
        maintenance  and  repairs are  carried  out other than as  necessary  to
        ensure that, until the sale of the Ship, the Ship complies and continues
        to comply in all material  respects with the  provisions of clause 18.1)
        and (c) to procure  that the Ship is insured in  accordance  with clause
        16.1 or clause 16.2; and

18.3.2  unless the Lessor otherwise directs, store or procure the storing of the
        Ship at a place and under conditions  reasonably  approved by the Lessor
        and the  Relevant  Security  Agent until the sale of the Ship shall have
        been completed.

19      Consumable stores

19.1    Upon Delivery

        It is  acknowledged  that  all  consumable  stores,  unused  diesel  and
        lubricating  oils,  bunkers,  duty free stocks and other  merchandise on
        board the Ship at Delivery belong to the Sub-Lessee.

19.2    Upon redelivery

        All consumable stores, unused diesel and lubricating oils and bunkers on
        board the Ship  which are owned by the Lessee or the  Sub-Lessee  at the
        time of re-delivery  shall be sold by the Lessee or, as the case may be,
        the Sub-Lessee to the purchaser of the Ship.

20      Use of equipment and replacement

20.1    Use of equipment and Manuals and Technical Records

        The Lessee shall have the use of all outfit, equipment (including cabin,
        crew and galley equipment),  furnishings,  furniture and fittings, spare
        and replacement  parts which are the property of the Lessor on board the
        Ship at the time of Delivery and the Manuals and  Technical  Records and
        the same or their substantial equivalent shall be returned to the Lessor
        on re-delivery in good order and condition, fair wear and tear alone and
        changes and  alterations  properly made by the Lessee as permitted under
        this Lease excepted.

20.2    Renewal of equipment

        The Lessee  shall at its own expense  from time to time during the Lease
        Period  replace,  renew  or  obtain  substitutions  for  such  items  of
        equipment as shall be so damaged or worn as to be unfit for use provided
        always that in any such case the Lessee shall  procure that title to the
        part replaced,  renewed or substituted shall promptly vest in the Lessor
        and title to any part replaced, renewed or substituted shall remain with
        the Lessor  until the part which  replaced it or the new or  substituted
        part  becomes  the  property  of the Lessor or is  replaced,  renewed or
        substituted by a part which thereupon becomes the property of the Lessor
        and the Lessee agrees that if any replaced,  renewed or substituted part
        is not the property of the Lessor it will as soon as practicable replace
        the same with a part which thereupon becomes the property of the Lessor.

20.3    Alteration of equipment; additional equipment

        The Lessee may at any time alter or remove all or any items of equipment
        or may  fit  any  additional  equipment  required  to  render  the  Ship
        available for any purpose for which the Lessee may require to use her in
        accordance  with the  provisions  of clause 13 provided  that the Lessee
        shall  first  have  obtained  the prior  written  consent  of the Lessor
        thereto if and to the extent such  consent  may be required  pursuant to
        clause 15.2.10.  Any additional  equipment so fitted by the Lessee shall
        be considered the property of the Lessee or relevant  sub-lessee who may
        remove such  additional  equipment at any time before the  expiration of
        the Lease Period. The cost of fitting or removing any equipment together
        with the cost of  making  good any  damage  caused  by such  fitting  or
        removal shall be payable in full by the Lessee who shall  re-deliver the
        Ship's  equipment to the Lessor in  accordance  with the  provisions  of
        clause 20.1  unless it is agreed  between the Lessor and the Lessee that
        any extra  fittings or equipment  which have been supplied by the Lessee
        during the Lease Period shall  remain on the Ship after  redelivery,  in
        which event such fittings or equipment shall as from  redelivery  become
        the property of the Lessor.

21      Encumbrances: Lessor's undertakings

        The  Lessor  warrants  that the Ship and the  Lessor's  interest  in the
        Insurances or any Requisition  Compensation will at the Delivery Date be
        free of any Lessor's  Encumbrances  created by it and undertakes that it
        will not during the Lease Period,  without the prior written  consent of
        the Lessee, create or, by its own acts or omissions, permit to arise any
        Lessor's  Encumbrance over the Ship, or any share or interest therein or
        the Lessor's interest in the Insurances or any Requisition Compensation.

        If,  notwithstanding the Lessor's  undertaking set out above, a Lessor's
        Encumbrance shall arise, the Lessor hereby agrees to discharge  promptly
        such Lessor's Encumbrance. If the Lessor does not promptly discharge the
        Lessor's Encumbrance the Lessee shall be entitled to act as the agent of
        the Lessor for the purpose of procuring such discharge (and for no other
        purpose)  and the Lessor  shall  reimburse  the Lessee in respect of any
        costs reasonably and properly incurred by the Lessee, in its capacity as
        agent, in connection with such discharge.

22      Loss and damage

22.1    Risk

        The Ship shall  throughout  the Lease Period be in every  respect at the
        risk of the Lessee who shall bear all risks howsoever arising whether of
        navigation,  operation  and  maintenance  of the Ship or otherwise  and,
        subject to clause 6.1, of any other  occurrence  of whatever  kind which
        shall deprive the Lessee of the use, possession or enjoyment thereof.

22.2    Total Loss

22.2.1  If the Ship shall  become a Total  Loss  during  the Lease  Period,  all
        insurance  proceeds in respect  thereof  shall be applied in  accordance
        with clause  22.5 and the Lessee  shall on the Total Loss  Payment  Date
        become  liable to pay to the Lessor an amount  equal to the  Termination
        Sum for the Ship as at that date together with all amounts of Rental and
        any other  amounts  then due and payable  under this Lease or any of the
        other  Lease  Documents.  If the  Lessor  serves a notice on the  Lessee
        pursuant to clause 27.1 the provisions of clause 27.1 shall prevail over
        this  clause  and the  Lessee  shall be  obliged  to make  the  payments
        required  to be made under  clause 27.1 in  accordance  with such clause
        notwithstanding  that the date for payment of such  amounts may be prior
        to the Total Loss Payment Date.

22.2.2  For the  purposes  of this  Lease,  a Total Loss shall be deemed to have
        occurred:

        (a)     in the case of an actual  total  loss of the Ship on the  actual
                date and at the time the Ship was lost or,  if such  date is not
                known, on the day on which the Ship was last reported;

        (b)     in the case of a constructive  total loss of the Ship,  upon the
                date and at the time notice of  abandonment of the Ship is given
                to the insurers of the Ship for the time being (provided a claim
                for such  constructive  total loss is admitted by the  insurers)
                or, if the  insurers do not admit such a claim,  at the date and
                at the time at either a total loss is  subsequently  admitted by
                the  insurers  or a total  loss is  subsequently  adjudged  by a
                competent court of law or arbitration panel to have occurred or,
                if earlier,  the date  falling one hundred and eighty (180) days
                after  notice  of  abandonment  of the  Ship  was  given  to the
                insurers;

        (c)     in the case of a compromised or arranged total loss, on the date
                upon  which  a  binding  agreement  as to  such  compromised  or
                arranged total loss has been entered into by the insurers of the
                Ship;

        (d)     in the case of  Compulsory  Acquisition,  on the date upon which
                the   relevant   requisition   of  title  or  other   compulsory
                acquisition occurs;

        (e)     in the case of  hijacking,  theft,  condemnation,  confiscation,
                capture,  detention,  seizure of the Ship  (other than where the
                same  amounts  to  Compulsory  Acquisition  of the  Ship) by any
                persons  which  deprives  the  Lessee of the use of the Ship for
                more than  thirty  (30)  days,  upon the expiry of the period of
                sixty  (60)  days  after  the  date  upon  which  the   relevant
                hijacking, theft, condemnation, confiscation, capture, detention
                or seizure occurred; and

        (f)     in the case of any of the events described in sub-paragraph  (d)
                of the  definition of Total Loss,  upon the expiry of the period
                of one  hundred  and  eighty  (180)  days  referred  to in  such
                sub-paragraph (d).

22.2.3  The Lessee agrees that it will, in the event that,  upon a Total Loss of
        the Ship, the Lessor is disabled from recovering under the Insurances or
        any of them or the amount of the recovery  thereunder is diminished  and
        such disablement or diminution  results from any breach by the Lessee of
        any of its  obligations  under  this Lease or in respect of the terms of
        the  relevant  Insurances,  pay  to  the  Lessor  on  demand  by  way of
        compensation  for the loss of the Ship a  capital  sum  (which  shall be
        applied  in  accordance  with  clause  22.5 as if the  same  had  been a
        recovery  under the  Insurances  in respect of such Total Loss) equal to
        the amount which would but for such  disablement  have been  recoverable
        under the  Insurances  or (as the case may be) a sum equal to the amount
        by which the insurance  recovery has been  diminished or, in either case
        and if greater,  an amount  equal to the Tax  Written  Date Value of the
        Ship.

22.3    Continuation of Lease Period

        The Lessee  shall  continue to pay Rental on the days and in the amounts
        required under this Lease  notwithstanding  that the Ship shall become a
        Total  Loss,  or if for any  reason  the  Lessee  shall  be  permanently
        deprived  of her use  prior  to the end of the  Lease  Period,  provided
        always  that no  further  instalments  of Rental  shall  become  due and
        payable  after the date on which all sums due under clause  22.2.1 shall
        have been paid in full and the Lease Period shall  terminate on the date
        of such final payment.

22.4    Application of Requisition Compensation

        In the event of the Compulsory  Acquisition of the Ship after  Delivery,
        all Requisition  Compensation received by the Lessor shall be applied by
        the Lessor (or, if received by the Lessee, shall be held in trust by the
        Lessee for application) in accordance with clause 22.5.

22.5    Application of Net Total Loss Proceeds and Requisition Compensation

        All Net Total Loss Proceeds and Requisition Compensation received by the
        Lessor shall be applied by the Lessor, subject to clause 10.4 and to the
        provisions of clause 2.1 of the Proceeds Deed, as follows:

22.5.1  first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the amount of the Net Total Loss Proceeds;

22.5.2  secondly,  in or towards  settlement  of any other  amounts owing by the
        Lessee  to the  Lessor  under  this  Lease  or any  of the  other  Lease
        Documents (including any interest due in respect thereof);

22.5.3  thirdly,  by way of rebate of Rental,  in or towards  settlement  of any
        amounts owing to the Other Lessors under the Other Ship Leases or any of
        the Other Ship Relevant Documents, such amounts to be paid to the Lessor
        Agent for  application  in accordance  with clause 4.3 of the Agency and
        Trust  Deed and  clauses  27.2.2  and  27.2.3 of each of the Other  Ship
        Leases;

22.5.4  fourthly,  if the Lessee shall on or before the date of  application  of
        such  moneys have paid the  Termination  Sum in  accordance  with clause
        22.2.1 or a part  thereof  in or towards  refunding  by way of rebate of
        Rental  to the  Lessee an amount  equal to the  Termination  Sum or part
        thereof so paid by the Lessee under this Lease; and

22.5.5  fifthly,  the  balance  to the  Lessee  by way of  rebate  of  Rental or
        otherwise as appropriate.

22.6    Damage claims

        In the event of repairable damage to the Ship, the Lessor shall, subject
        to clause 2.2.1 of the Proceeds Deed, pay any insurance  moneys received
        by it to the Lessee or, during the Sub-Lease Period, the Sub-Lessee upon
        the Lessee or, during the Sub-Lease  Period,  the Sub-Lessee  furnishing
        evidence  satisfactory  to the Lessor that such damage has been properly
        made good or repaired and that all repair accounts and other liabilities
        whatsoever  in  connection  with the  damage  have been paid in full and
        discharged  by  the  Lessee  or,  during  the  Sub-Lease   Period,   the
        Sub-Lessee, provided always that if a Relevant Event has occurred and is
        continuing,  the Lessor shall be entitled to apply such insurance moneys
        in or towards  settlement  of any amounts due and owing by the Lessee to
        the Lessor under this Lease or any of the other Lease Documents.  If the
        insurers with whom the fire and marine risks insurances are effected are
        prepared  to make  payment  on account of repairs in the course of being
        effected  then such  payment  may only be  requested  by the  Lessee or,
        during the Sub-Lease  Period,  the  Sub-Lessee if no Relevant  Event has
        occurred and is  continuing  and if, in the case of a claim in excess of
        the Casualty  Amount,  the Lessor has first  consented in writing  (such
        consent not to be unreasonably withheld or unreasonably delayed).

22.7    Third party claims

        Any insurance moneys paid under the insurances taken out or entries made
        referred to in clause  16.1.1(b)  shall,  subject to clause 2.2.2 of the
        Proceeds  Deed,  be paid to the person to whom the liability (or alleged
        liability)  covered by such  insurances or entry was incurred or, if the
        liability  (or alleged  liability)  to such person has  previously  been
        discharged by the Lessee or, during the Sub-Lease Period, the Sub-Lessee
        such moneys shall be paid to the Lessee or, during the Sub-Lease Period,
        the  Sub-Lessee  in  reimbursement  of the moneys so  expended  by it in
        satisfaction  of such liability or alleged  liability and, in such case,
        the Lessor shall pay any insurance  moneys  received by it in respect of
        such  liability  or  alleged  liability  to the  Lessee  or,  during the
        Sub-Lease  Period,  the  Sub-Lessee  upon  the  Lessee  or,  during  the
        Sub-Lease Period, the Sub-Lessee  furnishing evidence to the Lessor that
        such  liability or alleged  liability has  previously  been  discharged,
        provided  always that if a Relevant Event has occurred and is continuing
        the  Lessor  shall  be  entitled  to apply  such  moneys  in or  towards
        settlement  of any  amounts  due and owing by the  Lessee to the  Lessor
        under this Lease or any of the other Lease Documents.

22.8    Insufficient insurance recovery

        In the event of repairable  damage to the Ship or a liability or alleged
        liability  covered by the insurances  taken out or entries made referred
        to in clause  16.1.1  being  incurred or alleged,  and if the  insurance
        moneys  paid in  respect  thereof  are  insufficient  to pay the cost or
        estimated  cost of making good or repairing  such damage or  discharging
        the liability or alleged  liability,  the Lessee will pay the deficiency
        or, during the Sub-Lease  Period,  will procure that the Sub-Lessee will
        pay the deficiency.

22.9    Payment of claims

        Notwithstanding  anything to the  contrary  herein,  any moneys  payable
        under the  Insurances  shall be payable in accordance  with the terms of
        the relevant Loss Payable clause and, where relevant, the Proceeds Deed.

22.10   Sale of Ship following Total Loss

        If the  insurers  of the Ship have  satisfied  or admitted in full their
        obligations  under the Insurances  and have expressly  waived any rights
        they may have, or would or might acquire,  in the Ship the Lessor shall,
        as soon as practicable after the Total Loss date,  endeavour to sell the
        Ship. Any such sale shall comply with clauses 3.4 and 3.6.

22.11   Notice of abandonment

        Provided no Relevant  Event shall have  occurred and be  continuing  the
        Lessee shall have the sole right to determine  whether or not a case has
        arisen for the giving of notice of  abandonment  to abandon  the Ship to
        the insurers  and/or claim a  constructive  total loss and the Lessee is
        hereby  irrevocably  authorised  by the Lessor to give the same if it so
        determines.

        The Lessor  shall,  upon the  written  request of the  Lessee,  promptly
        execute such  documents as may be required to enable the Lessee  and/or,
        during the Sub-Lease  Period,  the Sub-Lessee to abandon the Ship to the
        insurers  and/or  claim a  constructive  total loss and the Lessor shall
        give the Lessee and/or,  during the Sub-Lease Period, the Sub-Lessee all
        appropriate assistance in pursuing the said claim.

23      Salvage

        All salvage and towage and all proceeds from derelicts shall, subject to
        the  Lessor's  prior right to retain  thereout any sums which may be due
        from the Lessee to the Lessor under this Lease or any of the other Lease
        Documents,  be for the Lessee's benefit and the cost of repairing damage
        occasioned thereby shall be borne by the Lessee.

24      Requisition for hire

24.1    Effect of requisition for hire

        If the Ship is requisitioned  for hire by any Government Entity or other
        competent  authority during the Lease Period then,  unless and until the
        Ship  becomes a Total Loss  following  such  requisition  and the Lessee
        shall have made payment of all sums due pursuant to clause 22.2.1,  this
        Lease  shall  continue in full force and effect  (subject  always to the
        provisions of clauses 26 and 31.3) for the remainder of the Lease Period
        and the Lessee  shall remain fully  responsible  for the due  compliance
        with all its obligations  under this Lease and the other Lease Documents
        other than such  obligations  which the Lessee is unable to comply  with
        solely by virtue of such requisition.

24.2    Payment of requisition hire

        If the Lessee  shall duly comply with its  obligations  under this Lease
        and the other Lease  Documents  during the Lease Period the Lessee shall
        be entitled to all requisition  hire paid to the Lessor or to the Lessee
        by such  Government  Entity or other  competent  authority on account of
        such requisition.

24.3    Lessor to account for requisition hire

        The Lessor shall,  subject to clause 33.7, pay any  requisition  hire to
        the Lessee promptly upon receipt.

24.4    Reinstatement of Ship

        The  Lessee  shall,  as  soon  as  practicable  after  the  end  of  any
        requisition  for  hire,  cause  the Ship to be put  into  the  condition
        required by this Lease, and where that  requisition  shall end after the
        expiry or termination of the Lease Period,  the Lessee shall, as soon as
        practicable,  cause  the Ship to be put into  the  redelivery  condition
        required  by clause 18,  allowance  being made for fair wear and tear in
        respect  of the  period  from the  expiry  or  termination  of the Lease
        Period.

24.5    Compensation for reinstatement

        The Lessor shall be entitled to all  compensation  payable in respect of
        any change in the  structure,  state or  condition  of the Ship  arising
        during the period of  requisition  for hire. The Lessor shall apply such
        compensation  in  reimbursing  the Lessee for its cost of complying with
        its  obligations  under clause 24.4,  provided always that if a Relevant
        Event has  occurred and is  continuing,  the Lessor shall be entitled to
        apply such compensation in or towards settlement of any amounts owing by
        the Lessee under this Lease or any of the other Lease  Documents and the
        balance, if any, shall be paid to the Lessee.

24.6    Continuing requisition for hire

        Should  the Ship be under  requisition  for hire at the end of the Lease
        Period:

24.6.1  the leasing of the Ship under this Lease shall (unless  otherwise agreed
        between the parties  hereto)  nevertheless be terminated at such end but
        without  prejudice  to the  accrued  rights  of the  parties  including,
        without prejudice to the generality of the foregoing,  the obligation of
        the Lessee contained in clause 24.4, and the Lessor shall be entitled to
        receive and retain any requisition hire payable in respect of the period
        from the expiry or termination of the Lease Period;

24.6.2  the Lessee shall, if and for so long as it is prevented by reason of the
        requisition  for hire from  re-delivering  the Ship under  clause 18, be
        relieved  from its  obligations  so to do,  but shall  consult  with the
        Lessor as to the most convenient method of enabling the Lessor to obtain
        redelivery of the Ship when the Ship is released from such  requisition;
        and

24.6.3  after such release the Lessee shall be given a reasonable opportunity of
        removing any such additional  equipment as is referred to in clause 20.3
        on the terms referred to in such clause.

        Provided  that  nothing in this clause  24.6  shall,  where the Lease is
        terminated  following  the issue of a  Termination  Notice,  operate  to
        modify the dates on which the Lessee is  required  to make any  payments
        (whether of any Termination Sum or otherwise) under this Lease.

24.7    Insurance claims during requisition

        If the Ship shall be  requisitioned  for hire,  insurance  recoveries in
        respect of all claims  whatsoever  (otherwise than in respect of a Total
        Loss) arising during the period of  requisition  shall (to the extent to
        which such recoveries have not been expended by the Lessee in repairs to
        the Ship and to the extent the Ship is still  requisitioned  for hire at
        the end of the Lease Period) be paid to the Lessor and in respect of any
        amount so paid the  Lessee  shall to that  extent be  relieved  from its
        repair  obligations  under the last  sentence  of clause  18.1 and under
        clause 20.3.

25      Security Provisions

25.1    LC Bank credit review

25.1.1  If at any time  during the  Primary  Period the Credit  Rating of the LC
        Bank is  less  than  the  Minimum  LC Bank  Credit  Rating  (other  than
        following the occurrence of a Relevant Bank Event in relation to such LC
        Bank),  the  Lessor  shall be  entitled  to notify the Lessee in writing
        advising the Lessee that either:

        (a)     notwithstanding  the  failure  of the LC  Bank  to  satisfy  the
                Minimum  LC Bank  Credit  Rating,  the  Lessor is  willing,  but
                without  prejudice  to its rights to  exercise  its  entitlement
                under this  clause  upon a further  deterioration  in the Credit
                Rating or under clause 25.1, to allow the LC Bank to continue as
                the "LC Bank" for the  purpose  of this  Lease and the Letter of
                Credit; or

        (b)     the Lessee is required  to replace  the  existing LC Bank with a
                Qualifying Replacement Bank acceptable to the Lessor and procure
                that  such  bank  executes  a new  letter  of credit on the same
                terms, mutatis mutandis, as the existing Letter of Credit.

                Upon  receipt of the notice  from the  Lessor  pursuant  to this
                clause  advising the Lessee that clause  25.1.1(b) is applicable
                the Lessee shall procure that within thirty (30) days of receipt
                of  such  notice  the  Lessee  shall  have   complied  with  the
                obligations imposed on the Lessee by clause 25.1.1(b).

        If the Lessor  determines  that the Lessee has failed to comply with the
        obligations  imposed  on the Lessee by such  sub-clause  within the said
        thirty (30) day period, the Lessee shall become  immediately  obliged on
        such date to give an irrevocable  notice to the Lessor  terminating  the
        Lease Period in accordance with the provisions of clause 3.3 (other than
        with  respect to the period by such  notice) and the Lease  Period shall
        terminate  upon the giving of such  notice.  Save as set out above,  the
        provisions  of clauses 3.3, 3.4 and 3.5 shall apply to such  termination
        of the Lease Period.

25.1.2  If at any time  during the  Primary  Period a Relevant  Bank Event shall
        occur in respect of a Relevant Bank,  the Lessee shall,  if so requested
        by the Lessor by notice in writing and at the  Lessor's  cost (and at no
        cost  to the  Lessee),  consult  with  the  Lessor  in  relation  to the
        replacement of that Relevant Bank and generally  assist the Lessor,  and
        take such steps as the Lessee may  lawfully  and  reasonably  be able to
        take at such  time,  to replace  that  Relevant  Bank with a  Qualifying
        Replacement  Bank acceptable to the Lessor and to provide  assistance in
        respect  of the issue of a new  letter of credit by the  replacement  LC
        bank or,  as the case may be,  the  issue of a new  additional  security
        document on the same terms, mutatis mutandis,  as the existing Letter of
        Credit or, as the case may be, the Additional  Security  Document issued
        by such Relevant Bank.

25.1.3  The credit rating  provisions of clause 25.1.1 shall apply in respect of
        the LC Bank until  such time as the  Lessee is able to provide  evidence
        satisfactory  to the  Lessor  that  the  obligations  of the LC Bank are
        guaranteed  by the German  Government  or any state or  division  of the
        German  Government in which case the minimum credit rating provisions of
        clause  25.1.1  shall  only apply with  effect  from any  renewal of the
        Letter of Credit in  accordance  with the  provisions  of clause 25.7 or
        following  any  replacement  of the LC Bank pursuant to any of the other
        provisions of this clause 25.

25.2    Additional Security re: Strip Liability

25.2.1  Where a new Additional  Security Table is required to be prepared by the
        Lessor after the Delivery  Date in  accordance  with  paragraph 9 of the
        Financial  Schedule and the Required  Security  Amount shown in that new
        Additional  Security Table is a negative  figure and in consequence  the
        Total  Security  Amount for and during such Security  Period as shown in
        the new  Additional  Security Table is greater than the aggregate of the
        Letter of Credit Amount, any Additional  Security Amount and the Maximum
        Unsecured Strip Liability Amount for and during any such Security Period
        (including,  without  limitation,  by  virtue  of the fact  that VAT has
        become payable on the amount of any  Termination  Sum payable under this
        Lease), the Lessee shall,  within thirty (30) days of receipt of written
        notice from the Lessor  (which  notice shall attach new such  Additional
        Security Table) either:

        (a)     procure  that,  subject to the approval of the Lessor,  the face
                amount of the Letter of Credit is  increased  by an amount equal
                to the Required  Security  Amount so that, with effect from said
                increase, the Total Security Amount for and during each Security
                Period shown in such new  Additional  Security Table is equal to
                or less than and will  continue  to be equal to or less than the
                aggregate of the Letter of Credit Amount (as so increased),  the
                Maximum  Unsecured  Strip  Liability  Amount and any  Additional
                Security  Amount in each case for and during each such  Security
                Period and thereafter; or

        (b)     constitute  to the  satisfaction  of the Lessor such  additional
                security as shall be acceptable to the Lessor and having a value
                for security  purposes (as determined by the Lessor) at the date
                upon which such additional  security shall be constituted  which
                is equal to the amount of the Required  Security Amount so that,
                when  aggregated with the amount of the Letter of Credit Amount,
                the Maximum  Unsecured Strip Liability Amount and any Additional
                Security Amount for and during any such Security Period shown in
                such new Additional  Security Table,  shall be at such time, and
                will continue to be thereafter, not less than the Total Security
                Amount for and during each such Security  Period and thereafter;
                or

        (c)     prepay the amount of Primary  Rental  notified  by the Lessor to
                the  Lessee,  following  receipt  by the  Lessor of the  written
                notice from the Lessee  referred to below,  in  accordance  with
                paragraph 8 of the  Financial  Schedule and being in such amount
                as will  result,  taking  into  account  such  prepayment,  in a
                reduction in the Total Security  Amount for each Security Period
                shown in such new Applicable  Security Table such that the Total
                Security  Amount for and during each  Security  Period  shown in
                such new  Applicable  Security  Table is equal or less  than and
                will  continue to be equal to or less than the  aggregate of the
                Letter of Credit Amount,  the Maximum  Unsecured Strip Liability
                Amount and any Additional  Security  Amount in each case for and
                during each such Security Period and thereafter.

        If the  Lessee  wishes to  exercise  the  option  referred  to in clause
        25.2.1(c) it shall notify the Lessor  within five (5) days of receipt of
        the notice  from the Lessor  pursuant  to this clause so that the Lessor
        can provide the Lessee  with a  Prepayment  Cash Flow (as defined in the
        Financial  Schedule)  for the purpose of  paragraph  8 of the  Financial
        Schedule;

        The Lessor agrees that for the purpose of clause 25.2.1(b) the provision
        by the Lessee of a letter of credit or bank  guarantee from a Qualifying
        Replacement Bank on terms acceptable to the Lessor in an amount equal to
        the amount of the additional security required to be provided under this
        clause shall be acceptable  additional  security for the purpose of this
        clause.

