11.028 EXHIBIT 10.12

DATED 30 JUNE 2006

XENIA INTERNATIONAL CORP.
(as Borrower)

- and -

FORTIS BANK N.V./S.A., ATHENS BRANCH
and others
(as lenders)

-and-

FORTIS BANK N.V./S.A., ATHENS BRANCH
(as agent and security trustee)

US$8,250,000 SECURED LOAN
FACILITY AGREEMENT

m.v. "TASMAN TRADER"

STEPHENSON HARWOOD
One St. Paul's Churchyard
London EC4M 8SH
Tel: 020 7329 4422
Fax: 020 7606 0822

Ref: 11.028

CONTENTS

                                                                            Page

1    Definitions and Interpretation............................................5

2    The Loan and its Purpose.................................................19

3    Conditions Precedent and Subsequent......................................21

4    Representations and Warranties...........................................25

5    Repayment and Prepayment.................................................29

6    Interest.................................................................30

7    The Master Agreement.....................................................32

8    Fee......................................................................34

9    Security Documents.......................................................34

10   Agency and Trust.........................................................35

11   Covenants................................................................44

12   Accounts.................................................................58

13   Events of Default........................................................59

14   Set-Off and Lien.........................................................64

15   Assignment and Sub-Participation.........................................66

16   Payments, Mandatory Prepayment, Reserve Requirements and Illegality......67

17   Communications...........................................................72

18   General Indemnities......................................................73

19   Miscellaneous............................................................75

20   Law and Jurisdiction.....................................................79

SCHEDULE 1....................................................................81
          The Banks and the Commitments.......................................81

APPENDIX A....................................................................83
          Drawdown Notice.....................................................83

APPENDIX B....................................................................84
          Form of Transfer Certificate........................................84

LOAN AGREEMENT

Dated: 30 June 2006

BETWEEN:-

(1) XENIA INTERNATIONAL CORP., a company incorporated according to the law of the Marshall Islands, with its registered office at The Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro Marshall Islands, M.H. 96960, c/o The Trust Company of the Marshall Islands Inc. ("the Borrower");

(2) FORTIS BANK N.V./S.A., ATHENS BRANCH (the "Original Bank") AND THE BANKS AND FINANCIAL INSTITUTIONS (together with the Original Bank, the "Banks" and each a "Bank") named in Schedule 1, of the offices listed in that Schedule or such other offices as they may select and notify to the Agent from time to time;

(3) FORTIS BANK N.V./S.A., ATHENS BRANCH acting as arranger, agent and security trustee through its office at 166, Syngrou Ave. 176 71, Athens, Greece (in that capacity "the Agent").

WHEREAS:-

(A) The Borrower is the registered owner of the Vessel. which is registered in the ownership of the Borrower under the flag of the Marshall Islands.

(B) Each of the Banks have agreed to advance to the Borrower its respective Commitment of an aggregate amount not exceeding the lesser of (i) eight million two hundred and fifty thousand Dollars ($8,250,000) and (ii) seventy seven per centum (77%) of the lower of (a) the Fair Market Value of the Vessel and (b) the Acquisition Price of the Vessel, in order to assist the Borrower in re-financing part of the Acquisition Price of the Vessel.

IT IS AGREED as follows:-

1 Definitions and Interpretation

1.1 Definitions

In this Agreement:-

1.1.1     "the Accounts" means the Earnings  Account and the Retention
          Account.

1.1.2     "the  Accounts  Security  Deed" means the Accounts  Security
          Deed referred to in Clause 9.5.

1.1.3     "Acquisition  Price",  in  respect of the  Vessel,  means an
          amount which shall not exceed ten million  seven hundred and
          seventy five thousand Dollars ($10,775,000).

1.1.4     "the Address for Service" means HTD, Irongate House,  Duke's
          Place,  London,  EC3A 7LP, United Kingdom or, in relation to
          any of the Security  Parties,  such other address in England
          and  Wales as that  Security  Party  may  from  time to time
          designate by no fewer than ten days'  written  notice to the
          Agent.

1.1.5     "the   Administration"  has  the  meaning  given  to  it  in
          paragraph 1.1.3 of the ISM Code.

1.1.6     "Annex VI" means Annex VI (Regulations for the Prevention of
          Air Pollution  from Ships) to the  International  Convention
          for the Prevention of Pollution from Ships 1973 (as modified
          in 1978 and 1997).

1.1.7     "Approved  Brokers"  means  independent  sale  and  purchase
          brokers appointed by the Agent in its discretion.

1.1.8     "the  Assignment"  means  the  deed  of  assignment  of  the
          Insurances,   Earnings,   Charter  Rights  and   Requisition
          Compensation referred to in Clause 9.2.

1.1.9     "the  Availability  Termination  Date" means 15 July 2006 or
          such later date as the  Borrower  may  request and the Banks
          may  in  their  discretion  agree  (such  consent  not to be
          unreasonably withheld).

1.1.10    "Break Costs" means all costs, losses, premiums or penalties
          incurred  by the  Agent  or any  Bank  in the  circumstances
          contemplated  by Clause 18.4, or as a result of it receiving
          any  prepayment  of all or any  part  of the  Loan  (whether
          pursuant  to Clause 5 or  otherwise),  or any other  payment
          under or in  relation  to the  Security  Documents  on a day
          other than the due date for payment of the sum in  question,
          and  includes  (without  limitation)  any  losses  or  costs
          incurred in liquidating or re-employing  deposits from third
          parties  acquired  to effect or maintain  the Loan,  and any
          liabilities, expenses or losses incurred by the Agent or any
          Bank in terminating or reversing, or otherwise in connection
          with,  any  Transaction  or any other  interest  rate and/or
          currency swap,  transaction  or arrangement  entered into by
          the Agent or any Bank to hedge any  exposure  arising  under
          this Agreement, or in terminating or reversing, or otherwise
          in connection  with,  any open  position  arising under this
          Agreement or the Master Agreement.

1.1.11    "Business  Day" means a day on which  banks are open for the
          transaction of business of the nature  contemplated  by this
          Agreement  (and not authorised by law to close) in New York,
          United States of America;  London,  England;  Athens, Greece
          and any other  financial  centre which any Bank may consider
          appropriate  for the  operation  of the  provisions  of this
          Agreement.