        If the  action  required  to be taken by the Lessee  under  this  clause
        25.2.1 is not taken  within the time period and  otherwise  on the terms
        contained in this clause the Lessor shall have the option to require the
        Lessee to terminate  the leasing of the Ship under this Lease and if the
        Lessor  wishes to  exercise  this  option it shall  notify the Lessee in
        writing whereupon the Lessee shall become immediately obliged to give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

25.2.2  Where either an increase in the amount of the Letter of Credit has taken
        place or any  additional  security  of the type  referred  to in  clause
        25.2.1 has been provided by the Lessee,  in each case in accordance with
        clause  25.2.1 and has not been released in full by the Lessor and a new
        Additional  Security  Table is  required to be prepared by the Lessor in
        accordance  with paragraph 9 of the Financial  Schedule and the Required
        Security  Amount  shown  in that  new  Additional  Security  Table  is a
        positive  figure and in consequence  the Total  Security  Amount for and
        during such Security Period shown in such new Additional  Security Table
        is less than the aggregate of the Letter of Credit  Amount,  the Maximum
        Unsecured Strip Liability Amount and any Additional  Security Amount for
        and during such Security Period (taking into account any VAT that may be
        payable in respect of the  Termination  Sum under this  Lease)  then the
        Lessor shall notify the Lessee (with such notice attaching a copy of the
        new Additional  Security  Table) and on the next Adjustment Date falling
        at least ten (10)  Banking  Days after the  delivery of such  Additional
        Security  Table,  the Lessor  shall  either  agree to a reduction in the
        Letter of Credit Amount and/or, depending on the action previously taken
        by the Lessee pursuant to clause 25.2.1, shall release (whether in whole
        or in  part  and to  the  extent  applicable)  any  additional  security
        provided  pursuant to clause  25.2.1 in an amount equal to the amount of
        the Required Security Amount shown in the new Additional  Security Table
        such that  following such  reduction,  amendment or, as the case may be,
        release the Total Security Amount for and during such Security Period as
        shown  in such  new  Additional  Security  Table  is at such  time,  and
        thereafter  will  continue to be, equal to or less than the aggregate of
        the Letter of Credit  Amount,  the  Maximum  Unsecured  Strip  Liability
        Amount and any  Additional  Security  Amount  for and  during  each such
        Security Period and, as the case may be,  thereafter.  It is agreed that
        any such reduction,  amendment or release pursuant to this clause 25.2.2
        shall be without  prejudice  to the rights of the Lessor to require  the
        provision of additional security in the manner contemplated,  and to the
        extent required, by clause 25.2.1.

25.3    Relevant Bank Change of Law Event

        Upon the occurrence of a Relevant Bank Change of Law Event in respect of
        any Relevant  Bank then the Lessee  shall,  within the  Relevant  Period
        applicable to such Relevant Bank Change of Law Event, either:

25.3.1  change the Relevant Bank Security provided by such Relevant Bank and/or,
        as the  case  may be,  replace  such  Relevant  Bank  with a  Qualifying
        Replacement  Bank,  such  that  the  circumstances  constituted  by such
        Relevant Bank Change of Law Event no longer apply and  thereafter  enter
        into either (a) such  supplemental  documentation  to the Relevant  Bank
        Security as such  Relevant  Bank and the Lessor may consider  reasonably
        necessary or, as the case may be, (b) replacement bank security with any
        such  replacement  bank on the  same  terms,  mutatis  mutandis,  as the
        Relevant Bank Security or with such amendments thereto as the Lessor may
        approve;

25.3.2  provide  such other  security  to replace  the  Relevant  Bank  Security
        provided by such Relevant Bank as the Lessor may approve; or

25.3.3  provide such other  additional  security as the Lessor may approve which
        will result in the Lessor  being  satisfied  that the  aggregate  of the
        payments  to be made by such  Relevant  Bank  under  the  Relevant  Bank
        Security  and the payments  receivable  by the Lessor in respect of such
        additional  security  will be equal,  after the  making of the  required
        deduction or withholding  in respect of the Relevant Bank  Security,  to
        the  amounts  which  would have been made by such  Relevant  Bank to the
        Lessor pursuant to such Relevant Bank Security had no such Relevant Bank
        Change of Law Event occurred in relation to such Relevant Bank.

        If the  Lessee  fails to take any of the steps  referred  to in  clauses
        25.3.1,  25.3.2 or 25.3.3 within such  Relevant  Period and otherwise on
        the terms  contained  in this clause the Lessor shall have the option to
        require the Lessee to terminate the leasing of the Ship under this Lease
        and if the Lessor  wishes to exercise  this  option it shall  notify the
        Lessee in writing whereupon the Lessee shall become immediately  obliged
        to give an irrevocable notice to the Lessor terminating the Lease Period
        in accordance with the provisions of clause 3.3 (other than with respect
        to the period of such notice) and the Lease Period shall  terminate upon
        the giving of such  notice.  Save as set out above,  the  provisions  of
        clauses  3.3, 3.4 and 3.5 shall apply to such  termination  of the Lease
        Period.

        The  provisions of this clause 25.3 are subject to the issue of a notice
        by the Lessor pursuant to the provisions of clause 25.10.

25.4    Relevant Bank Illegality Event

        Upon the  occurrence of a Relevant Bank  Illegality  Event in respect of
        any Relevant  Bank then the Lessee  shall,  within the  Relevant  Period
        applicable to such Relevant Bank Illegality Event, either:

25.4.1  change the Relevant Bank Security provided by such Relevant Bank and/or,
        as the  case  may be,  replace  such  Relevant  Bank  with a  Qualifying
        Replacement  Bank,  such  that  the  circumstances  constituted  by such
        Relevant Bank Illegality Event no longer apply and thereafter enter into
        either (a) such supplemental documentation to the Relevant Bank Security
        as such Relevant Bank and the Lessor may consider  reasonably  necessary
        or, as the case may be,  (b)  replacement  bank  security  with any such
        replacement bank on the same terms,  mutatis  mutandis,  as the Relevant
        Bank Security or with such amendments thereto as the Lessor may approve;
        or

25.4.2  provide  such other  security  to replace  the  Relevant  Bank  Security
        provided by such Relevant Bank as the Lessor may approve.

        If the  Lessee  fails to take any of the steps  referred  to in  clauses
        25.4.1 or 25.4.2 within such Relevant  Period and otherwise on the terms
        contained in this clause the Lessor shall have the option to require the
        Lessee to terminate  the leasing of the Ship under this Lease and if the
        Lessor  wishes to  exercise  this  option it shall  notify the Lessee in
        writing whereupon the Lessee shall become immediately obliged to give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period by such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

        The  provisions of this clause 25.4 are subject to the issue of a notice
        by the Lessor pursuant to the provisions of clause 25.10.

25.5    Termination security requirements

25.5.1  If at any  time  after  Delivery  the  leasing  of  the  Ship  shall  be
        terminated,  whether  pursuant  to clauses  3.3,  3.4,  3.7, 22 or 27 or
        otherwise, and at the time of such termination the Lessor shall not have
        finally agreed with the Board of Inland Revenue the Lessor's Corporation
        Tax  computations  regarding any  liabilities  to  Corporation  Tax (the
        "Potential  Liabilities")  which it may have with respect to the leasing
        of the Ship to the Lessee  under this Lease or the  termination  of such
        leasing  and the sale of the Ship (and which will be taken into  account
        under  the  Financial  Schedule)  or if  there  shall be a  dispute  (of
        whatsoever  nature)  between the Lessor and the Board of Inland  Revenue
        regarding the Lessor's  Corporation  Tax  computations  of the Potential
        Liabilities,  the Lessee  shall ensure and (when such  termination  is a
        voluntary  termination)  as a condition  to the consent of the Lessor to
        such voluntary  termination  that all the existing  security  including,
        without  limitation,  the Letter of Credit and any  Additional  Security
        held by the Lessor at the time of such termination  shall remain in full
        force and effect  until such time as the Board of Inland  Revenue  shall
        have finally agreed the Lessor's said Corporation Tax computations.

25.5.2  If the  Lessor  is of the  opinion  that  the  amount  of such  existing
        security shall not be sufficient to secure the Potential Liabilities the
        Lessee shall and (where such termination is a voluntary  termination) as
        a condition to the consent of the Lessor to such voluntary  termination,
        constitute to the satisfaction of the Lessor such additional security as
        shall be  acceptable  to the  Lessor and  having a value,  for  security
        purposes  (as  calculated  by the  Lessor),  at the date upon which such
        further  security shall be  constituted  as the Lessor,  in its opinion,
        calculates will, when aggregated with any existing security,  secure the
        Potential   Liabilities   (after   taking  into   account  the  relevant
        circumstances  in which the termination has arisen and the  arrangements
        relating to the Ship which have taken place or are  proposed  shall take
        place in respect  of the  disposal  of the Ship at such time  including,
        without  limitation,  the amount of any Net Sale  Proceeds  or Net Total
        Loss Proceeds  received or  receivable by the Lessor at such time).  For
        the  purpose  of this  clause,  the Lessor  agrees to  discuss  any such
        voluntary  termination with the Lessee and agrees to accommodate,  where
        possible,  any  requests  that  the  Lessee  may  make to  increase  the
        efficiency  of the said  voluntary  termination  and thereby  reduce any
        Potential Liabilities.

25.5.3  For the  purposes of this clause 25.5,  the Lessor's and Lessor  Agent's
        Corporation Tax computations  for an Accounting  Period shall be treated
        as having been agreed with the Board of Inland Revenue on the later of:

        (a)     the seventh (7th) anniversary of the Final Date; or

        (b)     the date on which the Lessor and Lessor Agent determine,  acting
                reasonably  and in good  faith,  and  certify  in writing to the
                Lessee,  as being the date on which they are satisfied  that the
                Corporation Tax computations  for all Accounting  Periods of the
                Lessor and Lessor  Agent have become  conclusive  and the Inland
                Revenue  shall  have no  powers  to  reopen  assessment  of such
                Corporation  Tax  computations in the absence of fraud or wilful
                neglect on the part of the Lessor or Lessor Agent.

25.5.4  If the Lessor is of the opinion that the amount of the security required
        to be provided to secure the  Potential  Liabilities  (and after  taking
        into account the relevant  circumstances  in which the  termination  has
        arisen  including,  without  limitation,  the  amount  of any Net  Sales
        Proceeds  or Net Total  Loss  Proceeds  received  or  receivable  by the
        Lessor)  is in fact less than the  amount  of the  security  held by the
        Lessor at the time of  termination  of the  leasing of the Ship then the
        Lessor  shall,  at the time of  termination  and, to the extent that the
        relevant  security  held by the  Lessor  at such  time  permits  partial
        release or reductions, release the amount of the surplus security to the
        Lessee. Notwithstanding the generality of the foregoing, if security has
        been provided in respect of a Potential  Liability which is attributable
        to an accounting period and the Lessor's and Lessor Agent's  Corporation
        Tax  computation  for that period is treated as agreed or  determined in
        accordance  with the  provisions  of this clause 25.5,  the Lessor shall
        release  such  security  to  the  extent  that  it  exceeds  the  actual
        Corporation Tax, as so determined or agreed, relating to that accounting
        period.

25.5.5  If any  security is  required  to be retained by the Lessor  pursuant to
        this clause then the Lessee  shall be entitled to send a written  notice
        to the Lessor  requesting  that any or all of the  existing  security be
        replaced  by  alternative  security  acceptable  to the Lessor and in an
        amount sufficient to secure the relevant  Potential  Liabilities and the
        Lessor  agrees to consider and discuss  with the Lessee,  in good faith,
        any such alternative security proposals.

25.5.6  Where any opinion or  accommodation  is to be  exercised or given by the
        Lessor  pursuant to this clause 25.5 it shall be  exercised  or given by
        the Lessor in its sole and absolute  discretion  but in so exercising or
        giving that opinion the Lessor shall act reasonably and in good faith.

25.6    Termination of Time Charter

        If the  chartering  of the Ship under the Time Charter shall at any time
        be terminated (including,  without limitation, by effluxion of time) and
        within ninety (90) days of such termination either:

25.6.1  the Time Charter is not  replaced by a new time charter  entered into by
        the Sub-Lessee with the Time Charterer on  substantially  the same terms
        (except as to term) as the Time Charter (including,  without limitation,
        in relation to the amount of charterhire); or

25.6.2  a new time  charter is not entered  into by the  Sub-Lessee  with a time
        charterer  who has a minimum  credit rating of BBB+ by Standard & Poor's
        or Baa1 with Moody's (a "Rated Time Charterer") or with another major or
        national  company  approved by the Lessor (in its  absolute  discretion)
        pursuant to clause  15.2.21  notwithstanding  that such company is not a
        Rated Time Charterer,

        the Lessee shall, within ten (10) Banking Days of its receipt of written
        notice from the Lessor constitute to the satisfaction of the Lessor such
        additional  security as shall be  acceptable  to the Lessor and having a
        value for security  purposes (as  determined  by the Lessor) at the date
        upon which such  additional  security shall be constituted  equal to the
        Strip  Liability  Amount at such time and during  each  Security  Period
        falling  thereafter  and any other  unsecured  obligations of the Lessee
        under this Lease and the other Lease Documents.

        Where the Lessee is required to provide  security to the Lessor pursuant
        to this clause 25.6, the Lessor agrees that it will consider, but in its
        absolute  discretion and without  obligation,  a request from the Lessee
        that the Lessor  accept  additional  security of an amount less than the
        Strip Liability Amount and any other unsecured obligations of the Lessee
        under  this  Lease  and the  other  Lease  Documents  to  recognise  any
        available security value in the Ship at that time.

        The Lessor  agrees that for the purpose of clause 25.6 the  provision by
        the  Lessee of a letter of credit or bank  guarantee  from a  Qualifying
        Replacement  Bank acceptable to the Lessor,  on terms  acceptable to the
        Lessor and in an amount equal to the amount of the  additional  security
        required to be provided under this clause shall be acceptable additional
        security for the purpose of this clause.

        If the action  required to be taken by the Lessee under this clause 25.6
        is not taken within the time period and otherwise on the terms contained
        in this clause the Lessor shall have the option to require the Lessee to
        terminate  the  leasing  of the Ship  under this Lease and if the Lessor
        wishes to  exercise  this  option it shall  notify the Lessee in writing
        whereupon  the  Lessee  shall  become  immediately  obliged  to  give an
        irrevocable  notice  to the  Lessor  terminating  the  Lease  Period  in
        accordance with the provisions of clause 3.3 (other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4 and 3.5 shall apply to such termination of the Lease Period.

        Where the Time Charter is replaced in accordance  with clauses 25.6.1 or
        25.6.2  then the  provisions  of this clause 25.6 shall apply with equal
        effect to any subsequent termination of the chartering of the Ship under
        such replacement Time Charter.

25.7    Letter of Credit Renewal

25.7.1  Where the  Letter of Credit  Expiry  Date is earlier  than the  Required
        Letter of Credit  Expiry  Date,  not later than thirty (30) Banking Days
        prior to the Letter of Credit  Expiry Date,  the Lessee shall provide to
        the Lessor in writing  proposals  for a further bank letter of credit to
        replace the Letter of Credit from the Letter of Credit Expiry Date for a
        period  up to the  Required  Letter  of  Credit  Expiry  Date.  Any such
        replacement bank letter of credit shall be from a Qualifying Replacement
        Bank  acceptable  to the Lessor and shall be on the same terms,  mutatis
        mutandis,  as the then existing Letter of Credit.  The Lessor shall have
        an absolute  discretion to determine whether the Lessee's  proposals are
        acceptable including,  without limitation,  the identity of the existing
        LC Bank (save that if at such time the existing LC Bank is in compliance
        with the Minimum LC Bank Credit Rating then it shall be an acceptable LC
        Bank for the purpose of this clause) or any proposed new LC Bank and the
        terms of any proposed new Letter of Credit if those terms are  different
        from the then  existing  Letter of Credit  which is to be  replaced  and
        shall  notify  the Lessee in writing  of its  response  to the  Lessee's
        written  proposals  within  ten  (10)  Banking  Days of  receipt  of the
        Lessee's written proposals.

25.7.2  If the Lessee has failed to provide a replacement or extended  letter of
        credit  on terms  and from a  Qualifying  Replacement  Bank  having  the
        Minimum LC Bank Credit  Rating  acceptable  to the Lessor in  accordance
        with  clause  25.7.1 not later than ten (10) days prior to the Letter of
        Credit  Expiry  Date (and which  letter of credit  may, if the Lessee so
        wishes,  be expressed to become effective on the Letter of Credit Expiry
        Date), then the Lessee shall become immediately  obliged on such date to
        give an irrevocable notice to the Lessor terminating the Lease Period in
        accordance with the provisions of clause  3.3(other than with respect to
        the period of such notice) and the Lease Period shall terminate upon the
        giving of such notice.  Save as set out above, the provisions of clauses
        3.3, 3.4and 3.5 shall apply to such termination of the Lease Period.

25.8    Required Security Amount

25.8.1  On the first day of each Adjustment  Period, the Lessor shall notify the
        Lessee in  writing  and shall  advise  the  Lessee  of the  amount  (the
        "Applicable  LC  Increased  Amount") by which the amount of the security
        required to be  provided by the Lessee  pursuant to the Letter of Credit
        Amount  for the  Security  Period  commencing  on the  first  day of the
        relevant  Adjustment Period needs to increase so that during each day of
        that  Security  Period  the  Letter  of  Credit  Amount  is equal to the
        Required LC Amount during each day of that Security  Period.  The Lessor
        shall, as  contemplated by paragraph 2(a) of the Letter of Credit,  copy
        to the LC Bank any such notice  delivered to the Lessee pursuant to this
        sub-clause at the same time such notice is delivered to the Lessee.

25.8.2  Following  receipt of any  written  notice  from the Lessor  pursuant to
        clause 25.8.1, if the Applicable LC Increased Amount for each day of the
        relevant Security Period exceeds the Variable Liability Amount of the LC
        Bank for each  corresponding  day of that Security Period as notified by
        the LC Bank to the Lessor  pursuant to  paragraph  2(b) of the Letter of
        Credit, the Lessee shall, on or before the date falling five (5) Banking
        Days after the commencement of the relevant  Adjustment  Period referred
        to in clause  25.8.1,  procure that the LC Bank agrees,  by means of the
        issue of a notice pursuant to paragraph 2(c) of the Letter of Credit, to
        increase the Letter of Credit  Amount by an amount equal to the relevant
        shortfall such that the  Applicable LC Increased  Amount set out in that
        written notice for each day falling during that Security Period is equal
        to or less  than the  Variable  Liability  Amount  for each day  falling
        during that Security Period.

25.8.3  In addition to the  obligations  contained in clause  25.8.2,  if at any
        time the  Fixed  Liability  Amount  shall be less than the  Required  LC
        Amount  during any  Security  Period,  the Lessor  shall be  entitled to
        notify the Lessee in writing not less than  fifteen  (15)  Banking  Days
        prior to the commencement of the relevant  Security Period in which such
        shortfall  shall arise and,  upon  receipt of that written  notice,  the
        Lessee  shall,  not  later  than  ten  (10)  Banking  Days  prior to the
        commencement of the relevant  Security Period,  procure that the LC Bank
        agrees to increase the Letter of Credit Amount by an amount equal to the
        relevant shortfall and with effect from the commencement of the relevant
        Security  Period  such that with  effect  from the  commencement  of the
        relevant  Security Period,  the Fixed Liability Amount shall,  following
        the  relevant  increase,  be equal to the  Required  LC Amount  for that
        Security Period and thereafter.

25.8.4  The  provisions  of  this  clause  25.8  set out  the  primary  security
        requirements of the Lessor and apply independently of clause 25.2.

25.9    General

        For the purpose of this clause 25, the value of any additional  security
        provided  or to be  provided to the Lessor  shall be  determined  by the
        Lessor  without any  necessity  for the Lessor  giving to the Lessee any
        reason for that determination save that:

25.9.1  where such  additional  security is  constituted  by security  over cash
        deposits,  the value of such  additional  security shall be equal to the
        amount of such cash deposit at any relevant time; and

25.9.2  where such  additional  security  comprises a letter of credit or demand
        guarantee  issued by a Qualifying  Replacement  Bank,  the value of such
        additional  security shall be the face value of such letter of credit or
        demand guarantee.

        In connection with any Additional Security provided,  or any replacement
        of the LC Bank effected,  in accordance  with this clause 25, the Lessor
        shall be entitled to receive  such  evidence  and  documents of the kind
        referred to in Schedule 1 as may in the Lessor's  opinion be appropriate
        and such favourable legal opinions as the Lessor shall in its reasonable
        discretion  require  and the  Lessor and the Lessee  shall  agree,  as a
        condition precedent to the implementation of such security arrangements,
        such reasonable  changes to the terms of this Lease and any of the other
        Relevant  Documents as the Lessor  considers  necessary having regard to
        the   proposed   nature  of  the  change  or  changes  to  the  security
        arrangements  in respect of this Lease.  Any Additional  Security shall,
        unless otherwise agreed by the Lessor, be free from  Encumbrances  other
        than any Encumbrance in favour of the Lessor.

25.9.3  If either  party  becomes  aware of the  occurrence  of a Relevant  Bank
        Change of Law Event or a Relevant Bank Illegality  Event,  then it shall
        promptly notify the other in writing.

25.9.4  Where any  replacement  security is to be  provided  by a Relevant  Bank
        (other  than the  Initial LC Bank) the Lessor  shall be  entitled,  as a
        condition to the Lessor's  acceptance  of such Relevant Bank and without
        prejudice  to any other  conditions  which may be imposed in  connection
        with such replacement  security, to require that a minimum Credit Rating
        test be applied in respect of such Relevant Bank.

25.10   Letter of Credit Adverse Event and liability reduction notice

25.10.1 If the Lessor  receives an Adverse Event Notice pursuant to paragraph 11
        of the Letter of Credit then,  without  prejudice to the  provisions  of
        clauses  25.3 and 25.4,  the Lessor  agrees to consult with the LC Bank,
        the Lessee and the Lessee Parent in accordance  with paragraph  11(b) of
        the Letter of Credit where such consultation is contemplated by the said
        paragraph 11(b). If,  notwithstanding  any such applicable  consultation
        (where  consultation  is to take place  pursuant  to the said  paragraph
        11(b)),  the LC Bank serves a notice on the Lessor pursuant to paragraph
        11(c) of the Letter of Credit  and,  at the time that  notice is served,
        the Lessee has not complied with its  obligations  under clauses 25.3.1,
        25.3.2 or 25.3.3 or, as applicable,  clauses 25.4.1 or 25.4.2 in respect
        of that  Adverse  Event,  then the Lessor  shall be  entitled to serve a
        written notice on the Lessee and in such circumstances the issue of that
        notice  shall  give  rise to a  Termination  Event  pursuant  to  clause
        26.1.3(d).

25.10.2 If the Lessor  receives a notice from the LC Bank  pursuant to paragraph
        2(e) of the  Letter  of  Credit  advising  the  Lessor  that  the  Fixed
        Liability Amount shall decrease in accordance with the provisions of the
        said paragraph 2(e) then,  without prejudice to the provisions of clause
        25.8.3,  the Lessor  shall be entitled to serve a written  notice on the
        Lessee and in such  circumstances  the issue of that  notice  shall give
        rise to a Termination pursuant to clause 26.1.3(d).

25.11   Demands under the Letter of Credit

        The Lessor  will not make a demand  under a Letter of Credit  unless and
        until:

25.11.1 the  Termination Sum has become due and payable (having regard to clause
        27.4.1(a) for this purpose); and

25.11.2 the  Termination  Sum has not  been  paid  in full on the due  date  for
        payment.

26      Termination Events

26.1    Termination Events

        The  Lessor  and the  Lessee  agree  that it is a  fundamental  term and
        condition  of this Lease that none of the  following  events shall occur
        during the Lease Period and that the  occurrence of any of the following
        events  shall  constitute  a  repudiatory  breach  of this  Lease by the
        Lessee:

26.1.1  Non-payment: any Relevant Party fails to pay any sum payable by it under
        any of the Relevant  Documents  at the time,  in the currency and in the
        manner  stipulated  in the  Relevant  Documents  (and so that,  for this
        purpose,  sums payable on demand shall be treated as having been paid at
        the stipulated time if paid within three (3) Banking Days of demand); or

26.1.2  Breach of Insurance and certain other obligations:

        (a)     the Lessee fails to obtain and/or  maintain the Insurances or if
                any insurer in respect of the Insurances  cancels the Insurances
                or  disclaims  liability  by  reason  of  mis-statement  in  any
                proposal for the  Insurances or for any other failure or default
                on the part of the Lessee,  the  Sub-Lessee,  the Manager or any
                other member of the Golar Gas Group; or

        (b)     the Lessee fails to comply with its  obligations  under  clauses
                11.1.9 or 11.1.10; or

26.1.3  Security provision: the Lessee:

        (a)     fails to comply with any  obligation  on its part  contained  in
                clause 25 to provide  Additional  Security  for its  obligations
                hereunder within the time provided in that clause; or

        (b)     fails to give any  notice of  termination  required  to be given
                under,  and within the time period  specified  in, the  relevant
                sub-clauses of clause 25; or

        (c)     fails to perform its obligations under clauses 25.8.2 and 25.8.3
                within the time period provided in those clauses; or

        (d)     the Lessor  services a notice on the Lessee  pursuant to clauses
                25.10.1 or 25.10.2;

26.1.4  Breach of other obligations: any Relevant Party commits any breach of or
        omits to observe any of the obligations or undertakings  expressed to be
        assumed  by it under any of the  Relevant  Documents  (other  than those
        referred  to in  clauses  15.2.19,  26.1.1,  26.1.2 and  26.1.3)  and in
        respect  of any such  breach or  omission  which is  capable  of remedy,
        within ten (10) Banking Days of the Lessor notifying such Relevant Party
        of such  breach or  omission,  the  Lessee has not  demonstrated  to the
        reasonable  satisfaction  of the Lessor that such breach or omission has
        been remedied; or

26.1.5  Misrepresentation:  any  representation or warranty made or deemed to be
        made or  repeated  by any  Relevant  Party in or  pursuant to any of the
        Relevant  Documents  or in any  document  or  certificate  or  statement
        referred to in or delivered  under any of the  Relevant  Documents is or
        proves to have  been  incorrect  in any  material  respect  when made or
        deemed to be made or repeated  unless the  circumstances  giving rise to
        the incorrectness are, in the reasonable opinion of the Lessor,  capable
        of remedy and are  remedied  within ten (10)  Banking Days of the Lessor
        notifying the Relevant Party of the requirement to remedy; or

26.1.6  Cross-default:

        (a)     at any time the aggregate amount at such time of:

                (i)     any Borrowed  Money or Swap  Liabilities of any Relevant
                        Party or any other  member of the Lessee  Group which is
                        not paid when due and remains unpaid;

                (ii)    any Borrowed  Money of any  Relevant  Party or any other
                        member of the Lessee Group which has become  (whether by
                        declaration  or  automatically  in  accordance  with the
                        relevant agreement or instrument constituting the same),
                        or is capable of being declared due and payable prior to
                        the date when it would otherwise have become due (unless
                        as a result of the exercise by the relevant  person of a
                        voluntary   right  of  prepayment   or  upon   mandatory
                        prepayment  as a  result  of a  change  of law or  other
                        circumstances  not  constituting  an  event  of  default
                        under,  or breach of, any  agreement  regulating  and/or
                        securing the relevant Borrowed Money);

                (iii)   any  facility or  commitment  available  to any Relevant
                        Party or any other member of the Lessee  Group  relating
                        to Borrowed Money which has been withdrawn, suspended or
                        cancelled by reason of any default  (however  described)
                        of the person concerned;

                (iv)    the amount of Swap  Liabilities of any Relevant Party or
                        any other  member of the Lessee  Group  which are due or
                        capable of being declared due upon early  termination of
                        the relevant  transaction by the relevant  counterparty;
                        and

                (v)     any  amounts  demanded  of,  but not  paid  when due and
                        remaining  unpaid  by any  Relevant  Party or any  other
                        member  of the  Lessee  Group  under  any  guarantee  in
                        respect of Borrowed Money or Swap Liabilities,

        exceeds five million Dollars ($5,000,000); or

        (b)     any event set out in clause 26 of any Other  Ship  Lease  occurs
                and is continuing;

26.1.7  Legal process:  any judgment or order made against any Relevant Party is
        not stayed or complied with within seven (7) days or a creditor attaches
        or takes possession of, or a distress, execution, sequestration or other
        process is levied or enforced  upon or sued out  against,  any  material
        part (in the  reasonable  opinion of the  Lessor)  of the  undertakings,
        assets,  rights or revenues of any Relevant  Party and is not discharged
        within seven (7) days; or

26.1.8  Insolvency:  the  Sub-Lessee  or the Manager is deemed unable to pay its
        debts  within the meaning of section  123(1)(a),  (b), (c) or (2) of the
        Insolvency Act 1986 or any other Relevant Party becomes  insolvent under
        the applicable  insolvency  laws of the place of  incorporation  of such
        Relevant  Party  or  stops  or  suspends  making  payments  (whether  of
        principal or interest)  with respect to all or any class of its debts or
        announces an intention to do so; or

26.1.9  Reduction or loss of capital:  a meeting is convened  (without the prior
        written approval of the Lessor) by any Relevant Party for the purpose of
        passing any  resolution  to purchase,  reduce or redeem any of its share
        capital; or

26.1.10 Winding  up: any  petition is  presented  or other step is taken for the
        purpose of winding up any Relevant Party (not being a petition which the
        Lessee or such other Relevant Party can demonstrate to the  satisfaction
        of the  Lessor,  by  providing  an opinion  of  leading  counsel to that
        effect, is frivolous,  vexatious or an abuse of the process of the court
        or relates to a claim to which such  Relevant  Party has a good  defence
        and which is being  vigorously  contested by such Relevant  Party and in
        respect of which reserves acceptable to the Lessor have been made) or an
        order is made or  resolution  passed for the winding up of any  Relevant
        Party or a notice  is issued  convening  a meeting  for the  purpose  of
        passing any such resolution; or

26.1.11 Administration: any petition is presented or other step is taken for the
        purpose of the appointment of an  administrator of any Relevant Party or
        the Lessor  believes that any such petition or other step is imminent or
        an administration order is made in relation to any Relevant Party; or

26.1.12 Appointment  of receivers  and  managers:  any  administrative  or other
        receiver is appointed of any Relevant Party or any material part (in the
        reasonable  opinion of the Lessor) of its assets and/or  undertaking  or
        any other  steps are taken to enforce  any  Encumbrance  over all or any
        material part (in the reasonable opinion of the Lessor) of the assets of
        any Relevant Party; or

26.1.13 Compositions:  any steps are taken,  or negotiations  commenced,  by any
        Relevant  Party or by any of its  creditors  with a view to the  general
        readjustment or  rescheduling  of all or part of its  Indebtedness or to
        proposing any kind of composition,  compromise or arrangement  involving
        such company and any of its creditors; or

26.1.14 Analogous  proceedings:  there occurs, in relation to any Relevant Party
        in any country or  territory in which any of them carries on business or
        to the jurisdiction of whose courts any part of their assets is subject,
        any event which,  in the  reasonable  opinion of the Lessor,  appears in
        that  country  or  territory  to  correspond  with,  or have  an  effect
        equivalent  or similar to, any of those  mentioned in clauses  26.1.8 to
        26.1.12  (inclusive) or any Relevant Party otherwise becomes subject, in
        any such country or  territory,  to the operation of any law relating to
        insolvency, bankruptcy or liquidation; or

26.1.15 Cessation  of  business:  any  Relevant  Party  suspends  or  ceases  or
        threatens  to  suspend  or cease to carry on the whole or a  substantial
        part of its business; or

26.1.16 Repudiation: any Relevant Party repudiates any of the Relevant Documents
        or does or causes or permits to be done any act or thing  evidencing  an
        intention  to  repudiate  any of  the  Transaction  Documents  or if the
        validity or enforceability of any of the Relevant Documents shall at any
        time and for any reason be contested  by any  Relevant  Party which is a
        party thereto, or if any such Relevant Party shall deny that it has any,
        or any further, liability thereunder; or

26.1.17 Arrest: the Ship is arrested,  confiscated,  seized, taken in execution,
        impounded,  forfeited, detained in exercise or purported exercise of any
        possessory  lien or other claim, or otherwise taken from the possession,
        other than due to a Lessor's  Encumbrance,  of the Lessee and/or, during
        the Sub-Lease Period,  the Sub-Lessee and the Lessee and/or,  during the
        Sub-Lease  Period,  the Sub-Lessee  shall fail to procure the release of
        the Ship within a period of ten (10) Banking Days; or

26.1.18 Environment:  the  Lessee  and/or  the  Sub-Lessee  and/or  any of their
        respective   Environmental   Affiliates   fails  to   comply   with  any
        Environmental Law or any Environmental Approval or the Ship or any other
        Relevant Ship is involved in an Environmental  Incident which gives rise
        or would be likely to give rise to Environmental  Claims which could, in
        the opinion of the Lessor, be expected to have a material adverse effect
        on the business, assets, operations,  property or financial condition of
        the Lessee Group taken as a whole; or

26.1.19 Qualifying  purpose:  if,  during the  designated  period (as defined in
        section  106 CAA),  the Ship  shall be used in a manner or for a purpose
        which results in the application of sections 109, 110, 111, 112, 113 and
        117  CAA  (including,   without  limitation  and  where  applicable,  in
        circumstances  arising  in  consequence  of the  conversion  of the Time
        Charter into a bareboat charter pursuant to clause 46(b)(ii) of the Time
        Charter); or

26.1.20 Lessee  ceases to be  Subsidiary:  (a) the  Lessee  shall  cease to be a
        wholly  owned  subsidiary  of Gotaas  Larsen or (b) Gotaas  Larsen shall
        cease to be a wholly owned  subsidiary  of the Lessee  Parent or (c) the
        Relevant Shareholder shall cease to directly or indirectly,  legally and
        beneficially  own twenty  five  percent  (25%) or more of the issued and
        outstanding share capital of the Lessee Parent; or

26.1.21 Termination  of  Sub-Lease:  the  Sub-Lease  terminates  for any  reason
        whatsoever.

26.2    Mandatory Prepayment Events

        Each of the  following  shall be a  Mandatory  Prepayment  Event for the
        purpose of this Agreement:

26.2.1  Seizure:  all or a material part of the undertaking,  assets,  rights or
        revenues  of, or shares or other  ownership  interest  in, any  Relevant
        Party are seized, nationalised, expropriated or compulsorily acquired by
        or under the authority of any  government in any manner which would,  in
        the reasonable opinion of the Lessor, affect the ability of the Relevant
        Party to perform its obligations  under the Relevant  Documents to which
        it is a party; or

26.2.2  Invalidity:  (except  where due to a Relevant Bank  Illegality  Event in
        which case clause 25.4 shall apply) any of the Relevant  Documents shall
        at any  time and for any  reason  become  invalid  or  unenforceable  or
        otherwise  cease to remain in full force and  effect and  (unless in the
        reasonable opinion of the Lessor any such invalidity or unenforceability
        is incapable of  rectification  or remedy) the Relevant Party shall have
        failed to procure within ten (10) Banking Days notice from the Lessor to
        do so that the foregoing is no longer invalid or unenforceable; or

26.2.3  Unlawfulness:  (except where due to a Relevant Bank Illegality  Event in
        which case clause 25.4 shall apply) it becomes impossible or unlawful at
        any time for any Relevant  Party or the Standby  Purchaser to fulfil any
        of the covenants and obligations expressed to be assumed by it in any of
        the  Relevant  Documents or for the Lessor to exercise the rights or any
        of them vested in it under any of the  Relevant  Documents  or otherwise
        and  (unless  in  the   reasonable   opinion  of  the  Lessor  any  such
        impossibility  or unlawfulness is incapable of  rectification or remedy)
        the Relevant Party or the Standby Purchaser shall have failed to procure
        within ten (10)  Banking  Days  notice from the Lessor to do so that the
        foregoing is no longer impossible or unlawful; or

26.2.4  Change in Law: there occurs any Change in Law  (considered by the Lessor
        in its absolute  discretion,  to be  materially  adverse to the Lessor's
        interests)  pursuant  to which  there is,  in the  Lessor's  opinion,  a
        potential  risk of the  Lessor  incurring  any  liability  or  increased
        liability  to any third party by virtue of its rights in relation to the
        Ship or otherwise in connection with the Relevant  Documents  and/or the
        rights and  obligations of the Lessor  thereunder and (a) such liability
        or increased  liability  is not, or does not continue to be,  covered by
        insurance   which  is,  in  the   reasonable   opinion  of  the  Lessor,
        satisfactory  having regard to such liability or increased  liability or
        (b) such  potential  risk is not promptly  removed or  terminated by the
        Lessee  moving  the Ship to,  and  keeping  the Ship in, a  location  or
        locations to which such potential risk would not apply or (c) such other
        steps as the  Lessor  considers  reasonably  necessary  to  remove  such
        potential  risk in such  circumstances  are not  promptly  taken  by the
        Lessee.

27      Lessor's rights following a Termination  Event and Mandatory  Prepayment
        Event

27.1    Termination rights and payments

        At any time after the occurrence of any Termination  Event (and provided
        that the same is  continuing)  the Lessor  may, by notice to the Lessee,
        accept any  repudiation  by the Lessee of this Lease  constituted by the
        occurrence of that Termination Event  (whereupon,  the Lessee agrees and
        acknowledges,  the  Lessee's  and  the  Sub-Lessee's  right,  title  and
        interest in and to the Ship and to possess  and operate the Ship,  shall
        terminate) and retake  possession of the Ship and the Lessee agrees that
        the Lessor may for this purpose enter upon any premises  belonging to or
        in the  occupation  or under the control of the Lessee where the Ship or
        any part thereof may be located and upon the serving of the  Termination
        Notice (and irrespective of whether possession is retaken by the Lessor)
        the Lessee shall pay to the Lessor  forthwith upon such termination such
        sum as shall equal the aggregate of:

27.1.1  all amounts due under this Lease and any of the other Lease Documents as
        shall be payable and remain outstanding; and

27.1.2  all  Indemnity  Losses (as  defined  in clause  9.4 but which  Indemnity
        Losses shall not include, for the avoidance of doubt, any loss of profit
        other than any  Termination  Fee)  incurred by the Lessor in  connection
        with such termination including,  without prejudice to the generality of
        the  foregoing,  all  costs  and  expenses  so  incurred  in  recovering
        possession of the Ship or any part thereof and in carrying out any works
        or  modifications  required to bring the Ship or any part  thereof up to
        the condition specified in clause 18.1,

        and  the  Lessee  shall  also  pay to the  Lessor  forthwith  upon  such
        termination  by way of  agreed  compensation  and not as a  penalty  the
        amount of the Termination Sum as at the date of termination.

        If a  Termination  Notice is served  pursuant to this clause  27.1,  the
        Termination Sum shall become due in accordance with such notice and this
        clause 27.1 notwithstanding the existence of a Total Loss at such time.

27.2    Application of Net Sale Proceeds

        Without  prejudice to the  obligation of the Lessee to make the payments
        referred to in clause 27.1, upon any such  termination as is referred to
        in clause 27.1 and provided that the Lessor shall not be prevented  from
        so doing for any reason whatsoever  (including,  without limitation,  if
        prevented  from doing so by reason of the  provisions of clause 9 of the
        Proceeds Deed), the Lessor or, where  applicable,  the Relevant Security
        Agent as agent of the Lessor  pursuant to the  provisions of clause 9 of
        the  Proceeds  Deed  shall  endeavour  to  sell  the  Ship  as  soon  as
        practicable.  The Net Sale  Proceeds  shall be  applied by the Lessor as
        follows:

27.2.1  first, in retention by the Lessor of an amount equal to one tenth of one
        per cent (0.1%) of the Net Sale Proceeds;

27.2.2  secondly,  in  retention  by the Lessor of an amount equal to the lesser
        of:

        (a)     all or any part of the  Termination  Sum which the Lessee  shall
                not,  on or  before  the  date of  application  of the Net  Sale
                Proceeds,  have paid to the  Lessor in  accordance  with  clause
                27.1; and

        (b)     the balance of the Net Sale Proceeds;

27.2.3  thirdly,  in or towards  settlement  of any other  amounts  owing by the
        Lessee  to the  Lessor  under  this  Lease  or any  of the  other  Lease
        Documents (including any interest due in respect thereof);

27.2.4  fourthly,  by way of rebate of Rental,  in or towards  settlement of any
        amounts owing to the Other Lessors under the Other Ship Leases or any of
        the Other Ship Relevant Documents, such amounts to be paid to the Lessor
        Agent for  application  in accordance  with clause 4.3 of the Agency and
        Trust  Deed and  clauses  27.2.2  and  27.2.3 of each of the Other  Ship
        Leases;

27.2.5  fifthly,  in or  towards  refunding  to the  Lessee  by way of rebate of
        Rental an amount equal to all Rental (including, without limitation, any
        Termination Sum) paid to the Lessor by the Lessee under this Lease; and

27.2.6  sixthly,  to the Lessee,  by way of sales  commission  or  otherwise  as
        appropriate.

27.3    Mandatory Prepayment

        On or at any time after the occurrence of a Mandatory  Prepayment  Event
        and whilst it is continuing:

27.3.1  the Lessor may, by notice to the Lessee after the Delivery  Date,  elect
        to treat the  occurrence  of that  event as  constituting  notice by the
        Lessee pursuant to clause 3.3 but without reference to the notice period
        referred to in that clause;

27.3.2  on the date  falling  five (5) Banking Days after the date of the notice
        from the Lessor referred to in clause 27.3.1, the Lessee will pay to the
        Lessor the amounts referred to in clause 27.1 as at the required date of
        that payment;

27.3.3  the Lessor will use reasonable endeavours to sell the Ship in accordance
        with the applicable provisions of clause 3;

27.3.4  any Net Sale  Proceeds from a sale of the Ship pursuant to clause 27.3.3
        will  be  applied  in the  manner  described  in  clause  3.4  or,  if a
        Termination  Event has occurred and is continuing at the time of receipt
        of the Net Sale Proceeds, clause 27.2;

27.3.5  with  effect on and from the date of the  payment  by the  Lessee of all
        amounts  pursuant to clause 27.3.2,  the Lessee shall cease to be liable
        to pay Rental  under this Lease but without  prejudice  to the  Lessee's
        obligations  pursuant  to  paragraphs  4, 6  and/or  7 of the  Financial
        Schedule; and

27.3.6  notwithstanding  anything else to the contrary in this Lease but subject
        to any rights of the Lessor under this Lease following the occurrence of
        a Termination Event, the Lease Period will continue until and end on the
        date on which the Ship is delivered to a purchaser of the Ship following
        a sale pursuant to clause 27.3.3.

27.4    Termination Sum liabilities

27.4.1  Limitation on recourse

        Notwithstanding  anything to the contrary  expressed or implied  herein,
        where the  Termination  Sum  becomes  payable by the Lessee  pursuant to
        clauses 27.1 or 27.3.1 or, if at the time of any  voluntary  termination
        of the leasing of the Ship  pursuant to clause 3.3 a Relevant Bank Event
        has arisen,  the Lessor shall have no recourse against the Lessee or any
        of the assets and  undertakings of the Lessee in respect of such part of
        the Termination Sum as is equal to the Applicable Security Amount at the
        relevant  time and the  relevant  part of the  Termination  Sum which is
        equal to the said Applicable Security Amount shall be recoverable by the
        Lessor  only from and to the extent of the  payments  made by a Relevant
        Bank under the Letter of Credit or other Additional  Security  Document.
        The limitation on recourse contained in this clause 27.4 is given on the
        basis that:

        (a)     the  foregoing  limitation  on recourse  shall be ignored in the
                determination of the Lease Obligations and the Lease Obligations
                shall include all moneys,  obligations and liabilities which are
                to be paid,  repaid,  performed,  satisfied or discharged by the
                Lessee, notwithstanding the foregoing limitation of recourse;

        (b)     to the extent  that a claim or proof is a  necessary  procedural
                step to  enable  the  realisation  or  enforcement  of the  full
                benefit of this Lease or the other Relevant Documents, or to the
                exercise by the Lessor of any right, title, interest and benefit
                in, to,  under or pursuant to this Lease and the other  Relevant
                Documents,  the Lessor shall be entitled to make or file a claim
                or proof in any Insolvency Event in relation to the Lessee,  but
                not itself to take any legal action or  proceeding  to instigate
                any such  Insolvency  Event in  respect  of amounts to which the
                obligations of the Lessee are limited recourse  pursuant to this
                clause; and

        (c)     save where the Lessor has agreed to limit its rights of recourse
                against  the Lessee  under,  or as  referred  to in, this clause
                27.4, the Lessor shall have full recourse  against the Lessee in
                respect  of all  of  the  Lease  Obligations.  Accordingly,  and
                without limiting the generality of the foregoing,  to the extent
                that the  Termination Sum and any other amounts due and owing by
                the  Lessee to the Lessor  under this Lease and the other  Lease
                Documents   exceeds  the  Applicable   Security  Amount  at  the
                applicable time, the Lessee shall be obliged to make payment for
                the  relevant  excess  in full and the  Lessor  shall  have full
                recourse  to the Lessee  and its assets to the extent  that such
                payment is not made.

        Where the limitation on recourse  arises by reason of the existence of a
        Relevant Bank Event at the time of any termination of the leasing of the
        Ship pursuant to clause 3.3, the Lessee acknowledges and agrees that the
        Lessor  shall be entitled to make a demand  and/or,  as the case may be,
        exercise  all its  rights  under any  Letter  of  Credit  or  Additional
        Security Document provided by that Relevant Bank.

27.4.2  Suspense accounts

        Any money  received  by the  Lessor  under  any  Letter of Credit or any
        Additional  Security  Document  may,  following  the  occurrence  of  an
        Insolvency  Event in respect  of either the Lessee or the Lessee  Parent
        which is  continuing,  be  placed  by the  Lessor  to the  credit  of an
        interest  bearing  suspense account with the Account Bank with a view to
        preserving the rights of the Lessor to prove for the whole of its claims
        against the Lessee  and/or the Lessee  Parent or any other person liable
        or, as the Lessor may elect,  may be applied in or towards  satisfaction
        of the  amounts  then due and  payable  to the  Lessor  under  the Lease
        Documents.

28      Notices

        Every notice, request, demand or other communication under this Lease or
        any of the other Lease Documents shall:

28.1.1  be in writing  delivered  personally  or by first class  prepaid  letter
        (airmail if  available),  or  facsimile  transmission  or other means of
        communication in permanent written form;

28.1.2  be deemed to have been received,  subject as otherwise  provided in this
        Lease,  in the case of a letter,  when delivered  personally or five (5)
        days after it has been put to the post and,  in the case of a  facsimile
        transmission or other means of  telecommunication  or permanent  written
        form, at the time of despatch  (provided that if the date of despatch is
        not a business day in the country of the addressee it shall be deemed to
        have been  received at the opening of business on the next such business
        day); and

28.1.3  be sent:

        (1)     to the Lessor at
                c/o Sovereign House
                PO Box 302
                298 Deansgate
                Manchester M3 4HH
                Fax No:  0161 953 3517
                Attention: Corporate Administration Manager

        (2)     to the Lessee at:
                30 Marsh Wall
                London E14 9TP

                Fax No: (44) 207 517 8601
                Attention: the President

        or to such other address,  and/or numbers as is notified by one party to
        the other under this Lease.

29      Liens and indemnities

29.1    No authority to impose liens

        Neither  the  Lessee  nor the  Master of the Ship  shall have any right,
        power or authority to create incur or permit to be imposed upon the Ship
        any liens  whatsoever  except for Permitted  Liens. The Lessee agrees to
        exhibit a  certified  copy of this Lease  with the Ship's  papers and to
        exhibit the same to any person having business with the Ship which might
        give rise to any lien thereon other than Permitted Liens.

        The Lessee further  agrees to fasten to the Ship in a conspicuous  place
        and to keep so  fastened  during  the Lease  Period a notice  reading as
        follows:

        "This Ship is the property of Golar Spirit (Bermuda) Limited (whose name
        is to be changed to Sovereign  Spirit  Limited)  (the  "Lessor")  and is
        under demise charter to Golar Gas Holding  Company,  Inc. (the "Lessee")
        and sub-demise  charter to Golar Spirit UK Ltd. (the  "Sub-Lessee") and,
        by the terms of the Lease,  neither the Lessee,  the  Sub-Lessee nor the
        Master  nor any  servant  or  agent  thereof  has any  right,  power  or
        authority  whatsoever  to  contract on behalf of the Lessor or to pledge
        the Lessor's credit or to involve the Lessor in any liability whatsoever
        or to  create,  incur,  or  permit  to be  imposed  on the Ship any lien
        whatsoever except for general average, crews' wages and salvage",

        or in such other form as the Lessor may reasonably  require from time to
        time.

        The Lessee  shall not remove or cover up such  notice and will not place
        or permit to be placed any other notice  (affecting the ownership of the
        Ship or otherwise  relating to the rights of the Lessor and dealing with
        the rights of any person other than the Lessor, the First Security Agent
        and the  Second  Security  Agent)  in or on the Ship  without  the prior
        written  consent  of the Lessor  (such  consent  not to be  unreasonably
        withheld so long as the same is not inconsistent  with the rights of the
        Lessor.

        The  Lessee  agrees  to give  written  instructions  with  regard to the
        foregoing  matters to the Master of the Ship, such instructions to be in
        such terms as may from time to time be required by the Lessor.

29.2    Release from arrest: Lessor's vessels

        If the Ship or any other vessel for the time being owned (in whole or in
        part) by or leased to the Lessor  shall at any time have a writ or libel
        filed against it or be arrested, attached or levied upon pursuant to any
        legal  process or purported  legal process or be detained in exercise or
        purported  exercise of any lien or claim of whatsoever  nature,  whether
        arising  out of the use or  operation  of the  Ship or out of the use or
        operation  of any other  vessel  owned by or leased or  chartered to the
        Lessee or the  Sub-Lessee  or otherwise by reason of the act or omission
        of any  of the  aforesaid  persons,  the  Lessee  shall  forthwith  upon
        receiving  notice thereof at its expense procure the release of the Ship
        or such  other  vessel  (as the  case may  require)  from  such  arrest,
        detention,  attachment  or levy or, as the case may be, the discharge of
        the  writ or libel by  providing  bail or  procuring  the  provision  of
        security or  otherwise as the  circumstances  may require and the Lessee
        shall be  responsible  for  discharging  each  and  every  liability  in
        connection with any such process,  claim, lien or other action.  Without
        prejudice to the generality of the other  indemnities  contained in this
        Lease or any of the other Lease Documents, should any other vessel owned
        by the Lessor and leased by it otherwise than to the Lessee be arrested,
        detained,  attached  or levied upon or be the subject of a writ or libel
        in such circumstances, the Lessee shall indemnify the Lessor against all
        claims  made on the Lessor by the  charterers  of such  other  vessel in
        connection with such arrest, detention, attachment, levy, writ or libel.

29.3    Release from arrest: Lessee's vessels

        If the Ship shall at any time have a writ or libel  filed  against it or
        be arrested,  attached or levied upon  pursuant to any legal  process or
        purported legal process or be detained in exercise or purported exercise
        of any lien or claim of whatsoever  nature in each such case arising out
        of the use or  operation of any other vessel for the time being owned by
        the  Lessor or any  other  company  in the  Lessor  Group and  leased or
        chartered by it otherwise  than to the Lessee and should the  charterers
        of such other vessel (being in that situation  under  obligations to the
        Lessor or such other  company in the Lessor  Group  equivalent  to those
        assumed  by the Lessee  under  clause  29.2)  fail to fulfil  their said
        obligations,  provided  that the Lessee  shall  first  have given  prior
        notice thereof to the Lessor and, to the extent  practicable,  consulted
        with the  Lessor or such other  company  in the  Lessor  Group as far in
        advance as is reasonable in all the  circumstances,  the Lessee shall be
        entitled  to act as agent for the  Lessor or such  other  company in the
        Lessor Group to procure release of the Ship or such other vessel (as the
        case may require) from such arrest, detention, attachment or levy or, as
        the case may be, the discharge of the writ or libel and the discharge of
        all  liabilities in connection with such process,  claim,  lien or other
        action but shall be  entitled to be  indemnified  by the Lessor and such
        other  company  in the Lessor  Group  against  all  losses and  expenses
        reasonably and properly so incurred by it.

30      Assignment and sale of Ship

30.1    Assignment by Lessee

        The  Lessee  may not  with  the  exception  of an  assignment  by way of
        security in favour of the First Security  Agent and the Second  Security
        Agent  assign or transfer  any of its rights or  obligations  under this
        Lease or any of the other  Lease  Documents  without  the prior  written
        consent of the Lessor,  but the Lessor shall not  unreasonably  withhold
        its consent in the circumstances of;

30.1.1  any assignment or transfer or novation to a company which is part of the
        Lessee Group where:

        (a)     the Lessee  Parent  Guarantee,  the  Standby  Documents  and any
                Additional Security Documents and the respective  obligations of
                the  Lessee  Parent,  the LC Bank  and any  Additional  Security
                Providers thereunder remain in full force and effect;

        (b)     the  replacement of the Lessee will not give rise to a breach of
                the provisions of clause 13.2.4;

        (c)     the  liabilities  and obligations of the Lessee under this Lease
                will not be increased following such transfer;

        (d)     the  rights of the  Lessor  under this Lease will not be reduced
                and the  liabilities  and  obligations  of the Lessor under this
                Lease  will  not  be  increased  in  each  case  following  such
                transfer; and

        (e)     the Lessor has received a legal  opinion from a lawyer chosen by
                the  Lessor   qualified   and   practising  in  the  country  of
                incorporation of the relevant assignee or transferee which is no
                worse  in form  and  substance  than  the  legal  opinion  to be
                provided  in  favour  of the  Lessor in  respect  of the  Lessee
                pursuant to clause 4.1 and Schedule 1.

30.2    Assignment by the Lessor

        The Lessor may not,  save as provided  below,  assign or transfer any of
        its rights or obligations  under this Lease or any of the other Relevant
        Documents  without the prior written consent of the Lessee which consent
        may not unreasonably be withheld.  Notwithstanding  the above provision,
        the Lessor  shall be at liberty to  transfer  (by way of  assignment  or
        novation) its rights,  benefits or obligations  under this Lease and any
        of the other  Relevant  Documents  to any leasing  company  chosen by it
        within the Lessor Group which is resident in the United  Kingdom for the
        purpose of the charge to Corporation Tax on the basis that:

30.2.1  subject to the First Security  Agent,  the Second Security Agent and the
        Lessee complying with their  obligations  under, and on the basis of the
        provisions  of clause 8.6 of the  Proceeds  Deed,  ownership of the Ship
        shall be  transferred  to such company at the same time and such company
        shall execute a replacement Lessor Mortgage and Lessor Proceeds Accounts
        Assignment in accordance with clause 8.6 of the Proceeds Deed;

30.2.2  any costs, charges or expenses including stamp duties payable in respect
        of any transfer shall be for the Lessor's account;

30.2.3  notwithstanding  any other  provision  of this Lease or any of the other
        Lease Documents all amounts payable or receivable by the Lessee or other
        Relevant Parties under this Lease and the other Relevant Documents shall
        be calculated as if no such transfer had taken place; and

30.2.4  the Lessor  Parent  shall comply with its  obligations  under the Lessor
        Support Letters in respect of such transfer.