1.1.12    "Charter"  means (a) the time charter dated 17 December 2003
          (as  amended  and  supplemented  by  addendum  no.1 dated 17
          December  2003,  as  further  amended  and  supplemented  by
          addendum no.2 dated 17 December 2003 and as further  amended
          and supplemented by addendum no.3 dated 17 December 2003) at
          a gross  daily  rate of hire  of (i)  eight  thousand  eight

hundred and fifty Dollars ($8,850) per day with two point two five per centum (2.25%) commission from the Drawdown Date until December 2008, (ii) nine thousand five hundred Dollars ($9,500) per day with two point five per centum (2.5%) commission until December 2010 and (iii) nine thousand Dollars ($9,000) per day with two point five per

          centum (2.5%) commission until March 2012, and (b) any other
          time  charter,   consecutive  voyage  charter,  contract  of
          affreightment  or any other  contract of  employment  of the
          Vessel in excess of twelve (12) months.

1.1.13    "Charterer"  means  Tasman  Orient  Line  (Cyprus  Ltd.)  of
          Limassol, Cyprus in respect of the Vessel.

1.1.14    "Charter  Rights" means all rights and benefits  accruing to
          the  Borrower in respect of the Vessel  under or arising out
          of the  Charter or any other  charterparty  or  contract  of
          employment  in respect of the Vessel and not forming part of
          the Earnings.

1.1.15    "Commitment"  means, in relation to each Bank, the amount of
          the Loan which that Bank  agrees to advance to the  Borrower
          as its several  liability as  indicated  against the name of
          that Bank in Schedule 1 and/or,  where the context  permits,
          the amount of the Loan  advanced by that Bank and  remaining
          outstanding.

1.1.16    a  "Communication"  means  any  notice,  approval,   demand,
          request  or  other  communication  from  one  party  to this
          Agreement to the other.

1.1.17 "the Communications Address" means c/o Eurobulk Ltd, Aethrion Center, 40 Ag. Konstantinou Avenue, 151 24 Maroussi, Greece, marked for the attention of Mr. Aristides J. Pittas.

1.1.18 "the Company" means, at any given time, the company

          responsible  for the Vessel's  compliance  with the ISM Code
          pursuant to paragraph 1.1.2 of the ISM Code.

1.1.19    a "Confirmation" means a Confirmation  exchanged,  or deemed
          exchanged,   between   the   Agent  and  the   Borrower   as
          contemplated by the Master Agreement.

1.1.20    "Corporate  Guarantee"  means the  guarantee  and  indemnity
          referred to in Clause 9.3.

1.1.21    "Corporate   Guarantor"   means  Euroseas  Ltd.,  a  company
          incorporated  according to the law of the Marshall  Islands,
          with  registered   office  at  The  Trust  Company  Complex,
          Ajeltake  Island,  Ajeltake Road,  Majuro Marshall  Islands,
          M.H.  96960,  c/o The Trust Company of the Marshall  Islands
          Inc. and/or (where the context  permits) any other person or
          company  who shall at any time  during the  Facility  Period
          give  to  the  Banks  or to the  Agent  a  guarantee  and/or
          indemnity   for  the   repayment  of  all  or  part  of  the
          Indebtedness.

1.1.22    "Credit Support  Document"  means any document  described as
          such in the Master Agreement and, where the context permits,
          any  other  document  referred  to  in  any  Credit  Support
          Document  which has the effect of creating an Encumbrance in
          favour of the Agent.

1.1.23    "Credit  Support  Provider" means any person (other than the
          Borrower) described as such in the Master Agreement.

1.1.24    "Currency of Account"  means,  in relation to any payment to
          be made to the Agent or a Bank under or  pursuant  to any of
          the Security  Documents,  the currency in which that payment
          is required to be made by the terms of the relevant Security
          Document.

1.1.25    "Default  Rate" means the  aggregate  rate of the Margin and
          two per centum (2%) per annum above the cost to the Agent of
          obtaining  funds in  amount  similar  to the  amount  of the
          Indebtedness  or any relevant part of the  Indebtedness  for
          such periods as the Agent shall determine in its discretion.

1.1.26    "DOC" means a valid  Document of  Compliance  issued for the
          Company by the Administration  pursuant to paragraph 13.2 of
          the ISM Code.

1.1.27    "Dollars"   and  "$"  each   means   available   and  freely
          transferable and convertible funds in lawful currency of the
          United States of America.

1.1.28    "the  Drawdown  Date"  means  the date on which  the Loan is
          advanced by the Banks to the Borrower pursuant to Clause 2.

1.1.29    "Drawdown Notice" means a notice complying with Clause 2.2.

1.1.30    "Earnings" means all hires, freights,  pool income and other
          sums  payable  to or for  the  account  of the  Borrower  in
          respect of the Vessel  including  (without  limitation)  all
          remuneration for salvage and towage services,  demurrage and
          detention   moneys,   contributions   in  general   average,
          compensation  in respect of any  requisition  for hire,  and
          damages and other payments  (whether awarded by any court or
          arbitral  tribunal or by agreement or otherwise) for breach,
          termination  or variation of any contract for the operation,
          employment or use of the Vessel.

1.1.31    "the Earnings  Account" means a bank account to be opened in
          the name of the  Borrower  with  the  Agent  and  designated
          "Xenia International Corp. - Earnings Account".

1.1.32 "Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien, assignment, hypothecation, preferential right, option, title retention or trust arrangement or any other agreement or arrangement which has the effect of creating security or payment priority.

1.1.33 "Environmental Affiliate" means an agent, employee,

          independent contractor,  sub-contractor or other person in a
          contractual  relationship  with the Borrower relating to the
          Vessel or its carriage of cargo or its operation  whose acts
          or omissions would have a Material Adverse Effect.

1.1.34    "Environmental  Approval"  means  all  approvals,  licences,
          permits,  exemptions and  authorisations  required under any
          applicable Environmental Laws.

1.1.35    "Environmental  Claim" means any and all enforcement,  clean
          up, removal or other  governmental or regulatory  actions or
          orders instituted or completed pursuant to any Environmental
          Laws or Environmental  Approval together with claims made by
          any third party relating to damage,  contributions,  loss or
          injury,   resulting   from  any  Release  of   Materials  of
          Environmental Concern.

1.1.36    "Environmental  Laws"  means all local,  state,  provincial,
          federal,   state  local,  foreign  and  international  laws,
          regulations,   treaties  and   conventions   (including  any
          amendments  and/or protocols  thereto) for the time being in
          force  pertaining  to the  pollution or  protection of human
          health or the environment  (including  ambient air,  surface
          water,  ground water,  land surface or subsurface strata and
          all  or  any  part  of  navigable  waters,   waters  of  the
          contiguous  zone,  ocean  waters  and  international  waters
          (howsoever called)),  including laws, regulations,  treaties
          and conventions  (including any amendments  and/or protocols
          thereto) for the time being in force relating to the Release
          (or  threatened   Release)  of  Materials  of  Environmental
          Concern.

1.1.37    "Event of Default" means any of the events set out in Clause
          13.2.

1.1.38    "the Facility Period" means the period beginning on the date
          of this  Agreement  and ending on the date when the whole of
          the  Indebtedness  has been repaid in full and the  Borrower
          has  ceased to be under  any  further  actual or  contingent
          liability  to the Banks or the Agent under or in  connection
          with the Security Documents.

1.1.39    "Fair  Market  Value"  means the  average of two  valuations
          obtained from two Approved Brokers.

1.1.40    "Final  Maturity Date" means the earlier of the date falling
          sixety nine (69) months after the Drawdown Date and 15 April
          2012.

1.1.41    a "Hedging  Transaction"  means a  Transaction  entered into
          between  the Agent and the  Borrower  pursuant to the Master
          Agreement for the express  purpose of hedging all or part of
          the   Borrower's   interest   rate  risk  pursuant  to  this
          Agreement.

1.1.42    "IAPPC" means a valid international air pollution prevention
          certificate for the Vessel issued under Annex VI.

1.1.43    "the  Indebtedness"  means the Loan;  any  Master  Agreement
          Liabilities; all other sums of any nature (together with all
          interest  on any of those  sums) which from time to time may
          be  payable  by the  Borrower  to the  Agent or to the Banks
          pursuant to the Security Documents; any damages payable as a
          result of any breach by the  Borrower of any of the Security
          Documents; and any damages or other sums payable as a result
          of any of the  obligations of the Borrower under or pursuant
          to any of  the  Security  Documents  being  disclaimed  by a
          liquidator  or any  other  person,  or,  where  the  context
          permits, the amount thereof for the time being outstanding.

1.1.44    an  "Instructing  Group"  means any one or more Banks  whose
          combined  Proportionate  Shares  exceed  seventy  per centum
          (70%).

1.1.45    "Insurances",  in respect of the Vessel,  means all policies
          and  contracts of insurance  (including  all entries in hull
          and  machinery,   protection  and  indemnity  or  war  risks
          associations)  which  are  from  time to time  taken  out or
          entered into in respect of or in connection  with the Vessel
          or her  increased  value or her Earnings or the loss of hire
          and  (where  the  context  permits)  all  benefits  thereof,
          including all claims of any nature and returns of premium.

1.1.46    "Interest  Payment  Date" means each date for the payment of
          interest in accordance with Clause 6.

1.1.47    "Interest Period" means each interest period selected by the
          Borrower or agreed by the Agent pursuant to Clause 6.

1.1.48    "the ISM Code" means the  International  Management Code for
          the Safe  Management of Ships and for Pollution  Prevention,
          as adopted by the  Assembly  of the  International  Maritime
          Organisation on 4 November 1993 by resolution A.741 (18) and
          incorporated  on 19 May 1994 as  chapter IX of the Safety of
          Life at Sea Convention 1974.

1.1.49    "the  ISPS  Code"  means  the  International  Ship  and Port
          Facility Security Code adopted by the International Maritime
          Organisation (as the same may be amended from time to time).

1.1.50    "law"   means   any  law,   statute,   treaty,   convention,
          regulation,  instrument or other subordinate  legislation or
          other legislative or  quasi-legislative  rule or measure, or
          any order or decree of any government, judicial or public or
          other body or authority, or any directive, code of practice,
          circular,  guidance  note or other  direction  issued by any
          competent  authority  or agency  (whether  or not having the
          force of law).

1.1.51    "LIBOR"  means the rate  displayed  as the British  Bankers'
          Association  Interest  Settlement  Rate  on any  information
          service  selected  by  the  Agent  on  which  that  rate  is
          displayed  (without  rounding),  for  deposits in Dollars of
          amounts equal to the amount of the Loan or any relevant part
          of the Loan for a period  equal in  length  to the  relevant
          Interest  Period,  or (if the Agent is for any reason unable
          to ascertain  that rate) the average rate at which  deposits
          in Dollars of amounts  comparable  to the amount of the Loan
          (or any relevant  part of the Loan) are offered to the Agent
          in the London  Interbank market for a period equal in length
          to the relevant Interest Period.

1.1.52    "the  Loan"  means the  aggregate  amount  from time to time
          advanced by the Banks to the  Borrower  pursuant to Clause 2
          or, where the context  permits,  the amount advanced and for
          the time being outstanding.

1.1.53    "the Managers" means Eurobulk Ltd., or such other commercial
          and/or  technical  managers of the Vessel  nominated  by the
          Borrower as the Agent may in its discretion approve.

1.1.54    "Manager's  Undertakings"  means  the  Undertakings  of  the
          Managers referred to in Clause 9.5.

1.1.55    "the Margin"  means zero point nine five per centum  (0.95%)
          per annum.

1.1.56    "Master  Agreement"  means any ISDA Master Agreement (or any
          other  form of master  agreement  relating  to  interest  or
          currency  exchange  transactions)  entered  into between the
          Agent and the Borrower during the Facility Period, including
          each Schedule to any Master Agreement and each  Confirmation
          exchanged pursuant to any Master Agreement.

1.1.57    "the Master  Agreement  Liabilities"  means, at any relevant
          time, all  liabilities of the Borrower to the Agent under or
          pursuant  to  the  Master   Agreement,   whether  actual  or
          contingent, present or future.

1.1.58    "Material Adverse Effect" means a material adverse effect on
          the Borrower's  ability to meet its obligations to the Agent
          in respect of the  Indebtedness or on the security  provided
          to the Agent and the Banks in respect of the Indebtedness.