30.3    Sale of Ship

        During the Lease Period the Lessor shall not sell,  transfer,  assign or
        otherwise  dispose of the legal title to, or beneficial  interest in the
        Ship,  or  agree  to do  so,  save  as  expressly  contemplated  by  the
        provisions of this Lease,  the Proceeds Deed and the Registered  Owner's
        Undertaking.

31      Increased costs, funding problems and illegality

31.1    Increased costs

        If any law, regulation or regulatory requirement or any judgment,  order
        or direction of any court, tribunal or authority taking effect after the
        date of this Lease which is binding upon the Lessor in the  jurisdiction
        in which it is formed or in which any action is required to be performed
        by it for the  purposes of this Lease of any  monetary  agency,  central
        bank or competent governmental or other authority shall:

31.1.1  subject  the  Lessor to Taxes or change  the  basis of  Taxation  of the
        Lessor with respect to any payment  under any of the Relevant  Documents
        (other than Taxes or Taxation which are the subject of an indemnity from
        the Lessee to the Lessor  under clause 10 or would be so subject but for
        the provisions of clauses 10.6 and 10.8); or

31.1.2  impose,  modify or deem  applicable any reserve  requirements or require
        the making of any special  deposits  against or in respect of any assets
        or liabilities of, deposits with or for the account of, or loans by, the
        Lessor or its holding company; or

31.1.3  impose on the Lessor or its  holding  company any other  condition  with
        respect to any of the Relevant Documents or its obligations under any of
        the Transaction Documents,

        and, as a result of any of the foregoing,  the cost to the Lessor or its
        holding  company of  funding,  financing  or  re-financing,  directly or
        indirectly,  its  purchase  of the Ship or of owning the Ship or leasing
        the Ship to the  Lessee  under  this  Lease is  increased  or the amount
        payable  or the  effective  return to the  Lessor  under  this  Lease is
        reduced or the Lessor or its holding company makes a payment or foregoes
        a return on or calculated by reference to any amount payable to it under
        this Lease (other than as provided in clause  31.1.1),  then and in each
        such case the Lessor shall as soon as  practicable  after becoming aware
        of the same  notify  the  Lessee of the  circumstances  thereof  and the
        Lessee  shall pay to the Lessor on demand  the  amount  which the Lessor
        specifies (in a certificate  setting forth the basis of the  computation
        of such  amount) is  required  to  compensate  the Lessor or its holding
        company for such increased  cost,  reduced  return,  payment or foregone
        return.

        Any demand  under clause 31.1 may be made at any time whether or not the
        Lease Period shall have terminated or expired.

        For the purpose of this clause 31.1 "holding  company" means the company
        or entity (if any)  within  the  consolidated  supervision  of which the
        Lessor is included.

31.2    Funding problems

        If the Lessor  notifies  the Lessee that  adequate and fair means do not
        exist for  determining  the Default  Rate or for  determining  LIBOR (as
        defined in the  Financial  Schedule)  then the Lessor  shall give notice
        thereof to the Lessee and the Lessor and the Lessee shall meet  together
        to discuss the matter in good faith and,  unless within thirty (30) days
        of the  giving of such  notice the  Lessor  and the  Lessee  arrive,  by
        negotiation in good faith, at an alternative basis reasonably acceptable
        to the  Lessor and the Lessee  for  continuing  the  leasing of the Ship
        hereunder and determining the Default Rate or LIBOR (and any alternative
        basis agreed in writing shall be  retroactive  to and effective from the
        commencement  of the relevant period and shall continue until the Lessor
        determines that  circumstances  are such that such alternative basis may
        cease to be  effective)  the Lessee shall  indemnify the Lessor from and
        against  any  liability,  loss or expense  suffered  or  incurred by the
        Lessor during the relevant  period as a result of the  circumstances  so
        notified by the Lessor to the Lessee.

31.3    Illegality

        If any law, regulation or regulatory requirement or any judgment,  order
        or direction of any court, tribunal or authority binding upon the Lessor
        in the  jurisdiction  in which it is formed  or in which  any  action is
        required to be  performed  by it for the purposes of any of the Relevant
        Documents  (whether  or not in  force  before  the  date of this  Lease)
        renders it unlawful  for the Lessor to continue to lease the Ship to the
        Lessee under this Lease, the Lessor shall promptly inform the Lessee and
        the  Lessor  shall be  entitled  by  written  notice  to the  Lessee  to
        terminate the Lease Period, the termination of the Lease Period to occur
        either (a) forthwith or (b) on a future specified date not being earlier
        than the date upon which it becomes  unlawful for the Lessor to continue
        to lease the Ship to the Lessee under this Lease.

        Such  termination  shall be deemed to be a voluntary  termination of the
        Lease Period in accordance  with clause 3.3  (notwithstanding  that such
        termination shall not have occurred on a Primary Rental Date or that the
        Lessor shall not have received thirty (30) days' notice thereof) and the
        provisions of clauses 3.3 to 3.6 shall apply thereto.

31.4    Mitigation

        If circumstances  arise which would, or would upon the giving of notice,
        result in:

31.4.1  the Lessee being  required to make a payment to the Lessor to compensate
        the Lessor or its holding company for a liability to Taxes, increased or
        additional cost, reduction, payment, foregone return or loss pursuant to
        clause 31.1;

31.4.2  the Lessee  being  required to make an  increased  payment to the Lessor
        pursuant to clause 31.2;

31.4.3  the  provision of  additional  security  and/or the  termination  of the
        leasing of the Ship pursuant to clauses 25.3, 25.4, 25.5 and 31.3; or

31.4.4  the  mandatory  prepayment  of the  amounts  referred  to in clause 27.1
        pursuant to clauses 26.2.3 or 26.2.4,

        then, without in any way limiting,  reducing or otherwise qualifying the
        obligations  of the Lessee under  clauses 25, 26 and this clause 31, the
        Lessor  shall,  at the  cost  of the  Lessee,  endeavour  to  take  such
        reasonable  steps  (and/or,  in the case of  clause  31.1 and  where the
        increased or additional  cost,  reduction,  payment,  foregone return or
        loss is that of its  holding  company,  endeavour  to  procure  that its
        holding company takes such  reasonable  steps) as may be open to it (or,
        as the case may be, its  holding  company)  to  mitigate  or remove such
        circumstances  and shall consult with the Lessee in connection with such
        mitigation  arrangements.  The Lessee  acknowledges that nothing in this
        clause  shall  oblige the Lessor (or its  holding  company)  to take any
        steps which might (in the opinion of the Lessor) be  prejudicial  to the
        Lessor (or,  as the case may be, its holding  company) or be in conflict
        with  the  Lessor's  (or,  as the case may be,  its  holding  company's)
        general banking  policies or involve the Lessor (or, as the case may be,
        its holding company) in expense or an increased administrative burden.

32      Refinancings

32.1    Refinancing by Lessee

32.1.1  Where the First  Bank Loan (as  defined  in the  Proceeds  Deed) and the
        Second Bank Loan (as defined in the  Proceeds  Deed) have been repaid in
        full (or will be repaid in full out of the  proceeds of any  refinancing
        contemplated  by this clause 32), the Lessee shall be entitled,  subject
        to clause 32.2,  to refinance its interest in the Ship and to assign the
        Lessor Mortgage to the relevant  refinancing banks or any security agent
        acting on their behalf and to grant other first and/or  second  priority
        security of the kind required under or in connection with the First Bank
        Loan and the  Second  Bank Loan and more  generally  referred  to in the
        Proceeds Deed.

32.1.2  In connection with any  refinancing  consented to pursuant to clause 32,
        the Lessor  shall  enter into such  documents  as the other party or the
        Lessee may reasonably require to amend this Lease and the other Relevant
        Documents to reflect the new financing structure.

32.2    Conditions

        The  agreement  of the Lessor to any  refinancing  referred to in clause
        32.1.1 shall be subject to the following conditions:

32.2.1  no Relevant Event shall have occurred and be continuing;

32.2.2  the Lessor shall be satisfied that the proceeds of the  refinancing  are
        sufficient to repay the First Bank Loan and the Second Bank Loan in full
        or, if not,  that the Lessee (or any other  person  obliged to repay the
        First Bank Loan and the Second  Bank Loan) has  sufficient  other  funds
        available to repay the First Bank Loan and the Second Bank Loan in full;

32.2.3  the Lessor shall be reasonably  satisfied  that the Third Priority Three
        Party  Deed  shall,  following  the  refinancing,  continue  to  provide
        security  for the  Lessee's  obligations  under this Lease in a form and
        with effect  substantively  equivalent to that  negotiated and agreed in
        relation  to the First Bank Loan and the Second Bank Loan as at the date
        of this Lease;

32.2.4  the Standby  Documents  shall remain in full force and effect  following
        the refinancing  with such amendments to such Standby  Documents  having
        been made as may, with the approval,  or at the request,  of the Lessor,
        be required having regard to the terms of the relevant refinancing:

32.2.5  the refinancing banks or the security agent acting on their behalf shall
        adhere to the provisions of the Proceeds Deed on terms acceptable to the
        Lessor and such  changes as may be  required,  and as may be approved by
        the Lessor,  shall be made to the terms of the Proceeds  Deed to reflect
        such refinancing;

32.2.6  the refinancing shall be on terms whereby:

        (a)     the  principal  amount  shall be no greater than one hundred and
                forty seven million Dollars ($147,000,000);

        (b)     the principal amount shall amortise on a straight-line  basis to
                zero over ten (10) years; or

        (c)     the  refinancing  shall be on terms  whereby the proceeds of the
                refinancing (or part thereof) will be paid direct to the account
                of the First Security Agent to repay the First Bank Loan and/or,
                as the case  may be,  the  Second  Security  Agent to repay  the
                Second Bank Loan in full.

        The amounts  referred to in sub-clauses (a) and (b) assume that the Ship
        and the Other Ships shall all be refinanced at the same time. If in fact
        the Ship and the  Other  Ships are not all  refinanced  at the same time
        then the Lessee shall as an  additional  condition to the consent of the
        Lessor  to any  refinancing,  be  required  to agree  with the  Lessor a
        revised  Dollar  amount for the  purpose of  sub-clause  (a) above;  and
        32.2.7  the  Lessor  shall be  entitled  to receive  such  evidence  and
        documents  of the kind  referred to in Schedule 1 as may in the Lessor's
        opinion be appropriate and such favourable  legal opinions as the Lessor
        shall in its reasonable discretion require.

33      Miscellaneous

33.1    Entire agreement

        This Lease and the other Lease  Documents  contain the entire  agreement
        between  the Lessor and the Lessee  relating  to the leasing of the Ship
        and the terms and conditions of this Lease and the other Lease Documents
        shall not be varied  otherwise  than by an instrument in writing of even
        date  herewith  or  subsequent  hereto  executed  by or on behalf of the
        Lessor and the Lessee  and shall  supersede  all  previous  term  sheets
        relating thereto.

33.2    Waivers

        No failure or delay on the part of the Lessor in  exercising  any right,
        power or remedy  under  this Lease or any of the other  Lease  Documents
        shall  operate  as a waiver  thereof  nor  shall any  single or  partial
        exercise by the Lessor of any such right,  power or remedy  preclude any
        other or further  exercise  thereof or the  exercise of any other right,
        power or remedy.

33.3    Remedies cumulative

        The remedies  provided in this Lease or any of the other Lease Documents
        are cumulative and are not exclusive of any remedies provided by law.

33.4    Time of the essence

        Subject to the periods of grace  referred to in clause 26, time shall be
        of  the  essence  as  regards  the  performance  by  the  Lessee  of its
        obligations under this Lease and the other Lease Documents.

33.5    General average

        All  rights  and  liabilities  in  respect of the Ship by way of general
        average shall be for the account of the Lessee.

33.6    Partial illegality

        If any  term  or  provision  of this  Lease  or any of the  other  Lease
        Documents  or the  application  thereof to any  person or  circumstances
        shall to any extent be invalid or  unenforceable,  the remainder of this
        Lease and the other  Lease  Documents  and  application  of such term or
        provision to persons or  circumstances  (other than those as to which it
        is already invalid or  unenforceable)  shall not be affected thereby and
        each term and  provision  of this  Lease and the other  Lease  Documents
        shall be valid and be  enforceable  to the fullest  extent  permitted by
        law.

33.7    Set-off

        The  Lessee  authorises  the  Lessor  without  prejudice  to  any of the
        Lessor's  rights of set-off at law, in equity or otherwise,  at any time
        that a Relevant  Event has occurred and is continuing or when  otherwise
        permitted  under this Lease or the other  Lease  Documents  and  without
        notice  to the  Lessee  to set  off or  withhold  from  any  sum or sums
        expressed  in this  Lease  or any of the  other  Lease  Documents  to be
        payable to the  Lessee by the  Lessor any amount due and  payable to the
        Lessor  from the  Lessee  under  this  Lease or any of the  other  Lease
        Documents.  For any such  purpose the Lessor is  authorised  to purchase
        with the sums which  would but for this clause 33.7 be so payable to the
        Lessee, such other currencies as may be necessary to effect such set off
        or  withholding.  The Lessor  shall not be obliged to exercise any right
        given to it by this  clause  33.7.  The Lessor  shall  notify the Lessee
        forthwith  upon the  exercise  or  purported  exercise  of any  right of
        set-off or withholding.

33.8    Further assurance

        The Lessee undertakes that it will at its expense execute, sign, perfect
        and do any and every such further assurance,  document,  act or thing as
        in the reasonable opinion of the Lessor may be necessary or desirable to
        carry out the purpose of this Lease or any of the other Lease  Documents
        or the Standby  Documents  or protect or enforce any right of the Lessor
        hereunder or thereunder or the title of the Lessor in the Ship.

33.9    Counterparts

        This  Lease may be  entered  into the form of two or more  counterparts,
        each  executed by one of the  parties,  and,  provided  both the parties
        shall so enter into this Lease, each of the executed counterparts,  when
        duly  exchanged  or  delivered,  shall be deemed to be an original  but,
        taken together, they shall constitute one instrument.

33.10   Confidentiality

        At all times during the Lease Period,  each of the parties  hereto shall
        keep  confidential  and shall not,  without the prior written consent of
        the other party, issue any press release in relation to the transactions
        evidenced by this Lease and the other Relevant Documents, or disclose to
        any other person, the business, financial or other information contained
        in or  supplied  in  connection  with this  Lease or any other  Relevant
        Document  and the  transactions  contemplated  hereby or  thereby or any
        other agreement entered into after the date hereof by the Lessor and any
        Relevant  Party or in connection  with this Lease or any other  Relevant
        Document,  or  release  copies  or  drafts  of any such  document  which
        disclose or reveal the identity of the parties (or any of them) provided
        that (a) the Lessor will not unreasonably  withhold or delay its consent
        to any  proposed  press  release  and (b) the  parties  hereto  shall be
        entitled, without any such consent, to disclose the same:

33.10.1 in connection with any proceedings  arising out of or in connection with
        this Lease or any of the other Relevant Documents; or

33.10.2 if  required to do so by an order of a court of  competent  jurisdiction
        whether in  pursuance  of any  procedure  for  discovery of documents or
        otherwise; or

33.10.3 pursuant to any law or regulation having the force of law; or

33.10.4 to any fiscal, monetary, tax, governmental or other competent authority;
        or

33.10.5 to the  auditors,  legal,  insurance or other  professional  advisors or
        insurers or underwriters of any member of either the Lessee Group or the
        Lessor Group; or

33.10.6 if required to do so in order to obtain any permits, consents,  licences
        which any Relevant Party is required to obtain  pursuant to the Relevant
        Documents; or

33.10.7 if any of the same is or shall become publicly known otherwise than as a
        result of a breach by such party of this clause 33.10; or

33.10.8 in any manner contemplated by any of the Relevant Documents; or

33.10.9 in the case of the Lessee, to the Lessee Group and the Related Companies
        and in the case of the Lessor, to the Lessor Group provided that in each
        case the Lessee or the Lessor shall  procure that the party to whom such
        disclosure  is made shall  comply with the  requirements  of this clause
        33.10; or

33.10.10 to the First  Security  Agent or any other party to the First Bank Loan
        or to the transactions  arising in respect of the First Bank Loan or, as
        the case may be, to the Second  Security Agent or any other party to the
        Second Bank Loan or to the transactions arising in respect of the Second
        Bank Loan; or

33.10.11 in the case of the  Lessee,  to any  persons who may be involved in the
        refinancing arrangements contemplated by clause 32.

34      Governing law and jurisdiction

34.1    Law

        This Lease is  governed by and shall be  construed  in  accordance  with
        English law.

34.2    Submission to jurisdiction

        The Lessee agrees, for the benefit of the Lessor,  that any legal action
        or proceedings  in connection  with this Lease or any of the other Lease
        Documents  against the Lessee or any of its assets may be brought in the
        English courts.  The Lessee irrevocably and  unconditionally  submits to
        the  jurisdiction  of such courts and  irrevocably  and  unconditionally
        designates,  appoints  and  empowers  Golar  Management  (UK) Limited at
        present of 30 Marsh  Wall,  London E14 9TP to receive  for it and on its
        behalf  service of process  issued out of the English courts in any such
        legal action or proceedings.  The submission to such jurisdiction  shall
        not (and shall not be  construed so as to) limit the right of the Lessor
        to take  proceedings  against the Lessee in any other court of competent
        jurisdiction,  nor shall the  taking of  proceedings  in any one or more
        jurisdictions   preclude  the  taking  of   proceedings   in  any  other
        jurisdiction,  whether  concurrently  or not. The parties  further agree
        that only the courts of England  and not those of any other  State shall
        have  jurisdiction  to  determine  any claim  which the  Lessee may have
        against the Lessor  arising out of or in  connection  with this Lease or
        any of the other Lease Documents.

        IN WITNESS  whereof the parties  hereto have entered into this Lease the
        day and year first above written.

<PAGE>

                                   Schedule 1

                         List of documents and evidence

1       A copy certified by an officer of the Lessee or the Relevant Party to be
        a true,  complete and up-to-date  copy, of the Articles of Incorporation
        and By-Laws of the Lessee and the  constitutional  documents  of each of
        the other Relevant Parties.

2       A copy,  certified  by a Director or the  Secretary of the Lessee or the
        relevant  company  to be a true  copy,  and as being in full  force  and
        effect and not  amended or  rescinded,  of  resolutions  of the board of
        directors and, if required,  of meetings of the  shareholders of each of
        the Lessee and the other Relevant Parties:

        (a)     approving the transactions  contemplated by such of the Relevant
                Documents to which the relevant company is a party;

        (b)     authorising  a person or  persons  to  execute  on behalf of the
                relevant company such of the Relevant Documents to which it is a
                party and any notices or other  documents  to be given  pursuant
                thereto.

3       A copy certified by a Director or the Secretary of the relevant  company
        to be a true copy, and as being in full force and effect and not revoked
        or withdrawn,  of any power of attorney  issued by the relevant  company
        pursuant to the said resolutions.

4       A list,  certified as true, complete and up to date by a Director or the
        Secretary of each of the Relevant Parties of its directors and officers.

5       Evidence that all governmental and other licences, approvals,  consents,
        registrations and filings necessary for any matter or thing contemplated
        by  the   Relevant   Documents   and   for   the   legality,   validity,
        enforceability, admissibility in evidence and effectiveness thereof have
        been obtained or effected on an unconditional  basis or, if conditional,
        on a basis  approved  by the Lessor  (in its  absolute  discretion)  and
        remain in full force and effect  (or,  in the case of  effecting  of any
        registrations and filings, that arrangements  satisfactory to the Lessor
        have been made for the effecting of the same within any applicable  time
        limit).

6       A copy, certified as a true and complete copy and as being in full force
        and effect and not  amended or  rescinded,  of the  Sub-Lease  in a form
        previously approved by the Lessor.

7       A copy, certified as a true and complete copy and as being in full force
        and effect and not amended or rescinded,  of the Time Charter (including
        the Time  Charter  Novation  Agreement  and any  documents  executed  in
        connection  with the Time  Charter and which amend the terms of the Time
        Charter).

8       Copies of all classification certificates relating to the Ship including
        (without limitation) the Certificate of Financial Responsibility.

9       An original of the Letter of Credit duly executed by the LC Bank.

10      A copy of the  signature  book,  power of attorney or other  evidence of
        signing  authority  satisfactory  to the Lessor of the LC Bank  together
        with  evidence  reasonably  satisfactory  to the  Lessor  as to the  due
        approval and  authorisation  for execution,  delivery and performance by
        the LC Bank of, and the validity and enforceability against the LC Bank,
        of the Letter of Credit.

11      The Lessee Parent Guarantee duly executed by the Lessee Parent.

12      The Proceeds  Deed duly  executed by the parties  thereto other than the
        Lessor.

13      The Third  Priority Three Party Deed duly executed by the Lessee and the
        Sub-Lessee respectively.

14      A copy of the  signature  book,  power of attorney or other  evidence of
        signing authority satisfactory to the Lessor of the First Security Agent
        and  the  Second  Security  Agent  together  with  evidence   reasonably
        satisfactory to the Lessor as to the due approval and  authorisation for
        execution,  delivery and performance by the First Security Agent and the
        Second Security Agent of the Proceeds Deed.

15      The Manager's Undertaking duly executed by the Manager.

16      A letter  from each  Relevant  Party's  agent for  receipt of service of
        proceedings  referred  to in  any  of the  other  Transaction  Documents
        accepting its appointment.

17      Opinions of Holland & Knight LLP,  Conyers,  Dill & Pearman and Hunter &
        Hunter  special  legal  advisers to the Lessor on matters of the laws of
        the Republic of Liberia, Bermuda and the Cayman Islands respectively.

18      The Lessor is satisfied  that at the time of Delivery the Lessee will be
        in compliance with the provisions of clause 13.2.4.

19      Equivalent documents to those referred to in paragraphs 1, 2, 3, 4 and 5
        in relation to the Standby Purchaser.

20      Each of the  Standby  Documents  duly  executed  by each of the  parties
        thereto other than the Lessor.

21      A copy, certified as a true and complete copy and as being in full force
        and  effect  and not  amended  or  rescinded,  of the DOC  issued to the
        Operator and the SMC for the Ship.

22      Evidence that the Ship:

        (a)     maintains the  Classification  with the  Classification  Society
                free   of   all   requirements   and   recommendations   of  the
                Classification  Society  that  are  overdue  or  have  not  been
                complied with in accordance with their relevant terms; and

        (b)     is insured in accordance  with the  provisions of this Lease and
                all requirements of this Lease in respect of such insurance have
                been complied with.

23      The  Protocol of Delivery and  Acceptance  duly signed by the Lessor and
        the Lessee.

24      An insurance  report from Marsh Limited as to the  acceptability  of the
        insurances referred to in paragraph 1(b) above.

25      Evidence  that (a) the  Lessee is a wholly  owned  subsidiary  of Gotaas
        Larsen,  (b) Gotaas  Larsen is a wholly owned  subsidiary  of the Lessee
        Parent and (c) not less than twenty five percent (25%) of the issued and
        outstanding   share   capital  of  the  Lessee  Parent  is  directly  or
        indirectly, legally and beneficially owned by the Relevant Shareholder.

26      Any such further opinions as may be reasonably required by the Lessor.

<PAGE>

                                   Schedule 2

                         Form of Delivery Request Notice

To:        Golar Spirit (Bermuda) Limited
           c/o  Sovereign House
           298 Deansgate
           Manchester
           M3 4HH

                                                                      April 2003

                           Lease dated [o] April 2003
                         relating to m.v. "GOLAR SPIRIT"

We refer to the above  Lease and  hereby  give you  notice  that we wish to take
delivery of the Ship on [o].

We confirm that:

        (a)     no event or  circumstance  has occurred and is continuing  which
                constitutes a Relevant  Event, a Relevant Bank Event, a Relevant
                Bank Change of Law Event or a Relevant Bank Illegality Event;

        (b)     the representations and warranties  contained in clauses 2.1 and
                2.2 of the Lease (and so that  representation  and  warranty  in
                clause  2.1.7  shall for this  purpose  refer to the then latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause  11.1.4) and in clauses 4.1 and 4.2 of the Lessee  Parent
                Guarantee (and so that the representation and warranty in clause
                4.1.6  thereof  shall for this purpose  refer to the then latest
                audited  financial  statements  delivered  to the  Lessor  under
                clause 5.1.4 thereof) are true and correct at the date hereof as
                if made with respect to the facts and circumstances  existing at
                such date; and

        (c)     the  leasing  of the Ship in  accordance  with the Lease will be
                within our  corporate  powers,  has been validly  authorised  by
                appropriate corporate action and will not cause any limit on our
                borrowings (whether imposed by statute, regulation, agreement or
                otherwise) to be exceeded.

Words and  expressions  defined in the Lease shall have the same  meanings  when
used herein.

                              For and on behalf of
                         GOLAR GAS HOLDING COMPANY, INC.

<PAGE>

                                   Schedule 3

             Form of Protocol of Delivery and Acceptance under Lease

                               m.v. "GOLAR SPIRIT"

It is  hereby  certified  that,  pursuant  to a lease  dated o April  2003  (the
"Lease") and made between (1) Golar Spirit  (Bermuda)  Limited (whose name is to
be changed to Sovereign Spirit Limited) (the "Lessor") and (2) Golar Gas Holding
Company, Inc. (the "Lessee") in respect of the m.v. "GOLAR SPIRIT" (the "Ship"),
registered under British flag with and on the basis of the confirmation given by
the Lessee below the Ship was delivered by the Lessor to the Lessee and accepted
by the Lessee  from the  Lessor at [o] hours  [GMT] on [o] April 2003 at [insert
location] under, and in accordance with the terms and conditions of, the Lease.

The Lessee hereby confirms that as at the date hereof:

        (a)     no Relevant Event has occurred and is continuing; and

        (b)     the  representations  and  warranties set out in clauses 2.1 and
                2.2 of the Lease and  clauses  4.1 and 4.2 of the Lessee  Parent
                Guarantee  are true and correct as if each was made with respect
                to the facts and circumstances existing at such time.