1.1.59    "Material of  Environmental  Concern" means and includes all
          pollutants,   contaminants,   toxic   substances,   oil  and
          hazardous  substances  as may be defined  in any  applicable
          local,   state,    provincial,    federal,    national   and
          international  laws,  regulations,  treaties and conventions
          (including any amendments and/or protocols  thereto) for the
          time being in force.

1.1.60    "the  Maximum Loan  Amount"  means an  aggregate  amount not
          exceeding  the lesser of (i) eight  million  two hundred and
          fifty thousand  Dollars  ($8,250,000) and (ii) seventy seven
          per centum (77%) of the lower of (a) the  Acquisition  Price
          and (b) the Fair Market Value.

1.1.61    "the   Mortgagees'   Insurances"   means  all  policies  and
          contracts of  mortgagees'  interest  insurance and any other
          insurance from time to time taken out by the Agent on behalf
          of the Banks in  relation to the Vessel for an amount of not
          less  than one  hundred  and ten per  centum  (110%)  of the
          outstanding Loan.

1.1.62    "the Mortgage" means the first preferred  mortgage  referred
          to in Clause 9.1.

1.1.63    "Notional  Amount",  in respect of any Hedging  Transaction,
          means the  Notional  Amount as defined  in the  Confirmation
          relating to that Hedging Transaction.

1.1.64    "Operating   Expenses"  means  cash  expenses  properly  and
          reasonably  incurred by the Borrower in connection  with the
          operation, employment,  maintenance, repair and insurance of
          the Vessel.

1.1.65    "Potential Event of Default" means any event which, with the
          giving of notice  and/or  the  passage  of time  and/or  the
          satisfaction of any materiality  test,  would  constitute an
          Event of Default.

1.1.66    "Proceedings" means any suit, action or proceedings begun by
          the  Agent  or  any  of  the  Banks  arising  out  of  or in
          connection with the Security Documents.

1.1.67    "Proportionate  Share" means,  at any time,  the  proportion
          which that Bank's Commitment  (whether or not advanced) then
          bears to the aggregate Commitments of all the Banks (whether
          or not advanced).

1.1.68    "Release"  means an  emission,  spill,  release or discharge
          into or upon the air, surface water,  groundwater,  or soils
          of any  Material  of  Environmental  Concern  for  which the
          Borrower has any liability under  Environmental  Law, except
          in accordance with a valid Environmental Approval.

1.1.69    "Repayment Date" means the date for payment of any Repayment
          Instalment in accordance with Clause 5.

1.1.70    "Repayment  Instalment"  means any instalment of the Loan to
          be repaid by the Borrower pursuant to Clause 5.

1.1.71    "Requisition  Compensation"  means all compensation or other
          money which may from time to time be payable to the Borrower
          as a result of the Vessel being  requisitioned  for title or
          in any other way compulsorily acquired (other than by way of
          requisition for hire).

1.1.72    "the Retention Account" means the bank account to be opened,
          in the  name of the  Borrower,  with the  Agent,  designated
          "Xenia International Corp. - Retention Account".

1.1.73    "the Security Documents" means this Agreement, the Mortgage,
          the  Assignment,   the  Corporate  Guarantee,  the  Accounts
          Security  Deed,  the  Managers'  Undertakings,   the  Master
          Agreement and any other Credit  Support  Documents or (where
          the context  permits) any one or more of them, and any other
          agreement  or document  which may at any time be executed by
          any person as security for the payment of all or any part of
          the Indebtedness.

1.1.74    "Security   Parties"  means  the  Borrower,   the  Corporate
          Guarantor, the Managers, any other Credit Support Providers,
          and any other  person or company  who may at any time during
          the Facility Period be liable for, or provide  security for,
          all or any part of the  Indebtedness,  and "Security  Party"
          means any one of them.

1.1.75    "SMC" means a valid safety management certificate issued for
          the Vessel by or on behalf of the Administration pursuant to
          paragraph 13.4 of the ISM Code.

1.1.76    "SMS"  means a  safety  management  system  for  the  Vessel
          developed and  implemented  in accordance  with the ISM Code
          and  including  the  functional  requirements,   duties  and
          obligations required by the ISM Code.

1.1.77    "Taxes" means all taxes, levies,  imposts,  duties, charges,
          fees,  deductions  and  withholdings  (including any related
          interest,   fines,   surcharges   and   penalties)  and  any
          restrictions  or conditions  resulting in any charge,  other
          than  taxes on the  overall  net income of the Agent or of a
          Bank,  and  "Tax"  and   "Taxation"   shall  be  interpreted
          accordingly.

1.1.78    "Total Loss" means:-

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

          (b)  the requisition for title or compulsory  acquisition of
               the Vessel by or on behalf of any  government  or other
               authority  (other than by way of requisition for hire);
               or

          (c)  the capture, seizure, arrest, detention or confiscation
               of the  Vessel,  unless  the  Vessel  is  released  and
               returned to the  possession of the Borrower  within one
               month after the capture,  seizure, arrest, detention or
               confiscation in question.

1.1.79    "Transaction"  means a transaction  entered into between the
          Agent and the Borrower governed by the Master Agreement.

1.1.80    "Transfer Certificate" means a certificate materially in the
          form of Appendix B.

1.1.81    "Transfer  Date",  in  relation  to a  transfer  of any of a
          Bank's rights and/or  obligations  under or pursuant to this
          Agreement,  means the fifth  Business  Day after the date of
          delivery of the relevant Transfer  Certificate to the Agent,
          or  such  later  Business  Day as may  be  specified  in the
          relevant Transfer Certificate.

1.1.82    "Transferee"  means  any bank or  financial  institution  to
          which a Bank transfers any of its rights and/or  obligations
          under or pursuant to this Agreement.

1.1.83    "the Trust Property" means:-

          (a)  the benefit of the covenant contained in Clause 10; and

          (b)  all  benefits   arising   under   (including,   without
               limitation, all proceeds of the enforcement of) each of
               the  Security  Documents  (other than this  Agreement),
               with the exception of any benefits  arising  solely for
               the benefit of the Agent.