Dated:  o April 2003

                              For and on behalf of
                    Golar Spirit (Bermuda) Limited as Lessor

                                               By:_________________________

                              For and on behalf of
                    Golar Gas Holding Company, Inc. as Lessee

                                               By:_________________________

<PAGE>

                                   SCHEDULE 4

                       FINANCIAL SCHEDULE - (Golar Spirit)

1       Definitions and Interpretations

1.1     Definitions

        In this  Schedule  words and  expressions  defined in clause 1.2 of this
        Lease  shall have the  meanings  ascribed to them in such clause and the
        following  expressions  shall have the  following  meanings when used in
        this Schedule and this Lease:

        "Accountancy  Rental Earnings" means  "accountancy  rental earnings" for
        the  purposes  of  Schedule 12 to the Finance Act 1997 in respect of the
        leasing of the Ship under this Lease;

        "Accountancy  Rental Excess" means  "accountancy  rental excess" for the
        purposes  of  Schedule  12 to the  Finance  Act 1997 in  respect  of the
        leasing of the Ship under this Lease;

        "Additional  Security  Table" means any Security  Table  prepared by the
        Lessor pursuant to paragraph 9.2;

        "Adjustment Date" means, for any Adjustment Period, the last day of such
        Adjustment Period;

        "Adjustment Period" means:

        (a)     the period commencing on the Delivery Date and ending on 14 July
                2003;

        (b)     thereafter and until the Tax Payment Date immediately  preceding
                the Primary Period End Date, each successive  period  commencing
                on the last day of the immediately  preceding  Adjustment Period
                and ending on the next succeeding Tax Payment Date;

        (c)     thereafter  the  period  commencing  on  the  Tax  Payment  Date
                immediately  preceding the Primary Period End Date and ending on
                the Primary Period End Date;

        (d)     thereafter the period  commencing on the Primary Period End Date
                and ending on the immediately succeeding Tax Payment Date; and

        (e)     thereafter each successive  period commencing on the last day of
                the immediately  preceding  Adjustment  Period and ending on the
                next succeeding Tax Payment Date;

        PROVIDED THAT:

        (i)     if any Adjustment  Period would  otherwise end on a day which is
                not a Banking  Day then the last day of that  Adjustment  Period
                shall (taking into account any substitution  referred to in (ii)
                and  (iii)  below) be the  immediately  succeeding  Banking  Day
                unless such  Banking Day falls in the next  calendar  month,  in
                which case the last day of that Adjustment  Period should be the
                immediately preceding Banking Day;

        (ii)    if the  Termination  Payment  Date  falls  otherwise  than on an
                Adjustment  Date the Adjustment  Period which would otherwise be
                current  on that date  shall be  treated  as coming to an end on
                that date and an Adjustment Period shall be treated as beginning
                on that date and ending on the next succeeding Tax Payment Date;

        (iii)   the  Adjustment  Period which would  otherwise be current on the
                Final  Date in  relation  to any Cash Flow  shall be  treated as
                having come to an end on that date and the period ending on such
                date  shall be the last  Adjustment  Period  so far as that Cash
                Flow is concerned;

        (iv)    if the  Lessor  pays  or  receives  any  amount  which  is to be
                reflected  in a Cash  Flow on a day  which  does not fall on the
                first day of an  Adjustment  Period  (the "Basis  Period"),  the
                period (the  "Remaining  Period") from and including the date on
                which  the  Lessor  pays or  receives  any  such  amount  to and
                including  the last day of the then  current  Basis Period shall
                constitute  an  Adjustment  Period for that  element only of the
                Notional  Capital  Outstanding and the rate of interest  applied
                during the Basis  Period  shall be the rate  applicable  to such
                part  of  the  Notional  Capital  Outstanding  as is  funded  or
                invested for the Basis  Period and the rate of interest  applied
                during the Remaining Period shall be the rate applicable to such
                part  of  the  Notional  Capital  Outstanding  as is  funded  or
                invested for the Remaining Period;

        (v)     interest  calculated by reference to an Adjustment  Period shall
                be calculated from and including the first day of such period to
                but excluding the last day thereof;

        "After-Tax  Interest Rate" means, at any relevant time, a rate per annum
        calculated in accordance with the following formula:

                         ATR = ((PTR x [1-TR]) + PR)

        Where:

        ATR     is the After-Tax Interest Rate (expressed as a decimal);

        PTR     is the Assumed Rate  (expressed  as a decimal) as at the Primary
                Period End Date;

        TR      is the Corporation Tax Applicable Rate for the Accounting Period
                of the  Lessor  in  which  the  above  Applicable  Rate is to be
                applied (expressed as a decimal); and

        PR      is the Percentage Return (expressed as a decimal);

        "Applicable  Cash Flow"  means the Initial  Cash Flow,  or any Cash Flow
        prepared by the Lessor pursuant to paragraph 4;

        "Applicable  Rate" means, in relation to any Adjustment  Period or other
        relevant period:

        (a)     where  applied  to  a  negative   balance  of  Notional  Capital
                Outstanding,  the  aggregate of LIBOR and the Reserve Asset Rate
                on the first day of that period, and

        (b)     where  applied  to  a  positive   balance  of  Notional  Capital
                Outstanding, LIBID on the first day of that period,

        "Applicable  Security  Table"  means the Initial  Security  Table or any
        Security Table prepared by the Lessor pursuant to paragraph 9.3;

        "Applicable  Tax Report"  means the Initial Tax Report or any Tax Report
        prepared by the Lessor pursuant to paragraph 4.1;

        "Arrangement  Fee"  means the fee of an amount  equal to zero point five
        per cent (0.5%) of the Ship Cost  payable by the Lessor to the  Arranger
        in  accordance  with the letter of  today's  date from the Lessor to the
        Arranger;

        "Assumed Rate" means, subject to paragraph 6.1.4(d),  in relation to any
        Adjustment Period or other relevant period:

        (a)     in  respect of  Notional  Capital  Outstanding  where a negative
                amount the rate of five point  three five per cent  (5.35%)  per
                annum,  which Assumed Rate shall include an amount in respect of
                the Reserve Asset Rate equal to zero per cent (0%); or

        (b)     in  respect of  Notional  Capital  Outstanding  where a positive
                amount the rate of five point two two five per cent (5.225%) per
                annum;

        "Assumptions"  means  the  Variable  Assumptions  and  the  Non-Variable
        Assumptions  set out in Appendix 1 to this  Schedule,  all of which were
        taken into account in preparing the Initial Cash Flow;

        "Base  Currency"  has  the  meaning  attributed  to  that  term  in  the
        definition of "Spot Exchange Rate";

        "Broken Funding Costs" means an amount equal to the loss (if any) to the
        Lessor arising by virtue of any payment being made or received hereunder
        otherwise  than  on the  last  day of an  Adjustment  Period  and in the
        amounts specified herein, the amount of such loss being deemed to be the
        amount  (if any) by which  (i) the cost to the  Lessor of  funding  that
        payment in the London  Inter-Bank  Market at LIBID  determined as at the
        date on which such payment is made or received for the unexpired portion
        of that  Adjustment  Period  exceeds  (ii) the amount of interest  which
        would have  accrued on the amount of such payment  during the  unexpired
        portion of that  Adjustment  Period at the Applicable Rate as determined
        at the commencement of such Adjustment Period;

        "Broken Funding Gains" means an amount equal to the gain (if any) to the
        Lessor arising by virtue of any payment being made or received hereunder
        otherwise  than  on the  last  day of an  Adjustment  Period  and in the
        amounts specified herein, the amount of such gain being deemed to be the
        amount (if any) by which (i) the  amount of  interest  which  would have
        accrued on the amount of such payment  during the  unexpired  portion of
        that  Adjustment  Period at the  Applicable  Rate as  determined  at the
        commencement  of such  Adjustment  Period  exceeds  (ii) the cost to the
        Lessor of funding that payment in the London  Inter-Bank Market at LIBID
        determined  as at the date on which such payment is made or received for
        the unexpired portion of that Adjustment Period;

        "Capital  Allowances"  means any  allowance  made in  respect of capital
        expenditure  on  machinery or plant under the CAA and/or under any other
        enactment  for the time  being  in force  providing  for the  making  of
        similar  allowances  and/or giving similar relief whether  introduced in
        addition to or as a replacement for the same;

        "Cash Flow" means any cash flow  prepared  for the  purposes  hereof and
        required to be provided by the Lessor to the Lessee hereunder;

        "Consolidated  Group Accounts" means any consolidated group accounts for
        the  purposes  of  Schedule  12 to the  Finance Act 1997 of any group of
        companies of which the Lessor is a member;

        "Corporation  Tax Applicable  Rate" means, in relation to any Accounting
        Period,  the  effective  rate of  Corporation  Tax  which is or would be
        applicable (if there were such profits and ignoring for this purpose any
        special rate  applicable to small  companies and to any special class of
        companies  unless the  company  concerned  is itself  such a company) to
        taxable profits arising in such Accounting Period.  Such rate is to be a
        weighted average  calculated on a daily basis where different  statutory
        rates  apply  for  financial  years  which  are  not  the  same  as such
        Accounting Period. If, at the date at which any calculation hereunder is
        to be made, the  Corporation  Tax  Applicable  Rate is not known because
        Corporation Tax rates are fixed retrospectively,  such calculation shall
        (without  prejudice to any  provision of this Lease  providing  for such
        calculation to be adjusted once the rate of Corporation Tax is known) be
        made on the basis that the rate of  Corporation  Tax last fixed will not
        change  unless  there has been an official  announcement  of a change in
        such rate in which case it shall be made on the basis that the rate will
        change in accordance with such announcement;

        "Cumulative Accountancy Rental Excess" means the "cumulative accountancy
        rental  excess" for the  purposes of Schedule 12 to the Finance Act 1997
        in respect of the leasing of the Ship under this Lease;

        "Cumulative  Normal Rental Excess" means the  "cumulative  normal rental
        excess"  for the  purposes  of  Schedule  12 to the  Finance Act 1997 in
        respect of the leasing of the Ship under this Lease;

        "Determination" means any determination,  calculation,  recalculation or
        quantification  made in accordance  with  paragraph 11 of this Financial
        Schedule and  "Determined",  "Determination"  and  "Determine"  shall be
        construed accordingly;

        "Disposal  Value" means  disposal  value for the purposes of sections 61
        and 62 of the CAA;

        "Economically  Burdensome"  means any change in any Variable  Assumption
        which results or is likely to result in the net present value benefit of
        the Lease to the  Lessee  over the  Primary  Period  anticipated  at the
        Delivery  Date and as notified by the Lessee in writing to the Lessor on
        or before the Delivery Date decreasing by more than thirty five per cent
        (35%);

        "Effective  Date" means the date falling ten (10) Banking Days after the
        date on which a new  Applicable  Cash Flow is prepared and  delivered to
        the Lessee pursuant to paragraph 4.2;

        "Event"  means,  where  paragraph 4.9 applies,  any change in any of the
        Variable Assumptions or the Termination Assumptions;

        "Extra Security  Amounts" means in respect of any Security  Period,  the
        amount,  if any, set out in relation to that Security Period in Appendix
        6;

        "Final Date" means, in relation to any Cash Flow:

        (a)     except where paragraph 6.4 applies, the first anniversary of the
                date on which the last  payment of  Corporation  Tax is shown by
                such Cash Flow to be paid or  relieved  by the Lessor in respect
                of:

                (i)     the Final  Rental in the case of any Cash Flow  prepared
                        for the purpose of determining the Primary Rentals; or

                (ii)    the  Termination  Sum or  the  amount  of  any  revision
                        thereto  (as  appropriate)  in the case of any Cash Flow
                        prepared for the purpose of determining the same; and

        (b)     where  paragraph  6.4.2  applies at any time  before the Primary
                Period  End  Date,  the  date  on  which  the  last  payment  of
                Corporation  Tax is shown by the  Applicable  Cash Flow prepared
                pursuant thereto to be paid or relieved by the Lessor in respect
                of the  Accounting  Period of the  Lessor in which the  fortieth
                (40th)  anniversary of the Delivery Date falls;  and in relation
                to the Applicable  Cash Flow prepared under  paragraph 6.4.2 for
                the Primary Period End Date, the Accounting Period of the Lessor
                in which the Primary Period End Date falls; and

        (c)     where paragraph 6.4.2 applies on the expiry by effluxion of time
                of the Lease Period on the Primary  Period End Date, the date on
                which  the  last  payment  of  Corporation  Tax is  shown by the
                Applicable  Cash Flow  prepared  pursuant  thereto to be paid or
                relieved  by the Lessor in respect of the  Accounting  Period of
                the Lessor in which the first  anniversary of the Primary Period
                End Date falls;

        "Final Rental" means the Rental referred to in paragraph 2.1.5;

        "First Accounting  Period" has the meaning given in Variable  Assumption
        1.2;

        "First UK  Meeting  Date" has the  meaning  given to it in  Non-Variable
        Assumption 2.16;

        "Further  Termination  Cash  Flow"  means  any  Cash  Flow  produced  in
        accordance with paragraph 7;

        "Generally Accepted  Accounting  Principles" means (i) insofar as any of
        the same are  applicable  to the  Lessor or any  Holding  Company of the
        Lessor, the accounting requirements of the Companies Acts, statements of
        standard  accounting  practice,  financial  reporting  standards and any
        other accounting standards having the like effect of financial reporting
        standards  issued by the Accounting  Standards Board Limited  (including
        abstracts  issued by the  Urgent  Issues  Task  Force of the  Accounting
        Standards  Board Limited) or any other body from time to time prescribed
        by  regulations  pursuant to section 256 of the Companies Act 1985,  and
        (ii) any other  accounting  principle  observance of which by the Lessor
        (or any  Holding  Company of the  Lessor) is required in order to ensure
        that its  accounts  and any  Consolidated  Group  Accounts  comply  with
        applicable  law  and  with  the  regulations  of  any   governmental  or
        regulatory body compliance with which is customary by leasing  companies
        generally (or, in relation to any Holding  Company of the Lessor,  banks
        generally)  or which  the  Auditors  advise  the  Lessor in  writing  is
        necessary to ensure that the Auditors can give an unqualified  report on
        the Lessor's or, as the case may be, any Consolidated Group Accounts;

        "Group  Relief"  shall have the meaning  attributed  thereto by Variable
        Assumption 1.11.2

        "Group Relief  Payment" means any payment taken to have been received by
        the Lessor in accordance with Non-Variable Assumption 2.6;

        "Group Relief  Receipt" means, in respect of each Past Tax Payment Date,
        the positive  amount (if any) shown  opposite that date in the column of
        the Applicable Cash Flow headed "Tax";

        "Group Relief  Recipient"  means the Lessor Agent or any Holding Company
        or Subsidiary of the Lessor Agent being a company which  presently draws
        accounts up to 31st December in each year and which pays Corporation Tax
        on  profits  arising in any  Accounting  Period in  accordance  with the
        Corporation Tax (Instalment Payments) Regulations 1998;

        "Initial Cash Flow" means the Cash Flow  printout  annexed as Appendix 2
        to this Schedule;

        "Initial  Insurance  Premium" means the insurance premium payable by the
        Lessor in respect of the first year of operation of the Ship and as more
        fully described in Variable Assumption 1.38;

        "Initial Security Table" means the Security Table prepared in accordance
        with paragraph 9.1 and annexed as Appendix 5;

        "Initial Tax Report" means the Tax Report  annexed as Appendix 3 to this
        Schedule;

        "Inland Revenue Terms" means the basis on which,  from time to time, the
        Inland  Revenue  charge  interest on underpaid  Corporation  Tax and pay
        interest on overpaid  Corporation  Tax and shall include any penalty due
        as a result of an underpayment of Corporation Tax;

        "Interest  Adjustments"  means the amounts calculated in accordance with
        paragraph 5.1.1 and payable in accordance with paragraph 5.1.2;

        "Irrecoverable VAT" means any amounts paid or payable by or on behalf of
        the Lessor in respect of Value Added Tax under or as contemplated by any
        of the  Transaction  Documents  to the  extent  that  the  Lessor  shall
        determine  that the Lessor,  or if the Lessor is a member of a group for
        Value Added Tax purposes, the representative member, has not or will not
        receive a credit (whether by way of credit or repayment) for that amount
        as "input  tax" (as that  expression  is defined in  sub-section  (1) of
        Section  24 of VATA)  under  Sections  25 and 26 of VATA (nor  receive a
        credit for it under any similar or equivalent legislation);

        "Lease Fee" means the fee in an amount of  (pound)131,576.06  payable on
        the Delivery Date by the Lessor to the Lessor Agent;

        "Lessor's  Professional  Costs"  means the Legal Fee  together  with the
        amount of fees and  disbursements  paid by the  Lessor  to the  Lessor's
        insurance advisers,  accountants and any other professional  adviser the
        Lessor shall  consult in relation to the  preparation,  negotiation  and
        completion of the Transaction Documents;

        "LIBID"  means,  in  relation  to any  period  for which  LIBID is to be
        determined, LIBOR for that period less one-eighth (1/8) of one per cent;

        "LIBOR"  means  in  relation  to any  period  for  which  LIBOR is to be
        determined:

        (a)     if the  relevant  period is equal to or greater  than one month,
                the  rate  for  Sterling  deposits  for  the  number  of  months
                comprised  in the  relevant  period  which  rates  appear on the
                display  designated  as  "Reuters  Page  LIBOR 01" on the Reuter
                Monitor  Money Rates  Service as at or about 11.00 a.m.  (London
                time) on the date on which the relevant period commences or such
                other  page  as may  replace  "Reuters  Page  LIBOR  01" on that
                service  or,  if  there  is no  such  replacement  page  on that
                service,  the page on any other service  displaying  the rate so
                designated  Provided  that if the  period is more than one month
                but not a  whole  number  of  months,  "LIBOR"  shall  mean  the
                interpolated  rate  calculated  by  reference  to LIBOR  for the
                number of months rounded down or up to the nearest whole number;
                or

        (b)     if the  relevant  period  is equal to or more  than one week and
                there  is no  such  page  on  such  service  as  referred  to in
                sub-paragraph  (a) above, or if the relevant period is less than
                one week, the rate per annum reasonably determined by the Lessor
                Agent to be the average (rounded  upwards,  if necessary to five
                decimal  places) of the rates per annum offered by leading banks
                in the London  Interbank  Market to other  leading  banks in the
                London  Interbank  Market for  deposits in Sterling for a period
                equal to, or as near as  possible  equal to,  that  period at or
                about 11.00 a.m. (London time),

        and for any  period in  respect of which  LIBOR is to be  determined  in
        relation  to  a  currency  other  than  Sterling,  the  rate  per  annum
        reasonably  determined  by the Lessor  Agent to be the average  (rounded
        upwards,  if necessary,  to five decimal places) of the rates offered by
        leading  banks in the London  Interbank  Market to leading  banks in the
        London Interbank Market for deposits in that currency for a period equal
        to, or as near as possibly  equal to, that period at or about 11.00 a.m.
        (London time) two Banking Days prior to the  commencement of that period
        or, in any such case, such other rate as may be agreed in writing by the
        Lessor and the Lessee;

        "Other  Currency"  has  the  meaning  attributed  to  that  term  in the
        definition of "Spot Exchange Rate";

        "Non-Variable  Assumptions"  means  the  assumptions  listed  as such in
        paragraph 2 of Appendix 1;

        "Normal Rent" means the "normal rent" for the purposes of Schedule 12 to
        the  Finance  Act 1997 in respect of the  leasing of the Ship under this
        Lease;

        "Normal Rental Excess" means the "normal rental excess" for the purposes
        of  Schedule 12 to the Finance Act 1997 in respect of the leasing of the
        Ship under this Lease;

        "Notional Capital  Outstanding"  means for any day, the sum (as the same
        may be adjusted  pursuant to the provisions of this  Schedule)  shown in
        the column of any Applicable Cash Flow headed "NCI";

        "Past Tax Payment  Date" means any Tax Payment Date  falling  before the
        Effective Date;

        "Percentage  Return"  means,  subject to  paragraph  4.8,  the  Lessor's
        after-tax  nominal  annual  percentage  rate of return of zero point two
        eight four four percent (0.2844%);

        "Prepaid  Rental"  means  the  amount   determined  in  accordance  with
        paragraph 8.3.5;

        "Prepayment"  means any election by the Lessee to make a  prepayment  of
        Primary Rental pursuant to clause 25.2.1(c);

        "Prepayment Amount" has the meaning given in paragraph 8.2;

        "Prepayment  Cash  Flow"  means the Cash  Flow  produced  by the  Lessor
        pursuant to paragraph 8.3;

        "Prepayment  Date" means if the Lessee elects to make a Prepayment,  the
        date falling not less than thirty (30) days after  receipt of the notice
        from the Lessor  referred to in clause  25.2.1,  unless such  Prepayment
        Date would otherwise fall on a day which is not a Banking Day, then such
        Prepayment Date shall be the immediately preceding Banking Day;

        "Primary  Period  End  Date"  means  the  twentieth  anniversary  of the
        Delivery Date;

        "Primary  Rental"  means the  Rental  payable  pursuant  to clause 7 and
        paragraph  2.1 in respect of the  leasing of the Ship during the Primary
        Period;

        "Primary  Rental Date" means 14 July 2003, each Tax Payment Date falling
        thereafter  until  (and  including)  the Tax  Payment  Date  immediately
        preceding the Primary Period End Date, and the Primary Period End Date;

        "Purchaser" means Sovereign Finance plc;

        "Relevant  Amount" means,  in relation to any Past Tax Payment Date, the
        sum of:

        (a)     the Tax Payment or Group Relief  Receipt (as the case may be) in
                respect of that Past Tax Payment Date; and

        (b)     the Revised Tax Payment or Revised Group Relief  Receipt (as the
                case may be) in respect of that Past Tax Payment Date,

        and provided  that for the  purposes  only of  calculating  any Relevant
        Amount,  the amount of any  Revised  Tax  Payment  and the amount of any
        Group Relief  Receipt shall be expressed as a negative  amount,  and the
        amount of any Tax  Payment and the amount of any  Revised  Group  Relief
        Receipt shall be expressed as a positive amount;

        "Rental"  means each amount  calculated  and payable in accordance  with
        this Schedule;

        "Rental Date" means each Primary Rental Date and each  Secondary  Rental
        Date;

        "Reserve  Asset  Rate"  means the rate  determined  in  accordance  with
        Appendix 4 to this Schedule;

        "Revised Group Relief Receipt" means, in respect of any Past Tax Payment
        Date, the amount of the Group Relief Payment which the Lessor would have
        been  assumed (on the basis of the  Variable  Assumptions  as revised to
        take the Event into  account) to have  received on that Past Tax Payment
        Date had the Event occurred before that Past Tax Payment Date;

        "Revised Tax Payment"  means,  in respect of any Past Tax Payment  Date,
        the amount of  Corporation  Tax which the Lessor would have been assumed
        (on the basis of the Variable  Assumptions  as revised to take the Event
        into  account) to have paid on that Past Tax Payment  Date had the Event
        occurred before that Past Tax Payment Date;

        "Risk Asset Weighting"  means, in relation to any form of security,  the
        counterparty  and/or  security  weightings  (expressed  as  percentages)
        attributable  from  time to time  to so  much  of the  transactions  and
        matters contemplated by the Transaction  Documents as is secured by such
        security  for the purpose of  determining  the capital  which the Lessor
        Agent or any other relevant  member of the Lessor's Group is required to
        maintain by the Financial  Services  Authority,  the Bank of England (or
        any other institution  requiring the Bank to maintain a particular level
        of capital,  where the Lessor Agent or any other relevant  member of the
        Lessor's   Group  is  obliged  or   accustomed   to  comply   with  such
        requirement);

        "RPI"  means  the  General  Index of Retail  Prices,  being  that  index
        calculated  for the time  being by the  Central  Statistical  Office  at
        intervals of approximately one month on one date in each and every month
        of each and every year and representing the average change from month to
        month  in  prices  of goods  and  services  bought  by the  majority  of
        consumers in Great  Britain,  or such similar  index as may from time to
        time replace the General Index of Retail Prices and the General Index of
        Retail Prices for any date shall be the most recently  published General
        Index of Retail Prices (or other similar index);

        "Sale Assumptions" has the meaning given in paragraph 6.1.5;

        "Secondary Rental" has the meaning given in paragraph 2.2;

        "Secondary  Rental  Date"  means any date on which  Secondary  Rental is
        payable;

        "Security Period" means:

        (a)     the period commencing on the Delivery Date and ending on 14 July
                2003;

        (b)     thereafter and until the Tax Payment Date immediately  preceding
                the Primary Period End Date, each successive  period  commencing
                on  the  day   immediately   succeeding  the  last  day  of  the
                immediately  preceding  Security  Period  and ending on the next
                succeeding Tax Payment Date;

        (c)     thereafter,   the  period  commencing  on  the  day  immediately
                succeeding  the Tax Payment Date  referred to in (b) above,  and
                ending on the Primary Period End Date;

        (d)     thereafter, in the event that any Potential Liabilities have not
                been  agreed  in  accordance   with  clause  25.5,   the  period
                commencing  on the  Primary  Period  End Date and  ending on the
                immediately succeeding Tax Payment Date;

        (e)     thereafter,   each  successive  period  commencing  on  the  day
                immediately succeeding the last day of the immediately preceding
                Security  Period and ending on the next  succeeding  Tax Payment
                Date  until  such time as the  Potential  Liabilities  have been
                agreed in accordance with clause 25.5,

        PROVIDED THAT if any Security  Period would otherwise end on a day which
        is not a Banking Day, then the last day of that Security Period shall be
        the immediately succeeding Banking Day unless that day falls in the next
        calendar  month,  in which  case it shall be the  immediately  preceding
        Banking Day;

        "Security  Table" means any table prepared in accordance  with paragraph
        9;

        "Security  Termination  Sum"  means,  in  respect  of  each  day in each
        Security  Period,  each Termination Sum which would appear in the column
        of  a  Termination  Cash  Flow  headed   "Termination   Sum"  were  such
        Termination  Cash Flow to be prepared in accordance  with  paragraph 6.1
        and assuming a termination of the Lease in accordance with clause 3.3 on
        each and every day of such Security Period;

        "Share  Acquisition   Documents"  means  the  share  sale  and  purchase
        agreement  entered into on 7 April 2003 between the Lessee as Vendor and
        the Lessor Agent as Purchaser and any and all other  documents  pursuant
        to which the Lessor Agent acquired the share capital of the Lessor;

        "Ship Cost" means the lowest of:

        (a)     the Sterling Equivalent of the expenditure  incurred on the Ship
                by Golar Gas Cryogenics Inc.;

        (b)     the Sterling  Equivalent of the price paid by the Lessor for the
                Ship to Golar Gas Cryogenics Inc.; or

        (c)     the fair  market  value of the Vessel as at the First UK Meeting
                Date,  as shown in the  independent  valuation  provided  by the
                Lessee;

        "Spot  Exchange  Rate"  for  any  day and  for  the  purchase  with,  or
        conversion from any currency (the "Base Currency") into another currency
        (the "Other  Currency")  the rate  determined  by the Lessor as the rate
        quoted by the Lessor  Agent in  accordance  with its usual  practice  at
        which the Lessor Agent is able to purchase the Other  Currency  with the
        Base  Currency in London at or about  10.00am Two (2) Banking Days prior
        to such day for delivery on such day and the Lessor's  determination  of
        any such rate  shall be  conclusive  and  binding  on the Lessee for all
        purposes;

        "Sterling  Equivalent"  on any  day for any  amount  denominated  (a) in
        Sterling,  means  that  amount or (b) in a currency  (as Base  Currency)
        other  than  Sterling  (as  Other  Currency),  means the  equivalent  in
        Sterling of that amount,  calculated  by  converting  that Base Currency
        amount into sterling at the Spot Exchange Rate for that day;

        "Tax Authority"  means the Inland Revenue,  H.M. Customs & Excise or any
        other  revenue,  customs,  fiscal,   governmental,   statutory,   state,
        provincial,  local governmental or municipal authority,  body or person,
        whether of the United Kingdom or elsewhere;

        "Tax Loss" means,  for any Accounting  Period of the Lessor,  the result
        (when the same is a negative  figure) of the aggregate of (i) the amount
        relating to Rentals which (in accordance with Variable Assumption 1.10.2
        as the same may be varied  from time to time) the Lessor is  required to
        bring  into  account  for tax  purposes  in such  period;  and  (ii) any
        interest  notionally  receivable by the Lessor on daily balances  during
        the relevant  period in respect of the Lessor's  notional  deposit of an
        amount  equal to the surplus  funds  (represented  by  Notional  Capital
        Outstanding  when that is a positive  figure)  assumed to be invested by
        the  Lessor in  accordance  with  Non-Variable  Assumption  2.1 (if such
        receipts were actual  rather than  notional) to the extent that the same
        would be taxable in such period (the Lessor  preparing its  computations
        in accordance with Variable Assumption 1.10.2, as the same may be varied
        from time to time) less the aggregate of (i) Capital  Allowances assumed
        to be  available  to the Lessor  for that  period in respect of the Ship
        Cost;  (ii) any  interest  notionally  payable  by the  Lessor  on daily
        balances during the relevant period in respect of the Lessor's  notional
        borrowing of amounts equal to negative  balances of the Notional Capital
        Outstanding  from time to time  assumed to be  borrowed by the Lessor in
        accordance with  Non-Variable  Assumption 2.1 to the extent that if such
        interest  payments  were  actual  rather  than  notional  the same would
        qualify  for tax  relief  in  such  period  (the  Lessor  preparing  its
        computations in accordance with Variable  Assumptions  1.10.2 and 1.8 as
        the same may be varied from time to time);  and (iii) the Lease Fee, the
        Arrangement  Fee,  the  Lessor's  Professional  Costs  and  the  Initial
        Insurance  Premium  to  the  extent  that  the  same  are  allowable  in
        accordance  with Variable  Assumptions  1.19, 1.20 and 1.38 (as the same
        may be varied from time to time);

        "Tax  Payment"  means,  in respect of each Past Tax  Payment  Date,  the
        negative  amount (if any) shown  opposite that date in the column of the
        Applicable Cash Flow headed "Tax";

        "Tax  Payment  Date"  means each of the dates  referred  to in  Variable
        Assumption 1.12;

        "Tax Report" means any report  prepared by the Lessor in accordance with
        paragraph 3.2 or 4.1 hereof;

        "Tax  System"  means the law and practice  (of general  application)  in
        relation to Corporation Tax;

        "Tax Written Down Value" means,  in relation to an Accounting  Period of
        the Lessor, the aggregate Ship Cost treated as incurred by the Lessor in
        that  and  all  previous   Accounting  Periods  qualifying  for  Capital
        Allowances (the Lessor preparing its computations in accordance with the
        Variable Assumptions,  as the same may be varied from time to time) less
        the aggregate of all Capital Allowances made to the Lessor in respect of
        the Ship Cost in all previous  Accounting  Periods of the Lessor and any
        Disposal Value which the Lessor is required to bring into account in any
        previous Accounting Period of the Lessor;

        "Termination Assumptions" means the assumptions to be taken into account
        in preparing the Termination  Cash Flow or any Further  Termination Cash
        Flow and which are set out in  paragraph  6.1.4 (as varied  from time to
        time in accordance herewith);

        "Termination  Cash Flow" means the Cash Flow produced in accordance with
        paragraph 6.1;

        "Termination Payment Date" means:

        (a)     where the leasing of the Ship to the Lessee terminates following
                the occurrence of any  Termination  Event pursuant to clause 27,
                the date specified in the notice referred to therein;

        (b)     in the case of a  voluntary  termination  of the  leasing of the
                Ship  pursuant  to clause  3.3,  the date upon which the Ship is
                delivered to and accepted by a purchaser following a sale of the
                Ship pursuant to clause 3.4;

        (c)     where the  leasing of the Ship  terminates  by reason of a Total
                Loss pursuant to clause 22, the Total Loss Payment Date;

        "Termination Sum" has the meaning given in paragraph 6.1.4(e);

        "Total Security Amount" means, in respect of each Security  Period,  the
        highest Security Termination Sum for that Security Period; and

        "Variable Assumptions" means the assumptions listed as such in paragraph
        1 of Appendix 1 (as varied from time to time in accordance herewith).

<PAGE>

2       Rentals

2.1     Primary Rental

2.1.1   Subject  to the terms of this  Lease the  Lessee  shall pay the  Primary
        Rentals to the Lessor on the Primary Rental Dates.

2.1.2   The  Primary  Rental  payable on each  Primary  Rental Date shall be the
        amount shown in the Applicable Cash Flow in the column headed  "Rentals"
        opposite that Primary Rental Date.

2.1.3   The Primary  Rental payable under this paragraph 2.1 shall be payable in
        accordance  with clause 7, the first Primary Rental being paid in arrear
        in respect of the period from the  Delivery  Date until 14 July 2003 and
        each subsequent  Primary Rental being payable on each subsequent Primary
        Rental  Date in arrear in  respect of the  period  from the  immediately
        preceding  Primary  Rental Date until the  Primary  Rental Date on which
        such  Primary  Rental is due until the Primary  Rental Date  immediately
        preceding the Primary Period End Date, the Primary Rental payable on the
        Primary  Period  End  Date  being  in  respect  of the  period  from the
        immediately  preceding  Primary Rental Date until the Primary Period End
        Date.

2.1.4   Each instalment of Primary Rental payable under paragraph 2.1.3 shall be
        subject to adjustment in the manner specified in this Schedule.

2.1.5   The Final  Rental shall  (subject to  paragraph  4.6 and except where no
        other  Primary  Rental is capable of  variation)  be an amount  equal to
        forty per cent (40%) of the Ship Cost and shall be payable in respect of
        and shall be  payable  on the  Primary  Period  End Date as shown in the
        Initial  Cash Flow in the column  headed  "Final  Rental"  opposite  the
        Primary Period End Date.

2.2     Secondary Rental

        In respect  of the  Secondary  Period the Lessee  shall on the first day
        following the Primary  Period End Date and on each  anniversary  thereof
        during  the  Secondary  Period  pay to the  Lessor a Rental  ("Secondary
        Rental")  annually in advance equal to zero point one per cent (0.1%) of
        the Ship Cost.

2.3     Early Termination and Prepayment

        If a Primary Rental falls due on the date for which the  Termination Sum
        is  payable,  the Primary  Rental  falling due on that date shall not be
        payable.  If a  Primary  Rental  falls  due on the  date for  which  any
        Prepayment  Amount is payable,  the Primary  Rental  falling due on that
        date shall not be payable (but without prejudice to paragraph 8).

<PAGE>

3       Initial Cash Flow and Initial Tax Report

3.1     Initial Cash Flow

        The Lessor has prepared the Initial Cash Flow:

3.1.1   on the basis of the Assumptions;

3.1.2   in accordance with the Initial Tax Report;

3.1.3   to ensure that Primary  Rental payable in paragraph  2.1.3  increases by
        five per cent (5%) per annum and accordingly:

        (a)     that the Primary Rental payable under paragraph 2.1.3 on 14 July
                2004 is 105% of the immediately preceding Primary Rental; and

        (b)     that the Primary Rental payable under paragraph 2.1.3 on each 14
                July  falling  after 14 July 2004 and before the Primary  Period
                End Date is 105% of the Primary Rental  payable under  paragraph
                2.1.3 on the immediately preceding 14 July;

3.1.4   to procure  that,  subject to the  payment by the Lessee of the  Primary
        Rentals on each Primary Rental Date, the Notional Capital Outstanding on
        the Final Date will be zero or as near thereto as may be;

3.2     Initial Tax Report

        The  Initial  Tax Report has been  prepared,  and any revised Tax Report
        prepared  pursuant to  paragraph  4.1 shall be prepared to show,  on the
        basis of  Variable  Assumptions  1.7 and 1.11 (as the same may be varied
        from time to time),  how the taxable  income  arising to the Lessor from
        the  transactions  contemplated  by the  Transaction  Documents  will be
        calculated in the Accounting Period of the Lessor current at the date of
        preparation  thereof  and in all  subsequent  Accounting  Periods of the
        Lessor up to the Accounting Period of the Lessor in which the Final Date
        applied in the preparation of the Applicable Cash Flow falls.

<PAGE>

4       New Applicable Cash Flows

4.1     Applicable Tax Reports

        Where an Applicable  Cash Flow is to be prepared in accordance with this
        paragraph  4 the  Lessor  shall  for  the  purposes  of  preparing  such
        Applicable Cash Flow also prepare a new Tax Report (the  "Applicable Tax
        Report")  which shall be delivered to the Lessee at the same time as the
        Applicable Cash Flow.

4.2     New Applicable Cash Flow - Changes in Variable Assumption

        As soon as reasonably  practicable  after any day falling after the date
        hereof on which the  Lessor  determines  that there has been a change in
        any of the Variable Assumptions (determined in accordance with paragraph
        4.5) on the basis of which any  Applicable  Cash Flow has been  prepared
        and the occurrence of such an event would, if a new Applicable Cash Flow
        were then prepared, produce different figures in respect of the Notional
        Capital  Outstanding and/or Rentals payable hereunder,  the Lessor shall
        promptly  prepare and deliver to the Lessee a new  Applicable  Cash Flow
        prepared in accordance with paragraph 4.3 which shall take effect on the
        Effective Date.

4.3     Preparation of Applicable Cash Flows

        Where any new  Applicable  Cash Flow is prepared  pursuant to  paragraph
        4.2, such Cash Flow shall:

4.3.1   subject to  sub-paragraphs  4.3.2 to 4.3.7 (inclusive) below be prepared
        on the same basis as the immediately  preceding Applicable Cash Flow was
        prepared;

4.3.2   take into account any changes in any of the Variable  Assumptions  which
        have  occurred  (and  are  known  to the  Lessor)  between  the  date of
        preparation of the  immediately  preceding  Applicable Cash Flow and the
        date of  preparation  of such new  Applicable  Cash  Flow and any  other
        changes  in the  Variable  Assumptions  not taken  into  account  in the
        preparation of any preceding Applicable Cash Flow;

4.3.3   take  into  account  the  Rentals  shown  in the  immediately  preceding
        Applicable  Cash Flow as payable  before the  Effective  Date of the new
        Applicable Cash Flow;

4.3.4   be  prepared  in  accordance  with the  revised  Applicable  Tax  Report
        prepared by the Lessor in accordance with paragraph 4.1;

4.3.5   procure  that each  Primary  Rental  payable  on a Primary  Rental  Date
        falling after the Effective Date shall bear the same ratio to each other
        such Primary Rental as the Primary  Rental payable on the  corresponding
        Primary Rental Date shown in the immediately  preceding  Applicable Cash
        Flow  bears  to  each  of  the  other  Primary  Rentals  shown  in  such
        immediately   preceding  Applicable  Cash  Flow  as  payable  after  the
        Effective Date;

4.3.6   procure  that the Final Rental shall be equal to forty per cent (40%) of
        the Ship Cost; and

4.3.7   procure that, subject to the payment by the Lessee of Primary Rentals on
        each subsequent Primary Rental Date, (including the payment of the Final
        Rental on the Primary Period End Date), the Notional Capital Outstanding
        on the Final Date will be zero or as near thereto as may be.

4.4     Effect of substitution of new Applicable Cash Flows

        As from the Effective  Date of any new  Applicable  Cash Flow,  the same
        shall be  deemed  to be  incorporated  herein  in  substitution  for the
        Initial Cash Flow or, as the case may be, the previous  Applicable  Cash
        Flow,  and  payments  of Primary  Rental to be made  hereunder  shall be
        determined by reference thereto.

4.5     Occurrence of Change

4.5.1   Subject to paragraph 10, for the purposes of this Schedule,  a change in
        a Variable  Assumption or a Termination  Assumption shall be regarded as
        having occurred if:

        (a)     without  prejudice  to  sub-paragraphs  (b) to  (d)  (inclusive)
                below,  the  Lessor  determines  such  Variable   Assumption  or
                Termination Assumption is incorrect;

        (b)     any  statute  or  statutory  instrument  embodying  such  change
                becomes law or if earlier when HM Government or other regulatory
                body makes an official announcement of a change even though such
                change  will only  take  effect  in the  future  and a Cash Flow
                prepared,  in such a case and at that  time,  shall  immediately
                take into account all changes so embodied or announced  provided
                that a further  change shall be regarded as having  occurred if,
                following  an  announcement  of a  change,  such  change  is not
                implemented in accordance with such announcement;

        (c)     the  Lessor  receives  a  determination,  decision,  assessment,
                notice or other  written  communication  from any Tax  Authority
                from which it appears  that any matter  relating to or affecting
                any  Variable  Assumption  or  Termination  Assumption  is being
                disputed  by such  Tax  Authority,  regardless  of any  right or
                decision to dispute,  challenge  or appeal the same (but without
                prejudice  to the terms of the Tax Contest  Letter)  and, in the
                reasonable  opinion  of  the  Lessor,  such  dispute  cannot  be
                resolved  promptly by  negotiation  with such Tax Authority on a
                basis  which  would  confirm the  correctness  of such  Variable
                Assumption  or  Termination  Assumption  provided that a further
                change shall be deemed to occur  depending on the final  outcome
                of any such dispute, challenge or appeal concerning the disputed
                matter; and

        (d)     following a  Termination  Event the Lessor  shall be entitled to
                deem  a  change  in  any  of  the  Variable  Assumptions  or the
                Termination Assumptions to have occurred at any time when it has
                reasonable  grounds for believing  that such a change will occur
                and, in such case, if the change does not in fact occur and take
                effect when anticipated, a further change shall then be regarded
                as having occurred.

4.5.2   A new  Applicable  Cash Flow prepared as a consequence of the occurrence
        of any  such  change  or  deemed  change  in a  Variable  Assumption  or
        Termination  Assumption shall take into account the date from which such
        change or deemed change becomes  effective and such new Applicable  Cash
        Flow shall be accompanied by a notice from the Lessor specifying:

        (a)     the Variable Assumption or the Termination  Assumption which has
                changed;

        (b)     the Lessor's reason or reasons for its  determination  that such
                Variable Assumption or Termination Assumption has changed;

        (c)     the replacement Variable Assumption or Termination Assumption on
                the  basis  of  which  the new  Applicable  Cash  Flow  has been
                prepared; and

        (d)     the date  from  which the  replacement  Variable  Assumption  or
                Termination Assumption is to apply.

4.6     Changes in Variable Assumptions after payment of Final Rental

        The  provisions of paragraph 7 shall (mutatis  mutandis)  apply if there
        shall be any change in any of the Variable Assumptions after the payment
        of the Final  Rental by treating  the latest  Applicable  Cash Flow as a
        Termination Cash Flow, and by treating such Final Rental as a payment in
        respect of the Termination Sum.

4.7     Revision of Assumptions

4.7.1   In the  event  of a change  in any of the  Variable  Assumptions  or the
        Termination   Assumptions,   that  Variable  Assumption  or  Termination
        Assumption  shall be deemed to be revised as  necessary  to reflect such
        change and that  Variable  Assumption  or  Termination  Assumption as so
        revised shall be deemed to be incorporated  herein in  substitution  for
        that set out in this  Schedule  (as the same may  previously  have  been
        revised pursuant to this Schedule).

4.8     Risk Asset Weighting

4.8.1   The  Percentage  Return  has been  determined  by the Lessor on the date
        hereof  on the  basis  that the Risk  Asset  Weighting  of the  Lessor's
        investment in the Transactions is an average (the "Average  Weighting"),
        which  Average  Weighting  has  been  calculated  by  reference  to  the
        percentage of the Lessor's  investment in the transactions  contemplated
        in the  Transaction  Documents  which is to be  secured by the Letter of
        Credit  with a Risk  Asset  Weighting  of twenty  per cent (20%) and the
        percentage of the Lessor's  investment in the transactions  contemplated
        by the Transaction  Documents which is to be unsecured with a Risk Asset
        Weighting of one hundred per cent (100%).

4.8.2   In the event that the Lessor  reasonably  determines that the Risk Asset
        Weighting is increased or decreased at any time after the date hereof as
        a result of a change in a  Variable  Assumption  which  gives  rise to a
        change in the Lessor's  investment in the  transactions  contemplated by
        the Transaction Documents, or a change in the percentage of the Lessor's
        investment  secured  by the  Letter  of  Credit,  the  provision  of any
        Additional  Security,  or any change in the  percentage  of the Lessor's
        investment secured by any Additional Security, or any change made by the
        Financial  Services  Authority,  Bank of  England  or other  appropriate
        regulatory body to the capital  required or a change to the structure of
        the  transactions  contemplated by the Transaction  Documents  otherwise
        than as a result of any  voluntary  act or omission by the Lessor or the
        Lessor  Agent or any  member of the  Lessor's  Group,  then,  subject to
        paragraph 4.8.3 below, a new Cash Flow shall be prepared under paragraph
        4.2 and  paragraph  4.3  shall  apply as if there had been a change in a
        Variable Assumption.

4.8.3   Subject to paragraph 4.8.4, where this paragraph 4.8.3 applies:

        (a)     the  Lessor  shall  determine  the  revised  average  Risk Asset
                Weighting  of  the  Lessor's   investment  in  the  transactions
                contemplated by the Transaction  Documents (the "Revised Average
                Weighting"), which Revised Average Weighting shall be calculated
                by reference to the percentage of the Lessor's investment in the
                transactions  contemplated by the Transaction  Documents on each
                Rental Date  falling  prior to the date on which this  paragraph
                4.8.3 is to be applied (the "Application Date") and by reference
                to the percentage of the Lessor's investment in the Transactions
                on each Rental  Date  falling on or after the  Application  Date
                which  is to be  secured  by  the  Letter  of  Credit  or  other
                Additional Security,  and the Risk Asset Weighting  attributable
                thereto,  and the  percentage of the Lessor's  investment in the
                transactions  contemplated by the Transaction  Documents on each
                Rental Date falling on or after the Application Date which is to
                be unsecured, and the Risk Asset Weighting attributable thereto.
                Where this paragraph  4.8.3 applies,  the Lessor shall notify in
                writing to the Lessee  such  Revised  Average  Weighting,  which
                shall be calculated on the same basis as the Average  Weighting,
                or,  as the case  may be,  the last  preceding  Revised  Average
                Weighting  notified  to the  Lessee,  save that such new Revised
                Average  Weighting  shall take into account the  application  of
                paragraph  4.8.2  and the  calculations  to be made  under  this
                paragraph 4.8.3(a);

        (b)     where the Revised Average  Weighting is greater than the Average
                Weighting,  or,  following  any  previous  application  of  this
                paragraph 4.8.3,  the Revised Average  Weighting last calculated
                under this sub-paragraph 4.8.3 (the "Latest Average Weighting"),
                then a new Cashflow Report prepared in accordance with paragraph
                4.2 shall  apply as if there had been a change in an  Assumption
                and in preparing  that Cashflow (and any  subsequent  Cashflow),
                the Percentage Return shall be increased by zero point zero zero
                nine seven  (0.0097) for each one per cent (1%)  increase in the
                Revised Average Weighting over the Latest Average Weighting;

        (c)     where the  Revised  Average  Weighting  is less than the Average
                Weighting or, as the case may be, the Latest Average  Weighting,
                then a new Cashflow Report prepared in accordance with paragraph
                4.2 shall  apply as if there had been a change in an  Assumption
                and in preparing  that Cashflow (and any  subsequent  Cashflow),
                the Percentage Return shall be decreased by zero point zero zero
                nine seven  (0.0097) for each one per cent (1%)  decrease in the
                Revised  Average  Weighting  below the Average  Weighting or the
                Latest Average Weighting;

        (d)     the  increased,  or,  as the case may be,  decreased  Percentage
                Return  calculated in accordance with this paragraph 4.8.3 shall
                apply from the date of  application  of this paragraph 4.8 until
                the  Primary  Period End Date,  or if  earlier,  the date of any
                further application of this paragraph 4.8.

4.8.4   The  Percentage  Return shall not be reduced  below zero point two eight
        four four  (0.2844%) as a result of any  application  of this  paragraph
        4.8.

4.8.5   This  paragraph 4.8 shall apply in the same way to any further change in
        Risk  Asset  Weighting.  In  the  event  of any  change  in  Risk  Asset
        Weighting, the Lessor shall notify the Lessee forthwith.

4.9     Retrospective changes in Variable Assumptions or Termination Assumptions

4.9.1   This  paragraph 4.9 shall apply where the  occurrence of a change in any
        of the Variable  Assumptions or the Termination  Assumption  results, in
        respect of any Past Tax  Payment  Date,  in a Relevant  Amount  which is
        other than zero.

4.9.2   Where this paragraph 4.9 applies,  the new Applicable Cash Flow required
        to be prepared  in  accordance  with  paragraphs  4.2 and 4.3 shall,  in
        respect of any Past Tax Payment Date, be prepared on the basis that:

        (a)     the amount of Corporation  Tax shown as payable,  or as the case
                may be, the Group Relief  Payment  shown as  receivable  on each
                Past Tax Payment  Date is  unchanged  from the amount  shown for
                that date in the immediately preceding Applicable Cash Flow;

        (b)     where the  Relevant  Amount is a negative  amount there shall be
                debited to the new  Applicable  Cash Flow in the  column  headed
                "Tax"  on  the  Tax  Payment  Date  immediately  succeeding  the
                Effective Date an amount equal to the Relevant Amount and in the
                column headed "Interest on Overdue Tax" interest on the Relevant
                Amount  calculated  on the Inland  Revenue  Terms for the period
                from and  including  the  relevant  Past Tax Payment Date to but
                excluding  the  Tax  Payment  Date  immediately  succeeding  the
                Effective Date;

        (c)     where the  Relevant  Amount is a positive  amount there shall be
                credited to the new  Applicable  Cash Flow in the column  headed
                "Tax" on the assumed date of the receipt  thereof in  accordance
                with  Non-Variable  Assumption  2.13  an  amount  equal  to  the
                Relevant  Amount and in the column  headed  "Interest on Overdue
                Tax" interest on the Relevant  Amount,  calculated on the Inland
                Revenue  Terms for the period from and  including  the  relevant
                Past Tax Payment Date to but excluding that assumed date.

<PAGE>

5       Adjustments for changes in Interest Rates

5.1     Adjustments in respect of Applicable Rate

5.1.1   In respect of the Adjustment Date for each Adjustment  Period commencing
        after the Delivery  Date up to and including  the  Adjustment  Period in
        which the Final Date in relation to the  relevant  Cash Flow falls,  the
        Lessor shall calculate an amount  ("Interest  Adjustment")  equal to the
        difference between:

        (a)     the amount of interest which has been debited or credited to the
                relevant Cash Flow for such Adjustment  Period calculated at the
                Assumed Rate; and

        (b)     the amount of interest which would have been debited or credited
                to that  Cash  Flow if the  amount  of the debit or credit to be
                made had been calculated by reference to the Applicable Rate for
                such Adjustment Period instead of the Assumed Rate,

        which shall be expressed as a positive amount where:

                (i)     the amount calculated under (b) above exceeds the amount
                        calculated  under  (a) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is negative;
                        or

                (ii)    the amount calculated under (a) above exceeds the amount
                        calculated  under  (b) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is positive;
                        and

        shall be expressed as a negative amount where:

                (iii)   the amount calculated under (a) above exceeds the amount
                        calculated  under  (b) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is negative;
                        or

                (iv)    the amount calculated under (b) above exceeds the amount
                        calculated  under  (a) above  and the  Notional  Capital
                        Outstanding  during that Adjustment  Period is positive;
                        and

                the  Lessor  shall  give  notice to the Lessee not less than ten
                (10)  Banking Days before the  relevant  Adjustment  Date of the
                amount of the Interest Adjustment and in the absence of manifest
                error,  the  Lessor's   calculation  of  such  amount  shall  be
                conclusive and binding on the Lessee.

5.1.2   On each Adjustment Date in respect of each Adjustment Period, the Lessee
        shall pay to the Lessor (where  positive) or the Lessor shall pay to the
        Lessee (where negative) the amount of the Interest Adjustment calculated
        in  accordance  with  paragraph  5.1.1 to the extent  possible by way of
        adjustment to the Rental otherwise payable on that date.

5.2     Adjustments in respect of new Applicable Cash Flow

        Where  any  new  Applicable  Cash  Flow is  prepared  the  Lessor  shall
        separately  calculate  the financial  adjustment  (if any) which has not
        been  taken  into  account  and which  needs to be made as  between  the
        parties  by reason of  adjustments  in respect  of the  Applicable  Rate
        calculated  under  paragraph 5.1 having been based on figures in respect
        of Notional Capital  Outstanding which such new Applicable Cash Flow may
        show to be incorrect,  which  adjustment shall be notified to the Lessee
        and paid in  accordance  with such  calculation  within ten (10) Banking
        Days  of  receipt  by the  Lessee  of such  notice  which  shall  not be
        reflected in any Applicable Cash Flow.

5.3     Consequences of Termination

        The  Lessee  undertakes  and  agrees to  indemnify  the Lessor on demand
        against  any Broken  Funding  Costs (as  certified  to the Lessee by the
        Lessor)  arising to the Lessor as a result of the Lessor  repaying prior
        to its  specified  maturity  any  funding  assumed to be obtained by the
        Lessor in respect of the  transactions  contemplated  by the Transaction
        Documents or in consequence of any Termination, or any Prepayment. If in
        consequence  of such repayment any Broken Funding Gains (as certified to
        the Lessee by the  Lessor)  accrue to the Lessor in  connection  with an
        early repayment of such funding, the Lessor undertakes to pay the Lessee
        an amount equal to such Broken Funding Gains. If the Lessor is unable to
        repay such funding actually entered into by the Lessor,  it shall notify
        the Lessee of the Lessor's best estimate of the Broken  Funding Costs or
        Broken  Funding  Gains  which  would have  resulted to the Lessor if the
        Lessor had in fact repaid such funding and such estimated amount will be
        treated for the purposes of this  paragraph  5.3 as if it were an actual
        amount.

5.4     Payments under this paragraph 5

        Payments  by or to the Lessee  under this  paragraph  5 shall be paid as
        additional Rental or rebates of Rental (as appropriate) but shall not be
        reflected in any Applicable Cash Flow.

<PAGE>

6       Termination

6.1     Termination Cash Flow

        In any case where the  Termination  Sum is to be ascertained  the Lessor
        shall,  as  soon  as  practicable  and in any  event,  in the  case of a
        Termination other than following a Termination Event, not later than ten
        (10) Banking Days before the  Termination  Payment Date and, in the case
        of a  Termination  pursuant  to clause 27, on or before the  Termination
        Payment  Date,  prepare  and  deliver  to the  Lessee a Cash  Flow  (the
        "Termination Cash Flow") which shall:

6.1.1   subject as mentioned  below, be prepared on the same basis as the latest
        Applicable  Cash Flow was prepared  and on the basis of the  Assumptions
        but excluding Variable Assumption 1.15;

6.1.2   take into account any changes in any of the Variable  Assumptions  which
        have occurred (in  accordance  with paragraph 4.5) (and are known to the
        Lessor)  between the date of preparation of the latest  Applicable  Cash
        Flow and the date of  preparation of the  Termination  Cash Flow and any
        other such changes in the Variable Assumptions not taken into account in
        the latest Applicable Cash Flow;

6.1.3   take into  account any Primary  Rental  payable  before the  Termination
        Payment Date;

6.1.4   be  prepared  on the basis of the  following  assumptions  ("Termination
        Assumptions",   which   assumptions   shall  be  treated   as   Variable
        Assumptions):

        (a)     that

                (i)     the Ship  will  cease to belong  to the  Lessor  for the
                        purposes  of the  CAA in the  Accounting  Period  of the
                        Lessor in which the Termination Payment Date falls; and

                (ii)    the Ship will be sold and the Net Sale  Proceeds  and/or
                        Net Total  Loss  Proceeds,  as the case may be,  will be
                        received  by the  Lessor  on or before  the  Termination
                        Payment Date;

        (b)     that the aggregate  amount of the Net Sale  Proceeds  and/or Net
                Total Loss Proceeds, as the case may be, will be the only amount
                required to be brought  into  account as  Disposal  Value in the
                Accounting Period in which the Termination Payment Date falls;

        (c)     that the  amount so  required  to be  brought  into  account  as
                Disposal  Value will not be less than the Tax Written Down Value
                of the Ship at the  commencement  of the  Accounting  Period  in
                which the Termination Payment Date falls;

        (d)     where the  Termination Sum is to be ascertained in the case of a
                Termination  pursuant to clause 27, the Assumed  Rate in respect
                of Notional Capital Outstanding where a positive amount shall be
                the best  estimate of LIBID as  determined by the Lessor for the
                date which the Termination Sum is to be calculated;

        (e)     assume  that  the  Lessor  receives  or pays on the  Termination
                Payment Date a single sum (the  "Termination  Sum") of an amount
                that will procure that the Notional  Capital  Outstanding  as at
                the Final Date for the Termination  Cash Flow will be zero or as
                near thereto as may be possible.