1.1.84    "the  Vessel"  means  the  container  motor  vessel  "TASMAN
          TRADER",  built in 1990 of approximately  22,568 dwt and 950
          TEU,  currently  registered  under the flag of the  Marshall
          Islands in the ownership of the Borrower and  everything now
          or in the future belonging to her on board and ashore.

1.2 Interpretation

In this Agreement:-

1.2.1     words  denoting the plural  number  include the singular and
          vice versa;

1.2.2     words denoting persons include  corporations,  partnerships,
          associations  of persons  (whether  incorporated  or not) or
          governmental or quasi-governmental bodies or authorities and
          vice versa;

1.2.3     references   to  Recitals,   Clauses  and   Appendices   are
          references  to recitals and clauses of, and  appendices  to,
          this Agreement;

1.2.4     references  to this  Agreement  include the Recitals and the
          Appendices;

1.2.5     the  headings  and  contents  page(s) are for the purpose of
          reference  only,  have no legal or other  significance,  and
          shall be ignored in the interpretation of this Agreement;

1.2.6     references to any document  (including,  without limitation,
          to all or any of the  Security  Documents)  are,  unless the
          context otherwise  requires,  references to that document as
          amended,  supplemented,  novated  or  replaced  from time to
          time;

1.2.7     references   to  statutes  or  provisions  of  statutes  are
          references to those statutes,  or those provisions,  as from
          time to time amended, replaced or re-enacted;

1.2.8     words  and  expressions  defined  in the  Master  Agreement,
          unless  the  context  otherwise  requires,   have  the  same
          meaning;

1.2.9     references to a Bank or to the Agent include its successors,
          transferees and assignees;

1.2.10    references to times of day are to London time.

1.3 Offer letter

This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between the Agent or any of the Banks and the Borrower or their representatives prior to the date of this Agreement.

2 The Loan and its Purpose

2.1 Agreement to lend Subject to the terms and conditions of this Agreement, and in reliance on each of the representations and warranties made or to be made in or in accordance with each of the Security Documents, each of the Banks agrees to advance to the Borrower an aggregate amount not exceeding the Maximum Loan Amount to be used by the Borrower for the purpose referred to in Recital (B).

2.2 Advance of the Loan Subject to satisfaction by the Borrower of the conditions set out in Clause 3.1, the Loan shall be advanced to the Borrower in one amount by such method of funds transfer as the Banks and the Borrower shall agree. The Loan shall be advanced in Dollars on a Business Day, provided that the Borrower shall have given to the Agent not more than ten and not fewer than three Business Days' notice (or such lesser period of notice as the Agent may accept in its discretion) in writing materially in the form set out in Appendix A of the required Drawdown Date. The Drawdown Notice once given shall be irrevocable and shall constitute a warranty by the Borrower that:-

2.2.1     all  conditions  precedent  to the  advance of the Loan will
          have  been   satisfied  on  or  before  the  Drawdown   Date
          requested;

2.2.2     no Event of Default or Potential  Event of Default will then
          have occurred;

2.2.3     no Event of  Default  or  Potential  Event of  Default  will
          result from the advance of the Loan; and

2.2.4     there has been no material  adverse  change in the business,
          affairs  or  financial  condition  of any  of  the  Security
          Parties from that pertaining at the date of this Agreement.

The Agent shall promptly notify each Bank of the receipt of the Drawdown Notice, following which each Bank will make, subject to the provisions of Clause 3, its Proportionate Share of the amount of the Loan available to the Borrower through the Agent on the Drawdown Date requested.

2.3 Availability Termination Date No Bank shall be under any obligation to advance all or any part of the Loan after the Availability Termination Date.

2.4 Several obligations The obligations of the Banks under this Agreement are several. The failure of a Bank to perform its obligations under this Agreement shall not affect the obligations of the Borrower to the Agent or to the other Banks, nor shall the Agent or any other Bank be liable for the failure of a Bank to perform any of its obligations under or in connection with this Agreement.

2.5 Application of Loan Without prejudice to the obligations of the Borrower under this Agreement, neither the Banks nor the Agent shall be obliged to concern itself with the application of the Loan by the Borrower.

2.6 Loan and control accounts The Borrower will open and maintain with the Agent such loan and control accounts as the Agent shall in its discretion consider necessary or desirable.

2.7 Interest several Notwithstanding any other term of this Agreement (but without prejudice to the provisions of this Agreement relating to or requiring action by the Instructing Group) the interest of the Banks is several and the amount due to any Bank is separate and independent debt.

2.8 General terms and conditions In addition to the terms and conditions set-out in this Loan Agreement the General Terms and Conditions of the Agent will apply.

3 Conditions Precedent and Subsequent

3.1 Conditions Precedent Before any Bank shall have any obligation to advance any part of the Loan, the Borrower shall deliver or cause to be delivered to or to the order of the Agent the following documents and evidence:-

3.1.1     Evidence  of  incorporation  Such  evidence as the Agent may
          reasonably   require  that  each  Security   Party  is  duly
          incorporated in its country of incorporation  and remains in
          existence and,  where  appropriate,  in good standing,  with
          power to enter  into,  and perform  its  obligations  under,
          those  of the  Security  Documents  to  which  it is,  or is
          intended to be, a party,  including  (without  limitation) a
          copy,  certified  by a  director  or  the  secretary  of the
          Security Party in question as true,  complete,  accurate and
          unamended,  of all  documents  establishing  or limiting the
          constitution of each Security Party.

3.1.2     Corporate authorities A copy, certified by a director or the
          secretary  of  the  Security  Party  in  question  as  true,
          complete,  accurate and neither  amended nor  revoked,  of a
          resolution   of  the  directors  and  a  resolution  of  the
          shareholders  of  each  Security  Party   (together,   where
          appropriate, with signed waivers of notice of any directors'
          or  shareholders'  meetings)  approving,  and authorising or
          ratifying the execution of, those of the Security  Documents
          to which that Security Party is or is intended to be a party
          and all matters incidental thereto.

3.1.3     Officer's   certificate  A  certificate  signed  by  a  duly
          authorised  officer of each of the Security  Parties setting
          out the names of the directors, officers and shareholders of
          that Security Party.

3.1.4     Power of attorney  The  notarially  attested  and  legalised
          power of  attorney  of each of the  Security  Parties  under
          which  any  documents  are to be  executed  or  transactions
          undertaken by that Security Party.