6.1.5   For  the  avoidance  of  doubt,  to  the  extent  that  the  Termination
        Assumptions  referred to in sub-paragraphs  6.1.4(a),  (b) and (c) above
        (the  "Sale  Assumptions")  are  correct,  there  shall be  deemed to be
        available to the Lessor in the Accounting  Period of the Lessor in which
        the Termination  Payment Date falls a Capital Allowance equal to the Tax
        Written  Down Value of the Ship at the  commencement  of the  Accounting
        Period in which the Termination Payment Date falls.

6.2     Determination of Termination Sum

6.2.1   The Termination  Sum shall be the number  appearing in the column headed
        "Termination  Sum" of the  Termination  Cash Flow prepared in accordance
        with paragraph 6.1 opposite the Termination Payment Date.

6.2.2   If the  Termination  Cash Flow has  assumed  the receipt of a sum by the
        Lessor, the amount of the Termination Sum shall be payable by the Lessee
        to the Lessor on the Termination Payment Date by way of Rental.

6.2.3   If the  Termination  Cash Flow has  assumed  the payment of a sum by the
        Lessor, the amount of the Termination Sum shall be payable by the Lessor
        to the  Lessee  on the  Termination  Payment  Date by way of  rebate  of
        Rental.

6.3     Termination Fee

6.3.1   Subject to paragraph 6.3.2 below,  if this Lease is terminated  prior to
        the date falling sixty (60) months after the Delivery  Date,  the Lessee
        shall,  in addition  to the  Termination  Sum,  pay to the Lessor on the
        Termination  Payment  Date,  the  Termination  Fee which  shall be of an
        amount equal to:

        A
        B

        where:  A is the aggregate of each amount of the Percentage Return which
                would have been  debited in the column  headed  "Margin"  in the
                latest  Applicable Cash Flow after the Termination  Payment Date
                and until and including the date falling sixty (60) months after
                the  Delivery  Date (on the basis that the Lease  would not have
                Terminated  before  such  date)  discounted  to the  Termination
                Payment  Date at the  rate of five  point  two two five per cent
                (5.225%) per annum; and

                B is  (1-x)  where  x is the  Corporation  Tax  Applicable  Rate
                (expressed as a decimal) for the Accounting Period of the Lessor
                in which the Termination Payment Date falls.

6.3.2   The Termination Fee referred to in paragraph 6.3.1 shall not be payable:
        (i) in the event that this Lease is  terminated  after the date  falling
        sixty (60) months  after the  Delivery  Date;  or (ii) in the event that
        this Lease is  terminated  as a result of a Total  Loss of the Ship;  or
        (iii) in the  event  that  this  Lease is  terminated  as a result  of a
        Relevant  Bank Change of Law Event  pursuant to clause 25.3;  or (iv) in
        the event that this Lease is  terminated  as a result of a Relevant Bank
        Illegality  Event pursuant to clause 25.4; or (v) in the event that this
        Lease is  terminated  as a result of a  Termination  Event  pursuant  to
        clauses  26.1.8 to 26.1.14  (inclusive)  and clause 26.2; or (vi) in the
        event that this Lease is  terminated as a result of the  application  of
        clause 31; or (vii)  where this  Lease is  terminated  prior to the date
        falling  sixty  (60)  months  after  the  Delivery  Date and the  Lessee
        certifies in writing to the reasonable  satisfaction  of the Lessor that
        it  is  terminating  this  Lease  because  it  has  become  Economically
        Burdensome.

6.4     Change in Variable Assumption 1.15 and/or the Sale Assumptions

6.4.1   Any  Applicable  Cash Flow  prepared  to  reflect  a change in  Variable
        Assumption  1.15.1  or,  as the case  may be,  the  Sale  Assumption  in
        paragraph 6.1.4(a),  shall take into account such change and be prepared
        on the assumption that there will be no sale of the Ship or, as the case
        may be, no receipt of Net Sale Proceeds  and/or Net Total Loss Proceeds,
        on or after the Termination Payment Date and that no Disposal Value will
        be required to be brought into account in respect thereof.

6.4.2   Any  Applicable  Cash Flow  prepared  to  reflect  a change in  Variable
        Assumption  1.15.2 or, as the case may be, the Sale  Assumptions,  or as
        the case may be, the  assumption  in  paragraph  6.4.1 (each a "Relevant
        Assumption")  shall take into account such change and be prepared on the
        basis of the following assumptions:

        (a)     that  Capital  Allowances  on the  amount  by which any Net Sale
                Proceeds  and/or Net Total Loss Proceeds  required to be brought
                into account as Disposal Value in the relevant Accounting Period
                are less than the Tax Written  Down Value in respect of the Ship
                Cost  will be  obtainable  in  accordance  with  the Tax  System
                prevailing  at the  date of  such  Cash  Flow in the  Accounting
                Period of the  Lessor in which the  Relevant  Assumption  proved
                incorrect and in each subsequent Accounting Period of the Lessor
                ending before the Primary Period End Date;

        (b)     that  the   Corporation   Tax  Applicable  Rate  for  each  such
                Accounting  Period of the Lessor  subsequent  to the  Accounting
                Period in which such  Applicable Cash Flow is prepared but prior
                to the  Accounting  Period in which the Primary  Period End Date
                falls  will  be the  Corporation  Tax  Applicable  Rate  for the
                Accounting  Period  current  at  the  date  such  Cash  Flow  is
                prepared;

        (c)     that Capital  Allowances  will be obtainable in accordance  with
                the Tax System  prevailing  at the date of  preparation  of such
                Cash Flow for each Accounting  Period of the Lessor ending after
                the  Primary   Period  End  Date  until  the   fortieth   (40th)
                anniversary of the Delivery Date;

        (d)     that, for the purposes of this calculation only, the Corporation
                Tax Applicable  Rate for the Accounting  Period of the Lessor in
                which the Primary Period End Date falls will be the lower of the
                Corporation Tax Applicable Rate for the Accounting Period of the
                Lessor current at such date and 25 per cent; and

        (e)     in an Applicable  Cash Flow prepared for the Primary  Period End
                Date there  shall be  credited  to the column of the  Applicable
                Cash Flow headed "Tax"  opposite the Primary Period End Date the
                allowances   assumed  by  sub-paragraph  (c)  to  be  obtainable
                multiplied by the  Corporation  Tax  Applicable  Rate assumed in
                sub-paragraph  (d) and discounted to the Primary Period End Date
                at the After-Tax Interest Rate.

6.4.3   Any Applicable  Cash Flow prepared  pursuant to this paragraph 6.4 shall
        be prepared on the  assumption  that the Assumed Rate for any Adjustment
        Period commencing after the date of preparation of such Cash Flow is:

        (a)     the  lower  of  (A)  twelve  month  LIBOR  (as at  the  date  of
                preparation of the Applicable  Cash Flow) minus one per cent and
                (B) LIBID (as at the date of preparation of the Applicable  Cash
                Flow) in respect of Notional Capital Outstanding when a positive
                amount; and

        (b)     the  aggregate  of  twelve  month  LIBOR  (as  at  the  date  of
                preparation of such  Applicable Cash Flow) plus four per cent in
                respect of Notional Capital Outstanding when a negative amount.

6.4.4   The  assumptions  made in  sub-paragraphs  6.4.1,  6.4.2(a)  and (b) and
        6.4.3(a)  and (b) above shall be treated as Variable  Assumptions  until
        the  Primary  Period  End Date or,  where the Lease  Period  expires  by
        effluxion of time on that date,  the first  anniversary of that date and
        as  Non-Variable  Assumptions  thereafter;   and  any  change  in  those
        assumptions shall be reflected in a Further  Termination Cash Flow which
        shall only be prepared on each 31 March  falling  after the  Termination
        Payment  Date and on the  Primary  Period End Date and,  where the Lease
        Period expires by effluxion of time on the Primary Period End Date, only
        on the first anniversary of the Primary Period End Date. The assumptions
        made in sub-paragraphs 6.4.2(c) and (d) shall be treated as Non-Variable
        Assumptions.

<PAGE>

7       Variation of Termination Sum

7.1     Further Termination Cash Flow

7.1.1   In any case where the Lessor has prepared a Termination  Cash Flow,  the
        Lessor shall prepare a further cash flow (the "Further  Termination Cash
        Flow")  to  take  into  account  any  change  in  any  of  the  Variable
        Assumptions and/or the Termination Assumptions which has occurred and is
        known  to the  Lessor  but  which  was not  taken  into  account  in the
        Termination Cash Flow.

7.1.2   The Further Termination Cash Flow shall be prepared on the same basis as
        the Termination Cash Flow and shall ensure that, in the light of changes
        in the Variable Assumptions and the Termination  Assumptions and subject
        to either  the  receipt  by the  Lessor of a further  single  sum or the
        payment  by the  Lessor  of a single  sum on the  last day of the  month
        following  that in which the Further  Termination  Cash Flow is prepared
        and delivered to the Lessee,  the Notional  Capital  Outstanding  on the
        Final Date for the Further Termination Cash Flow will be zero or as near
        thereto as may be.

7.2     Delivery of Further Termination Cash Flow

        The Lessor shall deliver the Further Termination Cash Flow to the Lessee
        as soon as reasonably  practicable and in any event no later than thirty
        (30)  Banking Days after the change in the  Variable  Assumption  or the
        Termination  Assumption  becomes  known to the Lessor by reason of which
        such Cash Flow is to be prepared.

7.3     Payment of adjustment to the Lessor

        If the Further Termination Cash Flow has assumed the receipt of a sum by
        the Lessor,  the Lessee  shall pay to the Lessor,  by way of  additional
        Rental,  the  amount  of  such  receipt  on the  last  day of the  month
        following  that in which the Further  Termination  Cash Flow is prepared
        and a copy delivered to the Lessee.

7.4     Payment of adjustment to the Lessee

        If the Further Termination Cash Flow has assumed the payment of a sum by
        the Lessor, the amount thereof shall be paid to the Lessee by the Lessor
        by way of rebate of Rental on the last day of the month  following  that
        in which  the  Further  Termination  Cash  Flow is  prepared  and a copy
        delivered to the Lessee.

7.5     Further Changes

        If any further change in the Variable Assumptions and/or the Termination
        Assumptions occurs after the Further Termination Cash Flow was prepared,
        which  would  have  affected  the  same  had it been  known  when it was
        prepared,  the  provisions  of this  paragraph  7 shall  apply,  mutatis
        mutandis, to the same.

<PAGE>

8       Prepayment

8.1     Payments

        Where the Lessee  notifies the Lessor in  accordance  with clause 25.2.1
        that it wishes to make a Prepayment, the Lessor shall no later than five
        (5) days before the Prepayment  Date calculate the Prepayment  Amount in
        accordance with this paragraph 8.

8.2     Prepayment Amount

        The Prepayment Amount shall be the aggregate of:

8.2.1   the Prepaid Rental; and

8.2.2   any Broken Funding Costs or, as the case may be, less any Broken Funding
        Gains.

8.3     Prepayment Cash Flow

        When any Prepayment Amount is required to be calculated pursuant to this
        paragraph 8, the Lessor shall,  as soon as practicable  and in any event
        on or before  the date  falling  five (5) days  prior to the  Prepayment
        Date,  produce and  deliver to the Lessee a  Prepayment  Cash Flow.  The
        Prepayment Cash Flow shall:

8.3.1   subject as  mentioned  below be  prepared  on the same basis as the last
        preceding Applicable Cash Flow was prepared;

8.3.2   take into account any changes in any of the Variable  Assumptions  which
        have occurred (and are known to the Lessor) between the date of the last
        preceding  Applicable  Cash Flow and the  preparation  of the Prepayment
        Cash Flow and any other  changes in the Variable  Assumptions  not taken
        into account in the last preceding Applicable Cash Flow;

8.3.3   be prepared on the  assumption  (which  shall be a Variable  Assumption)
        that the Prepaid  Rental  shall be included as Schedule D Case I receipt
        of the Lessor and taxed on the date on which such amount is payable;

8.3.4   assume that:

        (a)     Primary Rental due up to and including the Prepayment Date shall
                be the  Primary  Rental  determined  by  reference  to the  last
                preceding Applicable Cash Flow;

        (b)     the Prepaid Rental is received on the Prepayment Date;

8.3.5   assume that the Lessor  receives on the Prepayment  Date a single sum by
        way of Rental (the  "Prepaid  Rental")  of such amount as would  result,
        subject  to the  receipt  by the Lessor of the  Rentals  referred  to in
        paragraph  8.3.4(b),  in the Total  Security  Amount for and during each
        Security  Period shown in the new Additional  Security Table prepared by
        the Lessor  pursuant  to clause  25.2.1  being equal to or less than the
        aggregate of the Letter of Credit Amount,  the Maximum  Unsecured  Strip
        Liability Amount and any Additional Security Amount in each case for and
        during each such Security Period.

8.4     New Applicable Cash Flow

        Subject  to  the  payment  by the  Lessee  of the  Prepaid  Rental,  the
        Prepayment  Cash Flow  produced in accordance  with  paragraph 8.3 above
        shall be substituted for the last preceding  Applicable Cash Flow to the
        exclusion of any previous Cash Flow.

<PAGE>

9       Security

9.1     Initial Security Table

9.1.1   The Lessor has prepared a Security Table (the "Initial  Security Table")
        based on the Initial Cash Flow  setting out in column 2 the  Termination
        Sum on the first day of each Security Period,  in column 3 the Letter of
        Credit  Amount on that date,  in column 4 the  Maximum  Unsecured  Strip
        Liability Amount in each such case for each Security Period specified in
        column 1 and  ending on or before  the  Primary  Period  End Date and in
        column 5 the Extra Security Amounts.

9.2     Additional Security Table

        In any case where the Lessor  prepares an Applicable  Cash Flow pursuant
        to paragraph 4 on or after the date hereof,  the Lessor shall as soon as
        reasonably  practicable prepare and deliver to the Lessee a new Security
        Table  ("Additional  Security  Table")  on the same  basis as the latest
        Applicable  Security  Table was  prepared  save that the new  Additional
        Security Table shall:

9.2.1   take into  account the changes in Variable  Assumptions  which are taken
        into  account in the  preparation  of such new  Applicable  Cash Flow in
        accordance with paragraph 4;

9.2.2   show in column 2 the Total Security Amount for each Security Period;

9.2.3   show in column 3 the  aggregate  of the Letter of Credit  Amount and any
        Additional Security Amount;

9.2.4   column 5 shall be left blank; and

9.2.5   show,  in an  additional  column 6, as a negative  figure,  the Required
        Security  Amount (if any),  being the amount by which the Total Security
        Amount shown in column 2 of the new  Additional  Security  Table exceeds
        the aggregate of the Letter of Credit Amount and any Additional Security
        Amount shown in column 3, the Maximum  Unsecured Strip Liability  Amount
        shown in column 4 and the Extra Security  Amounts,  as  appropriate,  in
        column 5, in each case for and during each Security Period  specified in
        column 1 of the new Additional Security Table or, as the case may be, as
        a positive  figure,  the Required  Security  Amount (if any),  being the
        amount by which the aggregate of each such Letter of Credit Amount,  any
        Additional  Security  Amount and the Maximum  Unsecured  Strip Liability
        Amount and Extra  Security  Amounts  exceeds  each such  Total  Security
        Amount.

9.3     Substitution of new Applicable Security Table

9.3.1   As soon as  practicable  following  the increase in the Letter of Credit
        Amount, the provision by the Lessee of an Additional  Security Amount or
        the payment of a Prepayment Amount by the Lessee, as the case may be, in
        each case in  accordance  with clause  25.2.1 or, the  reduction  in the
        Letter  of Credit  Amount  or the  release  of any  Additional  Security
        Amounts,  as the case may be, in each  case in  accordance  with  clause
        25.2.2,  the  Lessor  shall  prepare  and  deliver  to the  Lessee a new
        Security Table ("Applicable  Security Table") which shall be prepared on
        the same  basis as the new  Additional  Security  Table  referred  to in
        paragraph 9.2 was prepared save that:

        (a)     in the case of an increase or  reduction in either the Letter of
                Credit Amount or the Additional  Security Amount,  it shall show
                the  revised  Letter  of Credit  Amount  or, as the case may be,
                Additional Security Amount; and

        (b)     in the case of the payment by the Lessee of a Prepayment Amount,
                shall also be prepared on the same basis as the Prepayment  Cash
                Flow prepared to calculate such  Prepayment  Amount was prepared
                and accordingly reflecting the revised Total Security Amount,

        in each case in respect of each Security Period.

9.3.2   As from the date  any new  Applicable  Security  Table is  prepared  and
        delivered  to the  Lessee,  the same  shall be  incorporated  herein  in
        substitution for the previous Applicable Security Table.

<PAGE>

10      Limitations on Adjustment

        Notwithstanding  anything  in  this  Schedule  and  this  Lease  to  the
        contrary,  the Lessor  shall not be  entitled  or  required  to make any
        adjustment  under the provisions of this Schedule or in the  preparation
        of any Cash Flow and no change  shall be  treated  as  occurring  in any
        Variable  Assumption or Termination  Assumption  where and to the extent
        that,  otherwise than (i) as a result of the occurrence of any change in
        Variable  Assumption  1.13,  (ii) by reason  of any of the  transactions
        effected  under  or  pursuant  to or  contemplated  by  the  Transaction
        Documents and the Share Acquisition  Documents (other than an assignment
        by the Lessor pursuant to clause 30.2), (iii) as a result of a change in
        Generally  Accepted  Accounting  Principles  or,  (iv) as a result  of a
        breach by the  Lessee of any of its  obligations  under the  Transaction
        Documents,  a Variable  Assumption  would but for the provisions of this
        paragraph 10, be treated as changing by reason of:

10.1    the Lessor not duly  claiming on a timely  basis all Capital  Allowances
        available  to it in  respect  of the Ship Cost or not  supplying  to any
        relevant Tax  Authority on a due and timely  basis any  information  and
        documents  which are properly  required by such  authority in support of
        any such  claim  (unless  such  failure  to make a claim or supply  such
        document or  information  on a timely basis results from a breach by the
        Lessee  of  its  obligations  under  this  Lease  or  such  document  or
        information not being available to the Lessor and/or unless such failure
        results  from any  written  request  made by the Lessee to the Lessor in
        relation  to such  claim  or  other  matter  affecting  such  claim)  or
        withdraws,  amends or  postpones  all or any of such  claim for  Capital
        Allowances,  or the  Lessor  not  treating  the  Ship  Cost  as  capital
        expenditure incurred by it for Tax purposes; or

10.2    the group of  companies  of which the  Lessor  Agent is a member for the
        purposes  of Group  Relief not having  sufficient  profits to absorb Tax
        Losses (calculated on the basis of the Initial Cash Flow) of the Lessor;
        or

10.3    any act or omission of the Lessor  (otherwise than as required by law or
        statute)  which  is a  breach  by the  Lessor  of  any  of  its  express
        obligations  under  any of the  Transaction  Documents  to which it is a
        party; or

10.4    the  Lessor  submitting  its  Corporation  Tax  computations  claims  or
        returns,  as  initially  submitted to any  relevant  Tax  Authority,  or
        preparing its accounts on a basis which is inconsistent  with any of the
        Variable  Assumptions  (as the  same  may be  varied  from  time to time
        pursuant to this  Schedule),  save where required by law, Inland Revenue
        practice or Generally Accepted Accounting Principles,  or not submitting
        its Corporation Tax returns and computations on a timely basis; or

10.5    any  voluntary  act or  omission  by the  Lessor  or any  member  of the
        Lessor's  Group  (other  than  as  required  or   contemplated   by  the
        Transaction  Documents or the Share  Acquisition  Documents) at any time
        after the Delivery  Date,  which  results in the Lessor  ceasing to be a
        member of the Lessor's Group for Group Relief purposes; or

10.6    any Non-Variable Assumption not occurring as a fact.

<PAGE>

11      Reference to Expert

11.1    Dispute Procedure

11.1.1  If the Lessee does not accept that any determination  made by the Lessor
        has been made  and/or any  Applicable  Cash Flow (other than the Initial
        Cash Flow) or any adjustment thereto or to the Rental (or any adjustment
        thereto) has been prepared  and/or  calculated  in  accordance  with the
        terms and provisions of this Lease, the Lessee may (without prejudice to
        its  obligations to make payment  hereunder in accordance with such Cash
        Flow  and/or  calculation   pending   determination  of  the  matter  as
        hereinafter  provided)  give  notice to the Lessor  within  thirty  (30)
        Banking  Days of  receiving a copy of such Cash Flow and/or  calculation
        from  the  Lessor   together   with  the   Lessee's   reasons  for  such
        non-acceptance.  As soon as practicable after a notification  under this
        paragraph  11.1.1 by the  Lessee,  if required in writing by the Lessee,
        the  Lessor  and the  Lessee  shall  discuss  with each  other  (and any
        relevant advisors) the determination in question. Such discussions shall
        be conducted  conscientiously and in good faith and shall allow time for
        full consideration of the views of both parties of the issues concerned.

11.1.2  If the Lessor and the Lessee cannot agree the  correctness  or otherwise
        of such  determination  within a further  period of twenty (20)  Banking
        Days  of the  Lessee's  notice  referred  to in  paragraph  11.1.1,  the
        Lessee's reasons together with the Lessor's  determination,  calculation
        and/or Cash Flow  and/or any  adjustment  thereto  and reasons  therefor
        shall then be referred to the  Auditors who shall act as experts and not
        as  arbitrators  and  whose  decision  as to  the  correctness  of  such
        determination and/or calculations and/or Cash Flow and/or any adjustment
        thereto in accordance with the terms of this Lease shall,  except in the
        case of manifest error until the same has been corrected,  or save where
        paragraph 11.1.3 below applies,  be conclusive and binding on the Lessor
        and the Lessee.

11.1.3  If the Auditors consider that the determination of the Lessor relates to
        a matter of law, then the matter (together with the material provided to
        the  Auditors  as  referred  to in  paragraph  11.1.1)  will  instead be
        referred to an independent Queen's Counsel (the "QC") who specialises in
        tax matters and who is acceptable  to the Lessor and the Lessee.  In the
        event that the parties  cannot agree on the  appointment  of the QC then
        the Lessee shall  nominate as the QC one out of three tax counsel chosen
        by the Lessor.

11.1.4  The costs of the  Auditors,  or as the case may be, the QC, in so acting
        shall be borne by the Lessee  unless the  amount(s)  resulting  from the
        finding of the Auditors, or as the case may be, the QC, differs from the
        amount(s)  resulting  from the  determination  made by the  Lessor in an
        amount in excess of  (pound)10,000  in respect of a  calculation  of any
        Termination Sum or  (pound)10,000  in respect of each  determination  or
        calculation of any other amount of Rental in which case the costs of the
        Auditors, or as the case may be, the QC, shall be borne by the Lessor.

11.1.5  The Lessor shall  provide the  Auditors,  or as the case may be, the QC,
        with  such  information  as they or he may  reasonably  require  for the
        purposes of this paragraph 11.1.

11.2    If  the  Lessee   considers  that  the  Lessor  ought  to  have  made  a
        determination  but has not done so,  the  Lessee  may  inform the Lessor
        within twenty (20) Banking Days of the date the Lessee  becomes aware of
        the alleged omission, giving its written reasons why it considers that a
        determination  ought to have been made. For the purposes of paragraph 11
        any  omission by the Lessor to make a  determination  as  specified in a
        notice  under  this   paragraph   11.2,   shall   itself   constitute  a
        determination to which paragraph 11.1 shall apply.

11.3    Adjustments

        Should  the  decision  of the  Auditors,  or as the case may be, the QC,
        require an  adjustment  to an amount  previously  paid  hereunder,  such
        adjustment  shall  apply  retrospectively  from the  date on  which  the
        relevant  amount was paid and the amount of any  deficiency or excess in
        or of such amount  previously  paid by or received by the Lessor  shall,
        within ten (10) Banking Days after  receipt by the Lessor and the Lessee
        of written  notice of the decision and of a revised Cash Flow (which the
        Lessor shall  produce  forthwith  after,  and in  accordance  with,  the
        decision of the Auditors, or as the case may be, the QC), be remedied by
        a payment by or to the Lessor by way of  adjustment to the Rental or any
        adjustment thereto (as appropriate).

11.4    Detail of Calculations

        All  determinations  to be made by the Lessor  under this Lease and this
        Financial  Schedule  shall be made  reasonably  and in good  faith.  All
        calculations  provided by the Lessor to the Lessee under this  Financial
        Schedule shall be made in good faith and in reasonably sufficient detail
        to enable the Lessee to substantiate the same.

<PAGE>

                                   Appendix 1

                                 The Assumptions

1       Variable Assumptions

1.1     The  Lessor  will  become  resident  in  the  UK  for  the  purposes  of
        Corporation Tax on the First UK Meeting Date.

1.2     The first Accounting  Period of the Lessor ("First  Accounting  Period")
        will commence on the First UK Meeting Date.

1.3     The Lessor  will be  treated  under  section  13 CAA as having  incurred
        capital expenditure on the provision of the Ship on the Delivery Date in
        an amount equal to the Ship Cost.

1.4     The Lessor  shall be  entitled to Capital  Allowances  by way of writing
        down  allowances of twenty five per cent (25%) per annum on the reducing
        balance  basis  on  the  full  amount  of the  Ship  Cost  such  Capital
        Allowances  commencing  on the  Delivery  Date in the  First  Accounting
        Period (and in respect of the First Accounting  Period being reduced pro
        rata to the proportion which the length of the First  Accounting  Period
        bears to a period  of  twelve  (12)  months),  in which the Ship Cost is
        treated (on the basis  assumed in paragraph  1.3) to have been  incurred
        and to continue in each subsequent Accounting Period of the Lessor until
        but excluding the Accounting  Period referred to in Variable  Assumption
        1.15.1.

1.5     The rate and times at which Capital  Allowances are obtainable under the
        Tax System at the date  hereof  will not change and  Capital  Allowances
        obtained  by the Lessor in respect of the Ship Cost will not at any time
        be withdrawn or postponed in whole or in part nor,  otherwise than on an
        actual  disposal  or  Total  Loss  of the  Ship,  be made  subject  to a
        balancing charge at any time in so far as the Lessor is concerned.

1.6     The rate of Corporation  Tax for the Financial Year ending 31 March 2002
        and each subsequent financial year will be thirty per cent (30%).

1.7

1.7.1   The Lessor will not be required by law or Generally Accepted  Accounting
        Principles to draw up its accounts as at any other date than 31 December
        in any year and/or for any other period than twelve  months,  except for
        the First Accounting Period.

1.7.2   None of the Group Relief Recipients will be required by law or Generally
        Accepted  Accounting  Principles  to draw up its accounts as at any date
        other than 31  December  in any year  and/or for any other  period  than
        twelve months.

1.7.3   None of the  Lessor  (other  than in  respect  of the  First  Accounting
        Period) and any of the Group Relief  Recipients  will be required by law
        to have  Accounting  Periods  which  are  other  than  twelve  months in
        duration nor will any of them be required to draw up their  accounts for
        periods which do not coincide with the relevant Accounting Period.

1.8     Any  interest  payable  or deemed to be  payable in respect of any funds
        borrowed  or deemed to be  borrowed by the Lessor for the purpose of the
        transactions  contemplated by the Transaction  Documents (as represented
        by Notional  Capital  Outstanding  when that is a negative figure) is or
        would if funds had actually  been  borrowed and interest  actually  been
        payable  been  allowed or, as the case may be, have been  allowable as a
        trading expense.

1.9     The Lessor's  taxable  income,  receipts and outgoings in respect of the
        transactions  contemplated by the Transaction  Documents will fall to be
        assessed and dealt with under Case I of Schedule D.

1.10    The Lessor will be entitled to prepare its Corporation Tax  computations
        (and the Inland Revenue will accept such  computations  as the basis for
        charging Corporation Tax):

1.10.1  insofar as they relate to interest received or paid, on a daily accruals
        basis for the period in respect of which it is received or paid;

1.10.2  insofar as they relate to Primary  Rentals,  on the basis that an amount
        shall be brought into account as income in each Accounting  Period equal
        to the greater of:

        (1)     the Accountancy Rental Earnings for that Accounting Period; and

        (2)     the Normal Rent for that Accounting Period;

        PROVIDED THAT

        (A)     if the  Accountancy  Rental  Earnings in any  Accounting  Period
                exceed the Normal Rent for that Accounting Period and there is a
                Cumulative Normal Rental Excess for that Accounting  Period, the
                amount to be brought into account for the Accounting Period will
                be the greater of:

                (1)     the  Accountancy  Rental  Earnings  for that  Accounting
                        Period less the Cumulative Normal Rental Excess for that
                        Accounting Period; and

                (2)     the Normal Rent for that Accounting Period; and

        (B)     if  the  Normal  Rent  in  any  Accounting  Period  exceeds  the
                Accountancy Rental Earnings for that Accounting Period and there
                is a Cumulative  Accountancy  Rental Excess for that  Accounting
                Period,   the  amount  to  be  brought  into  account  for  that
                Accounting Period will be the greater of:

                (1)     the Normal  Rental for that  Accounting  Period less the
                        Cumulative Accountancy Rental Excess for that Accounting
                        Period; and

                (2)     the  Accountancy  Rental  Earnings  for that  Accounting
                        Period.

1.11    Subject in the case of the First Accounting Period to paragraph 1.34, in
        respect  of the First  Accounting  Period and each  subsequent  relevant
        Accounting  Period of the Lessor,  the Lessor  shall have  received  and
        retained  the  benefit  of relief  for the Tax Loss in  respect  of that
        Accounting Period by reason of either:

1.11.1  a set-off of such Tax Loss  against  other  profits of the Lessor  under
        section 393 and/or 393A ICTA; or

1.11.2  the  surrender  by the  Lessor of such Tax Loss or any part  thereof  in
        accordance  with the  provisions  relating to group relief  contained in
        Chapter  IV Part X and  Schedule  18 ICTA as at the  date of this  Lease
        ("Group Relief") to one or more Group Relief  Recipients and the receipt
        of payments for Group  Relief so  surrendered  on the dates,  and in the
        amounts calculated in accordance with Non-Variable Assumption 2.6.

1.12    In respect of the First Accounting  Period and each relevant  Accounting
        Period  of  the  Lessor  thereafter  and in  respect  of  each  Relevant
        Accounting  Period of any Group  Relief  Recipient,  the Lessor and each
        Group Relief Recipient shall be liable to pay twenty five per cent (25%)
        of the total  Corporation Tax on profits for each such Accounting Period
        on each of 14 July  and 14  October  in that  Accounting  Period  and 14
        January and 14 April following the end of that Accounting Period.

1.13    There will be no change in the Tax  System  affecting  the  transactions
        contemplated by the Transaction Documents after the date hereof.

1.14    In  respect  of  the   transactions   contemplated  by  the  Transaction
        Documents:

1.14.1  the accounts of the Lessor  following the First UK Meeting Date, and any
        Consolidated Group Accounts, will be prepared in accordance with SSAP 21
        on the actuarial after tax basis;

1.14.2  the accounts of the Lessor  following the First UK Meeting Date, and any
        Consolidated Group Accounts, will be prepared on the assumption that the
        leasing of the Ship will terminate on the Primary Period End Date;

1.14.3  following the First UK Meeting Date there will be no change in the basis
        on which the Lessor prepares its accounts in respect of the transactions
        contemplated by the Transaction Documents;

1.14.4  if and  as  often  as  Variable  Assumption  1.6 is  varied,  a  one-off
        adjustment will be made to the profit and loss account of the Lessor for
        the earliest Accounting Period then possible to reflect the consequences
        of the  change in the rate of  Corporation  Tax and to  ensure  that the
        treatment  described above in relation to the application of SSAP 21 can
        be applied to subsequent Accounting Periods;

1.14.5  there  will be no change in  Generally  Accepted  Accounting  Principles
        after the date of this Lease.

1.15

1.15.1  the Ship will be sold  during  the  Accounting  Period of the  Lessor in
        which the Primary Period End Date falls;

1.15.2  the Net Sale Proceeds or Net Total Loss Proceeds  required to be brought
        into  account as  Disposal  Value will be not less than the Tax  Written
        Down Value of the Ship at the  commencement of the Accounting  Period of
        the Lessor in which the Termination Payment Date falls;

        (and to the extent that this Variable Assumption 1.15 is satisfied there
        shall be deemed to be available to the Lessor a Capital  Allowance equal
        to such Tax Written Down Value).

1.16    The Lessor will not be required to bring into account as Disposal  Value
        any amount in excess of the  aggregate of Net Sale Proceeds or Net Total
        Loss Proceeds.

1.17    The Lessor  will be subject  to no Tax other  than  Corporation  Tax and
        Value  Added Tax in  respect  of the  transactions  contemplated  by the
        Transaction Documents.

1.18    Subject to  paragraph  1.33 the only  amounts  which the Lessor  will be
        required  to bring  into  account  as income in  calculating  UK taxable
        profits by  reference  to the  leasing  of the Ship will be the  Primary
        Rental payable in accordance  with paragraph 2.1,  interest  received or
        assumed to be received by the Lessor in accordance  with this  Financial
        Schedule,  the Termination Sum (or any adjustment thereto),  any Prepaid
        Rental,  any Disposal  Value,  and any other amount  payable  under this
        Lease expressed to be payable by way of Rental.

1.19

1.19.1  the  Arrangement Fee will be  (pound)384,281.28  and will be incurred on
        the Delivery Date;

1.19.2  the  Lease Fee will be  (pound)131,576.06  and will be  incurred  on the
        Delivery Date;

1.19.3  the Lessor's  Professional Costs will be  (pound)147,715.17  and will be
        incurred on the Delivery Date.

1.20    The Arrangement Fee, the Lease Fee and the Lessor's  Professional  Costs
        will be allowable as a trading  expense for  Corporation Tax purposes in
        the First Accounting Period.

1.21    The  "designated  period" (as that  expression is defined in section 106
        CAA):

1.21.1  will commence on the First UK Meeting Date; and

1.21.2  in the  "designated  period",  the Ship  will not be used for a  purpose
        which results in sections 109 or 110 CAA applying.

1.22    The United  Kingdom  will not take part in the Third  Stage and the Euro
        will not replace Sterling as the United Kingdom national currency.

1.23    Chapter 10 of Part 2 CAA does not apply to the Ship.

1.24    Section 225 CAA will not apply to the  transactions  contemplated by the
        Transaction Documents.

1.25    Interest on any late  payment of  Corporation  Tax made by the Lessor in
        respect of this Lease,  and interest on any  Relevant  Amount which is a
        negative  amount is (or would be had it  actually  been  payable  by the
        Lessor) deductible in computing the taxable profits of the Lessor.

1.26    Interest on any  overpayment  of  Corporation  Tax made by the Lessor in
        respect of this Lease,  and interest on any  Relevant  Amount which is a
        positive  amount is (or  would  had it  actually  been  received  by the
        Lessor) taxable in computing the taxable profits of the Lessor.

1.27    The Lessee and the Sub-Lessee  will not elect to include the Ship in the
        tonnage  tax regime (as  referred  to in  schedule 22 of the Finance Act
        2000).

1.28    The  Lessee  will  not  elect to make a  Prepayment  of  Primary  Rental
        pursuant to clause 25.2.1(c).

1.29    That any amounts received or receivable from:

1.29.1  the LC Bank under any Letter of Credit;

1.29.2  the Lessee Parent under the Lessee Parent Guarantee;

1.29.3  any Additional Security Provider under any Additional Security;

        will be  treated in the same way for  Corporation  Tax  purposes  as the
        payments  due under the  Transaction  Documents in respect of which such
        amount  is  received  under the  Letter of  Credit,  the  Lessee  Parent
        Guarantee and any Additional Security.

1.30    The Lessor will become a member of the  Lessor's  Group for the purposes
        of Group Relief on the Delivery Date.

1.31    The First UK Meeting Date will occur on 7 April 2003.

1.32    The Delivery Date will occur on 8 April 2003.

1.33

1.33.1  the Lessor will be treated as commencing a trade of operating leasing on
        the First UK Meeting Date and ceasing such trade on the Delivery Date;

1.33.2  no  Capital  Allowances  will be due to the  Lessor in  respect  of such
        trade;

1.33.3  profit of  (pound)44,249.79  will be earned in respect of such trade and
        (pound)51,596.17 of Tax Loss will be available to shelter such profit.

1.34

1.34.1  in  respect  of the First  Accounting  Period  the  Lessor  will only be
        entitled to surrender a proportion of Tax Loss,  that  proportion  being
        equal to

 Tax Loss x  number of days from Delivery Date to end of First Accounting Period
             -------------------------------------------------------------------
                     total number of days in the First Accounting Period

1.34.2  the balance (being  (pound)7,346.38)  of such Tax Loss shall be eligible
        to be set off as in  paragraph  1.33.3  and to the  extent of any excess
        carried  forward and set against  profits  arising in the finance  lease
        trade of the Lessor in later Accounting Periods.

1.35    the Ship Cost will be (pound)76,812,005.90.

1.36    There  will  be no  liability  to Tax  in  respect  of the  transactions
        contemplated by the Deed of Assignment,  Novation and Waiver (as defined
        in the Share Acquisition Documents).

1.37    The Spot  Exchange  Rate as between  Sterling as the Base  Currency  and
        Dollars as the Other  Currency  on the  Primary  Period End Date for the
        purposes of Non Variable Assumption 2.19 is 1:1.

1.38    The Initial Insurance Premium:

1.38.1  will be (pound)6000;

1.38.2  is incurred on the Delivery Date; and

1.38.3  is deductible as a trading  expense for the purposes of Corporation  Tax
        in the Accounting Period in which it is incurred.

1.39    The  Notional  Capital  Outstanding  on 8  April  2003 is  equal  to the
        aggregate of:

        (a)     (pound)76,812,005.90;

        (b)     the Arrangement Fee;

        (c)     the Lease Fee;

        (d)     the Lessor's Professional Costs; and

        (e)     the Initial Insurance Premium.

<PAGE>

2       Non-Variable Assumptions

2.1     On  each  Adjustment  Date  the  Lessor  will  pay or  receive  interest
        calculated  (on a daily  basis  and  using a 365 day  year) on the daily
        balances during each Adjustment  Period of Notional Capital  Outstanding
        calculated at the Assumed Rate.

2.2     The Percentage  Return will be applied to the daily negative balances of
        Notional Capital  Outstanding using a year of 365 days during the period
        from the Delivery  Date until the Final Date and the product is shown in
        the column of the Applicable Cash Flow headed "Margin", each such figure
        being  debited to the Cash Flow on each  Primary  Rental Date and on the
        Final Date.

2.3     All  notional  borrowing by the Lessor of funds in  connection  with the
        transactions of which this Lease forms part shall be deemed to have been
        raised in the  United  Kingdom  on a  sterling  advance  from a bank (as
        defined,  for the purposes of section  349(3)(a)  ICTA,  in section 840A
        ICTA) in  circumstances  where at the time when the interest is paid (or
        deemed to be paid) the person  beneficially  entitled to the interest is
        within the charge to Corporation Tax in respect of the interest and on a
        full recourse basis.

2.4     For the purposes of preparing any Applicable Cash Flow only, it shall be
        assumed that the Primary Rentals and any other amount payable under this
        Lease or the other Transaction Documents and which is taken into account
        in any  Applicable  Cash Flow  will be paid on the due date for  payment
        thereof.

2.5     The Lessor shall have no taxable profits other than any it shall make in
        respect of the  transactions  contemplated by the Transaction  Documents
        and shall be  regarded as having no assets on which  Capital  Allowances
        are available other than the Ship.

2.6     Subject only to there being no change in any Variable  Assumption  which
        affects the  operation  of the  following,  and to paragraph  1.34.1,  a
        single Group Relief Recipient will make to the Lessor payments for Group
        Relief which are calculated and receivable on the following basis:-

        (a)     by applying the provisions of section 403A ICTA to determine how
                much of the Lessor's Tax Loss for any  Accounting  Period of the
                Lessor is available for  surrender to the relevant  Group Relief
                Recipient  for  such  Group  Relief  Recipient's   corresponding
                Accounting  Period  (as  that  expression  is used  in the  said
                section 403A);

        (b)     by assuming that,  with the consent of the Lessor,  the relevant
                Group  Relief  Recipient  makes  such claim as is  necessary  to
                procure that the full amount of such Tax Loss is available to it
                by way of Group Relief;

        (c)     by assuming that the relevant Group Relief Recipient pays to the
                Lessor  by way of  Group  Relief  Payment  amounts  equal to the
                product of:

                (i)     the amount of the Tax Loss in respect of each Accounting
                        Period  of the  Group  Relief  Recipient  assumed  under
                        sub-paragraph  (a) above to have been surrendered by the
                        Lessor; and

                (ii)    the  Corporation  Tax Applicable Rate in relation to the
                        Accounting Period of the Group Relief Recipient to which
                        such Tax Loss was surrendered;

        (d)     by assuming that the relevant Group Relief  Recipient makes each
                payment  referred  to in  sub-paragraph  (c)  above  on the date
                assumed  to be the  date for the  payment  by the  Group  Relief
                Recipient  of  Corporation  Tax on profits in  relation  to that
                Accounting Period in Variable Assumption 1.12.

2.7     No payments or recovery of Value Added Tax will be taken into account in
        any Cash Flow.

2.8     The Lessor will pay the Arrangement  Fee, the Lease Fee and the Lessor's
        Professional Costs.

2.9     Subject  to there  being no change  in the  Variable  Assumptions  which
        affects  the  Lessor  or a Group  Relief  Recipient,  any  Group  Relief
        Recipient  will have an  Accounting  Period which ends on 31 December in
        each year.

2.10    Where it is assumed in any of the  Assumptions or in the  preparation of
        any Cash Flow that an amount is  received  or paid by the  Lessor on any
        date,  an amount  equal to such  receipt  or  payment  shall be shown as
        credited or debited to such Cash Flow on such date.

2.11    The aggregate of any Relevant Amount which is a negative amount together
        with  interest  thereon  at the rate and for the period  referred  to in
        paragraph  4.9.2(b) shall be paid by the Lessor to the Inland Revenue on
        the Tax Payment Date immediately succeeding the Effective Date.

2.12    Interest on any Relevant  Amount which is a negative  amount as referred
        to in  Non-Variable  Assumption  2.11 shall be deemed to be  interest on
        underpaid Corporation Tax payable by the Lessor to the Inland Revenue.

2.13    Any Relevant  Amount which is a positive amount shall be received by the
        Lessor  together  with  interest  thereon at the rate and for the period
        referred to in paragraph  4.9.2(c) on the Tax Payment  Date  immediately
        succeeding the monthly anniversary of the Effective Date.

2.14    The amount of any  interest on any  Relevant  Amount which is a positive
        amount as referred to in Non-Variable Assumption 2.13 shall be deemed to
        be interest on overpaid Corporation Tax payable by the Inland Revenue to
        the Lessor.

2.15    The Lessor will not be entitled to Capital  Allowances or any other form
        of Tax relief in respect of the Ship Cost at a rate of more than  twenty
        five per cent. (25%) per annum on a reducing balance basis.

2.16    Immediately following the completion of the acquisition by the Purchaser
        of the shares of the Lessor pursuant to the Share Acquisition Documents,
        a meeting of the board of directors of the Lessor will be held in the UK
        (the "First UK Meeting Date") and all subsequent board meetings at which
        major and  strategic  decisions  relating  to the  Lessor's  business or
        affairs will be taken and subject to any Bermudan law  requirements  all
        general  meetings  of the  Lessor  will  be held  within  the UK and all
        corporate  books and accounts  relating to the Lessor's  affairs will be
        maintained in the UK.

2.17    At the meeting  referred to in  Non-Variable  Assumption  2.16 above and
        after the First UK Meeting Date, at least a majority of the directors of
        the Lessor will be UK residents and at least a majority of the directors
        of the Lessor will be physically  present in the UK at board meetings of
        the Lessor.

2.18    Subject to there being no change in any Variable  Assumption  which will
        affect the Lessor,  after the First UK Meeting Date the Lessor will draw
        up its accounts for periods ending on 31 December in each year.

2.19    The Lessor will pay a fee of the Sterling  Equivalent  of $12,000 on the
        Primary Period End Date or, if earlier,  the Termination Date and no Tax
        relief will be available in respect of such fee.

<PAGE>

                                   Appendix 2

                              The Initial Cash Flow

<PAGE>

                                   Appendix 3

                             The Initial Tax Report

<PAGE>

                                   Appendix 4

                               Reserve Asset Rate

The Reserve Asset Rate for any Adjustment  Period or other relevant period shall
mean the annual percentage rate of interest derived from the following formula:

                             XL + S (L-D) + 0.01 x F
                             ------------------------
                                  100 - (X + S)

Where:

        "X"     is the amount required to be held as a non-interest bearing cash
                ratio  deposit  with  the  Bank of  England  or  other  relevant
                authority expressed as a percentage of an eligible institution's
                eligible liabilities (above any stated minimum);

        "L"     is LIBOR for the relevant Interest Period;

        "S"     is the amount required to be placed as special deposits with the
                Bank of  England or other  relevant  authority,  expressed  as a
                percentage  of an eligible  institution's  eligible  liabilities
                (above any stated minimum);

        "F"     is the amount of Sterling per  (pound)1,000,000  of the fee base
                of an authorised  institution  payable to the Financial Services
                Authority per annum  (disregarding any minimum fee payable under
                the Fees Regulations);

        "D"     is the lower of L and the rate of interest per annum paid by the
                Bank of England or other relevant  authority on special deposits
                at or about 11.00 am on the date of calculation;

PROVIDED THAT:

        (a)     for the  purposes  of  calculating  the  Reserve  Asset  Rate in
                accordance with this Appendix 4:

                (i)     X, L, S and D are included in the formula as numbers and
                        not as percentages (for example, if X=0.15 per cent. and
                        L=7 per cent., XL is calculated as 0.15 x 7;

                (ii)    the  formula is applied on the first day of each  period
                        for  which  is falls to be  calculated  (and the  result
                        shall apply for the duration of such period);

                        (A)     each  amount is rounded up to the  nearest  four
                                decimal places;

                        (B)     if the formula  produces a negative  percentage,
                                the percentage shall be taken as zero;

        (b)     if alternative or additional financial  requirements are imposed
                by the Bank of England,  the Financial Services Authority or any
                other United Kingdom  governmental  authority or agency which in
                the Lessor's  opinion  makes the formula no longer  appropriate,
                the  Lessor  shall  be  entitled  by  notice  to the  Lessee  to
                stipulate  such other  formula as shall be  suitable to apply in
                substitution  for  the  formula.   Any  such  other  formula  so
                stipulated  shall take  effect in  accordance  with the terms of
                such notice; and

        (c)     for the purposes of this Appendix 4:

                (i)     "authorised" and  "institution"  have the meanings given
                        to those terms in the Banking Act 1987;

                (ii)    "Bank of  England  Act"  means the Bank of  England  Act
                        1998;

                (iii)   "eligible  institution"  has the  meaning  given to that
                        term in schedule 2 to the Bank of England Act;

                (iv)    "eligible  liabilities"  has the  meaning  given to that
                        term in the Cash Ratio Deposits  (Eligible  Liabilities)
                        Order 1998 or the applicable substitute order made under
                        the  Bank of  England  Act as in  force  on the  date of
                        application of the formula;

                (v)     "fee base" has the meaning given to the term in the Fees
                        Regulations;

                (vi)    "Fees Regulations" means the Banking  Supervision (Fees)
                        Regulations   2000   or   the   applicable    substitute
                        regulations made under the Bank of England Act as are in
                        force on the date of application of the formula; and

                (vii)   "special deposits" has the meaning given to that term by
                        the Bank of  England on the date of  application  of the
                        formula.

<PAGE>

                                   Appendix 5

                             Initial Security Table

<PAGE>

                                   Appendix 6

                             Extra Security Amounts

        Security Period                                          Amount
                                                                 (pound)
        15 July 03           to 14 October 03                   121,433
        15 October 03        to 14 January 04                   273,275
        14 April 04          to 14 July 04                       26,344
        15 July 04           to 14 October 04                  208, 179
        15 October 04        to 14 January 05                   364,130
        15 April 05          to 14 July 05                       90,454
        15 July 05           to 14 October 05                   271,653
        15 October 05        to 14 January 06                   425,870
        15 July 06           to 14 October 06                   152,079
        15 October 06        to 14 January 07                   299,290
        15 July 07           to 14 October 07                    53,399
        15 October 07        to 14 January 08                   204,360
        15 October 08        to 14 January 09                   124,803
        15 October 09        to 14 January 10                    57,491
        15 July 22           to 14 October 22                       349
        15 October 22        to 14 January 23                    27,319

<PAGE>

                                   Schedule 5

                          Forms of Loss Payable Clause

Hull and Machinery (Marine and War Risks)

By a charterparty  by way of demise made the [o] day of April 2003 between Golar
Spirit  (Bermuda)  Limited  (whose  name is to be  changed to  Sovereign  Spirit
Limited) (the "Lessor") and Golar Gas Holding  Company,  Inc. (the "Lessee") the
Lessor has demise chartered the Ship to the Lessee.

By a sub  charterparty  by way of demise made the [o] day of April 2003  between
the  Lessee  and  Golar  Spirit  UK Ltd.  (the  "Sub-Lessee"),  the  Lessee  has
sub-demise chartered the Ship to the Sub-Lessee.

All recoveries under this policy shall be applied as follows:

(a)     all  claims  hereunder  in  respect  of an  actual  or  constructive  or
        compromised or arranged total loss shall be paid in full to the Lessor;

(b)     all claims in respect of a major  casualty  (that is to say any casualty
        the claim in respect of which exceeds five million Dollars  ($5,000,000)
        (or the equivalent)  inclusive of any deductible)  shall be paid in full
        to the Lessor; and

(c)     all other claims hereunder shall be paid in full to the Sub-Lessee or to
        its order  unless and until the  Lessor  shall  have  notified  insurers
        hereunder to the  contrary,  whereupon  all such claims shall be paid to
        the Lessor.

Protection and Indemnity Risks

Payment of any recovery which Golar Spirit  (Bermuda)  Limited (whose name is to
be changed to  Sovereign  Spirit  Limited)  (the  "Lessor") or Golar Gas Holding
Company,  Inc.  (the  "Lessee") or Golar Spirit UK Ltd.  (the  "Sub-Lessee")  is
entitled  to  make  out of  the  funds  of the  Association  in  respect  of any
liability,  costs  or  expenses  incurred  by the  Lessor,  the  Lessee  and the
Sub-Lessee,  shall be paid to the  person  to whom  the  liability  (or  alleged
liability) covered by the entry was incurred or to the extent that the liability
(or alleged  liability)  to such person has  previously  been  discharged by the
Lessor,  the Lessee and the Sub-Lessee,  such moneys shall be paid to the Lessor
or its order or, as the case may be, the Lessee or its order or, as the case may
be, the Sub-Lessee or its order in reimbursement of the moneys so expended by it
in satisfaction of such liability (or alleged  liability),  unless and until the
Association  receives  notice to the contrary from the Lessor in which event all
recoveries due to the Lessee and the Sub-Lessee  shall thereafter be paid to the
Lessor;  provided that no liability  whatsoever shall attach to the Association,
its Managers or their  agents for failure to comply with the latter  obligations
until the expiry of two clear Banking Days from the receipt of such notice.  The
Association shall, unless it receives from the Lessor notice to the contrary, be
at liberty at the request of the Lessee and the  Sub-Lessee  to provide  bail or
other  security  to  prevent  the arrest or obtain  the  release of the  vessel,
without liability to the Lessor.

<PAGE>

                                   Schedule 6

                         Form of Compliance Certificate

                   Compliance Certificate issued pursuant to a
                            Lease Agreement dated [o]
           April 2003 in respect of m.v. "GOLAR SPIRIT" (the "Lease")

I, [o], the Chief  Financial  Officer of Golar Gas Holding  Company,  Inc.  (the
"Lessee"), hereby certify that:

1       Attached hereto are the latest [Annual Financial Statements]  [Quarterly
        Financial  Statements]  for the [o] period ended on [o] (the  "Reference
        Date").  Such financial  statements  [were  prepared in accordance  with
        Relevant  GAAP] [were not prepared in accordance  with Relevant GAAP and
        attached  hereto is a statement of the full  details of the  adjustments
        required to in such statements to reflect  Relevant GAAP as necessary to
        calculate the amounts referred to in paragraph 2 below].

2       Attached hereto is a statement of the respective amounts of:

        o       the Cash Balances and Minimum Free Available Cash

        o       Current Assets,  Current  Liabilities and the current portion of
                long-term debt

        o       Annualised EBITDA and Interest Expense

        o       Net Debt,

        as at, and for each relevant period ended on, the Reference Date.

3       The Lessee has complied with each of the financial  undertakings set out
        in clause  11.1.9 of the Lease and is not in default in the  performance
        or observance of any of such covenants [specify any exceptions].

4       As at [date] no Relevant  Event has occurred and is continuing  [specify
        any exceptions].

5       The person executing this certificate on our behalf has full information
        concerning our financial  affairs and has executed the same after having
        made due investigation and enquiry as to the accuracy of the information
        herein contained.

Terms used herein and not otherwise  defined  herein shall have the meanings set
forth in the said Lease. This certificate is rendered pursuant to clause 11.1.11
of the Lease.

IN WITNESS WHEREOF, the undersigned has set his hand this [o] day of [o] [20o].

GOLAS GAS HOLDING COMPANY INC.

By: _____________________________
    Chief Financial Officer

<PAGE>

SIGNED by                            )
GOLAR SPIRIT (BERMUDA) LIMITED       )     _______________________________
                                           Name:
                                           Title:

SIGNED by                            )
GOLAR GAS HOLDING COMPANY, INC.      )     _______________________________
                                           Name:
                                           Title:

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