3.1.5     Vessel documents  Photocopies,  certified as true,  accurate
          and complete by a director or the secretary of the Borrower,
          of:-

          (a)  the Charter  and/or any other contract of employment of
               the Vessel which will be in force on the Drawdown  Date
               and must be reviewed and accepted by the Agent;

          (c)  the management  agreement  between the Borrower and the
               Managers relating to the Vessel;

          (d)  the  Vessel's  current  Safety   Construction,   Safety
               Equipment,  Safety  Radio,  Oil  Pollution  Prevention,
               International Tonnage and Load Line Certificates;

          (e)  the   Vessel's   current   Certificate   of   Financial
               Responsibility issued pursuant to the United States Oil
               Pollution Act 1990;

          (f)  the Vessel's  International  Ship Security  Certificate
               issued pursuant to the ISPS Code;

          (g)  the Vessel's current SMC; and

          (h)  the Company's current DOC;

          (i)  the Vessel's current IAPPC;

          in each  case  together  with  all  addenda,  amendments  or
          supplements.

3.1.6     Evidence  of  ownership   Certificate(s)  of  ownership  and
          encumbrance (or equivalent) issued by the Registrar of Ships
          (or  equivalent  official) at the Vessel's  port of registry
          confirming  that the Vessel is on the Drawdown Date owned by
          the Borrower and free of registered Encumbrances.

3.1.7     Evidence of insurance  Evidence  that the Vessel is, or will
          from the Drawdown Date be, insured in the manner required by
          the Security  Documents and that letters of undertaking will
          be issued in the manner required by the Security  Documents,
          together with the written  approval of the  Insurances by an
          insurance adviser appointed by the Agent (at the cost of the
          Borrower)   confirming   (inter   alia)  that  the  required
          Insurances  have been placed and are acceptable to the Agent
          and that the underwriters are acceptable to the Agent.

3.1.8     Confirmation of class A Certificate of Confirmation of Class
          for hull and machinery confirming that the Vessel is classed
          with the highest class applicable to Vessel of her type with
          Nippon   Kaiji   Kyokai   free  and  clear  of  all  overdue
          recommendations or such other classification  society as may
          be acceptable to the Agent.

3.1.9     Survey  reports The latest  annual  survey and class  status
          reports  prepared  by  surveyors  instructed  by  the  class
          society for the Vessel (namely Nippon Kaiji Kyokai),  and at
          the cost of the  Borrower,  confirming  the condition of the
          Vessel,  such condition to be in all respects  acceptable to
          the Agent.

3.1.10    Valuations A valuation of the Vessel  addressed to the Agent
          from  two  Approved  Brokers  appointed  by  the  Agent  and
          approved by the Borrower  certifying a value for the Vessel,
          assessed in such manner as the Agent may require, acceptable
          to the Agent and at the cost of the Borrower.

3.1.11    The Security Documents The Security Documents, together with
          all  notices  and other  documents  required by any of them,
          duly executed  and, in the case of the Mortgage,  registered
          with  first  priority  through  the  Registrar  of Ships (or
          equivalent official) at the Vessel's port of registry.

3.1.12    Drawdown Notice A Drawdown Notice.

3.1.13    Process  agent A letter  from HTD,  Irongate  House,  Duke's
          Place,  London,  EC3A 7LP, United  Kingdom,  accepting their
          appointment  by each of the  Security  Parties  as agent for
          service of Proceedings pursuant to the Security Documents.

3.1.14    Mandates  Such duly signed  forms of mandate,  and/or  other
          evidence of opening of the Accounts,  as the Agent or any of
          the Banks may require.

3.1.15    Fee  Payment of the fee due from the  Borrower  to the Banks
          pursuant to the terms of Clause 8 or any other  provision of
          the Security Documents.

3.1.16    Legal opinions  Confirmation  satisfactory to the Agent that
          all  legal  opinions  required  by the  Agent  will be given
          substantially in the form required by the Agent.

3.2 Conditions Subsequent The Borrower undertakes to deliver or to cause to be delivered to the Agent, in the case of Clause 3.2.1 not later than three days after the Drawdown Date and, in the case of Clauses 3.2.2 and 3.2.3 not later than two weeks after the Drawdown Date, the following additional documents and evidence:-

3.2.1     Evidence of registration Evidence of permanent  registration
          of the Vessel and the Mortgage  (with first  priority)  with
          the  Registrar  of Ships  (or  equivalent  official)  at the
          Vessel's port of registry.

3.2.2     Letters of undertaking Letters of undertaking as required by
          the Security  Documents in form and substance  acceptable to
          the Agent including, without limitation confirmation notices
          of assignment of  Insurances,  notices of  cancellation  and
          loss payable clause in form and substance  acceptable to the
          Agent.

3.2.3     Legal  opinions  Such  legal  opinions  as the  Agent  shall
          require.

3.2.4     Companies Act  registrations  Evidence  that the  prescribed
          particulars  of the Corporate  Guarantee have been delivered
          to the  Registrar  of  Companies  of the  United  States  of
          America within the statutory time limit.

3.2.5     Master's receipt The master's receipt for the Mortgage.

3.3 No waiver If the Banks in their sole discretion agree to advance the Loan to the Borrower before all of the documents and evidence required by Clause 3.1 have been delivered to or to the order of the Agent, the Borrower undertakes to deliver all outstanding documents and evidence to or to the order of the Agent no later than five (5) Business Days, and the Banks' advance of the Loan shall not be taken as a waiver of the Agent's right to require production of all the documents and evidence required by Clause 3.1.

3.4 Form and content All documents and evidence delivered to the Agent pursuant to this Clause shall:-

3.4.1     be in form and substance acceptable to the Agent;

3.4.2     be  accompanied,  if required by the Agent,  by translations
          into the English language,  certified in a manner acceptable
          to the Agent;

3.4.3     if required by the Agent, be certified, notarised, legalised
          or attested in a manner acceptable to the Agent.

3.5 Event of Default No Bank shall be under any obligation to advance any part of the Loan nor to act on any Drawdown Notice if, at the date of the Drawdown Notice or at the date on which the advance of the Loan is requested in the Drawdown Notice, an Event of Default or Potential Event of Default shall have occurred, or if an Event of Default or Potential Event of Default would result from the advance of the Loan.

4 Representations and Warranties

The Borrower represents and warrants to the Agent at the date of this Agreement and (by reference to the facts and circumstances then pertaining) at the date of the Drawdown Notice, at the Drawdown Date and at each Interest Payment Date as follows:-

4.1 Incorporation and capacity Each of the Security Parties is a body corporate duly constituted and existing and (where applicable) in good standing under the law of its country of incorporation, in each case with perpetual corporate existence and the power to sue and be sued, to own its assets and to carry on its business, and all of the corporate shareholders (if any) of each Security Party are duly constituted and existing under the laws of their countries of incorporation with perpetual corporate existence and the power to sue and be sued, to own their assets and to carry on their business.

4.2 Solvency None of the Security Parties is insolvent or in liquidation or administration or subject to any other insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of any of the Security Parties or all or any part of their assets.

4.3 Binding obligations The Security Documents when duly executed and delivered will constitute the legal, valid and binding obligations of the Security Parties enforceable in accordance with their respective terms.

4.4 Satisfaction of conditions All acts, conditions and things required to be done and satisfied and to have happened prior to the execution and delivery of the Security Documents in order to constitute the Security Documents the legal, valid and binding obligations of the Security Parties in accordance with their respective terms have been done, satisfied and have happened in compliance with all applicable laws.

4.5 Registrations and consents With the exception only of the registrations referred to in Clause 3.2.1, all (if any) consents, licences, approvals and authorisations of, or registrations with or declarations to, any governmental authority, bureau or agency which may be required in connection with the execution, delivery, performance, validity or enforceability of the Security Documents have been obtained or made and remain in full force and effect and the Borrower is not aware of any event or circumstance which could reasonably be expected adversely to affect the right of any of the Security Parties to hold and/or obtain renewal of any such consents, licences, approvals or authorisations.

4.6 Disclosure of material facts The Borrower is not aware of any material facts or circumstances which have not been disclosed to the Agent and which might, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrower.

4.7 No material litigation There is no action, suit, arbitration or administrative proceeding pending or to its knowledge about to be pursued before any court, tribunal or governmental or other authority which would, or would be likely to, have a materially adverse effect on the business, assets, financial condition or creditworthiness of any of the Security Parties.

4.8 No breach of law or contract The execution, delivery and performance of the Security Documents will not contravene any contractual restriction or any law binding on any of the Security Parties or on any shareholder (whether legal or beneficial) of any of the Security Parties, or the constitutional documents of any of the Security Parties, nor result in the creation of, nor oblige any of the Security Parties to create, any Encumbrance over all or any of its assets, with the exception of the Encumbrances created by or pursuant to the Security Documents and, in entering into those of the Security Documents to which it is, or is to be, a party, and in borrowing the Loan, the Borrower is acting for its own account.

4.9 No deductions The Borrower is not required to make any deduction or withholding from any payment which it may be obliged to make to the Agent or any of the Banks under or pursuant to the Security Documents.

4.10 No established place of business in the United Kingdom or United States None of the Security Parties (other than the Corporate Guarantor) has, nor will any of them have during the Facility Period, an established place of business in the United Kingdom or the United States of America.

4.11 Use of Loan The Loan will be used for the purpose specified in Recital (B).

4.12 Pari passu The obligations of the Borrower under this Agreement are direct, general and unconditional obligations of the Borrower and rank at least pari passu with all other present and future unsecured and unsubordinated indebtedness of the Borrower with the exception of any obligations which are mandatorily preferred by law and not by contract.

4.13 No default under any other indebtedness Neither the Borrower nor any other Security Party is (nor would with the giving of notice or lapse of time or the satisfaction of any other condition or combination thereof be) in breach of or in default under any agreement relating to any indebtedness to which it is a party or by which it may be bound.

4.14 Information The information, exhibits and reports furnished by any Security Party to the Agent in connection with the negotiation and preparation of the Security 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; to the best knowledge of the Borrower there are no other facts the omission of which would make any fact or statement therein misleading.

4.15 No material adverse change There has been no material adverse change in the financial position of the Borrower or any other Security Party from that described to the Agent in the negotiation of this Agreement.

4.16 Environment Except as may already have been disclosed by the Borrower in writing to, and acknowledged in writing by, the Agent, the Borrower represents and warrants to the Agent as follows:

4.16.1    the Borrower and (to the best of the  Borrower's  knowledge)
          its   Environmental   Affiliates  have  without   limitation
          complied with the  provisions  of  applicable  Environmental
          Laws, except where  non-compliance would not have a Material
          Adverse Effect;

4.16.2    the Borrower and (to the best of the  Borrower's  knowledge)
          its  Environmental  Affiliates  have  obtained all requisite
          Environmental  Approvals  and are in  compliance  with  such
          Environmental Approvals,  except where the failure to obtain
          or comply with any such  Environmental  Approvals  would not
          have a Material Adverse Effect;

4.16.3    neither  the  Borrower  nor (to the  best of the  Borrower's
          knowledge) any of its Environmental Affiliates have received
          notice of any  Environmental  Claim which  alleges  that the
          Borrower is not in compliance with applicable  Environmental
          Laws or Environmental  Approvals,  where such non-compliance
          would have a Material Adverse Effect;

4.16.4    there  is  no   Environmental   Claim  pending  or,  to  the
          Borrower's knowledge, threatened which would have a Material
          Adverse Effect; and

4.16.5    to the best of the Borrower's  knowledge,  there has been no
          Release of Material of  Environmental  Concern  except where
          the event would not have a Material Adverse Effect.

5 Repayment and Prepayment

5.1 Repayment The Borrower agrees to repay the Loan to the Agent as agent for the Banks by twenty three (23) consecutive quarterly Repayment Instalments, the first twenty two (22) such Repayment Instalments in the sum of two hundred and sixty five hundred thousand Dollars ($265,000) each and the twenty third (23rd) and final Repayment Instalment in the sum of two million four hundred and twenty thousand Dollars ($2,420,000) (consisting of an instalment of two hundred and sixty five hundred thousand Dollars ($265,000) and a balloon payment of two million one hundred and fifty five thousand Dollars ($2,155,000) ("the Balloon Payment")) the first Repayment Date being the date which is three calendar months after the Drawdown Date and subsequent Repayment Dates being at consecutive intervals of three calendar months thereafter and the final Repayment Instalment shall be due and payable on the Final Maturity Date.

5.2 Reduction of Repayment Instalments If the aggregate amount advanced to the Borrower is less than the Maximum Loan Amount, the amount of each Repayment Instalment shall be reduced pro rata to the amount actually advanced.

5.3 Voluntary Prepayment The Borrower may without any premium or penalty prepay the Loan in whole or in part in minimum amounts equal to one hundred thousand Dollars ($100,000) or an integral multiple of that amount (or as otherwise may be agreed by the Agent) provided that it has first given to the Agent not fewer than fifteen (15) days' prior written notice expiring on a Business Day of its intention to do so. Any notice pursuant to this Clause once given shall be irrevocable and shall oblige the Borrower to make the prepayment referred to in the notice on the Business Day specified in the notice, together with all interest accrued on the amount prepaid up to and including that Business Day.

5.4 Prepayment indemnity If the Borrower shall, subject always to Clause 5.3, make a prepayment on a Business Day other than the last day of an Interest Period, it shall, in addition to the amount prepaid and accrued interest, pay to the Agent any amount which the Agent may certify is necessary to compensate the Agent and the Banks for any Break Costs incurred by the Agent or any of the Banks as a result of the making of the prepayment in question.

5.5 Application of prepayments Any prepayment pursuant to Clause 5.3 in an amount less than the Indebtedness shall be applied in satisfaction or reduction first of any costs and other amounts outstanding; secondly of all interest outstanding; and thirdly pro rata against the outstanding Repayment Instalments (including the Balloon Payment).

5.6 No reborrowing No amount repaid or prepaid pursuant to this Agreement may in any circumstances be reborrowed.

5.7 Mandatory Prepayment - sale or Total Loss of Vessel In the event of the Vessel being sold or becoming a Total Loss, the Indebtedness shall be repaid in full. In the case of a sale or disposal of the Vessel, the proceeds of such sale or disposal of the Vessel shall be used to repay the Indebtedness immediately upon the date of such sale or disposal of the Vessel. In the case of a Total Loss of theVessel, the proceeds of the Insurances of the Vessel shall be used to prepay the Indebtedness on the earlier of the date on which Insurance proceeds are received by the Borrower and the date which is ninety (90) days after the date on which the Vessel was declared a Total Loss.

6 Interest

6.1 Interest Periods The period during which the Loan shall be outstanding pursuant to this Agreement shall be divided into consecutive Interest Periods of one, three six, nine or twelve months' duration, as selected by the Borrower by written notice to the Agent not later than 11.00 a.m. on the third Business Day before the beginning of the Interest Period in question, or such other duration as may be agreed by the Agent in its discretion.

6.2 Beginning and end of Interest Periods The first Interest Period shall begin on the Drawdown Date, and the final Interest Period shall end on the Repayment Date applicable to the final Repayment Instalment.

6.3 Interest Periods to meet Repayment Dates If the Borrower shall select, or the Borrower and the Banks shall agree, an Interest Period which does not expire on the next Repayment Date, there shall, in respect of each part of the Loan equal to a Repayment Instalment falling due for payment before the expiry of that Interest Period, be a separate Interest Period which shall expire on the relevant Repayment Date, and the Interest Period selected or agreed shall apply to the balance of the Loan only.

6.4 Interest rate During each Interest Period interest shall accrue on the Loan at the rate determined by the Agent to be the aggregate of (a) the Margin and (b) LIBOR determined at or about 11.00 a.m. on the second Business Day prior to the beginning of that Interest Period.

6.5 Failure to select Interest Period If the Borrower at any time fails to select or to agree an Interest Period in accordance with Clause 6.1, the interest rate applicable after the expiry of the then current Interest Period shall be the rate determined by the Agent in accordance with Clause 6.4 for consecutive Interest Periods each of such duration (not exceeding six months) as the Agent may in its discretion select.

6.6 Accrual and payment of interest Interest shall accrue from day to day, shall be calculated on the basis of a 360 day year and the actual number of days elapsed and shall be paid by the Borrower to the Agent on the last day of each Interest Period and additionally, during any Interest Period exceeding three months, on the last day of each successive three month period after the beginning of that Interest Period.

6.7 Ending of Interest Periods Each Interest Period shall, subject to Clauses 6.2 and 6.3, end on the date which numerically corresponds to the date on which the immediately preceding Interest Period ended (or, in the case of the first Interest Period, to the Drawdown Date) in the calendar month which is the number of months selected or agreed after the calendar month in which the immediately preceding Interest Period ended (or, in the case of the first Interest Period, in which the Drawdown Date occurred), except that:-

6.7.1     if  there  is  no  numerically  corresponding  date  in  the
          calendar  month in  which  the  Interest  Period  ends,  the
          Interest  Period shall end on the last  Business Day in that
          calendar month; and

6.7.2     if any  Interest  Period  would  end on a day which is not a
          Business  Day,  that  Interest  Period shall end on the next
          succeeding Business Day (unless the next succeeding Business
          Day falls in the next  calendar  month,  in which  event the
          Interest  Period in question shall end on the next preceding
          Business Day).

Any adjustment made pursuant to Clause 6.7.1 or 6.7.2 shall be ignored for the purpose of determining the date on which any subsequent Interest Period shall end.

6.8 Default Rate If an Event of Default shall occur, the whole of the Indebtedness shall, from the date of the occurrence of the Event of Default, bear interest up to the date of actual payment (both before and after judgment) at the Default Rate, compounded at such intervals as the Agent shall in its discretion determine, which interest shall be payable from time to time by the Borrower to the Agent on demand.

6.9 Determinations conclusive Each determination of an interest rate made by the Agent in accordance with Clause 6 shall (save in the case of manifest error or on any question of law) be final and conclusive.

7 The Master Agreement

7.1 Purpose The Agent and the Borrower have entered, and/or may during the Facility Period enter, into one or more Transactions pursuant to a Master Agreement, the terms and conditions of each of which are or will be specified in a Confirmation sent by the Agent to the Borrower.

7.2 Additional Termination Event If the Loan is for any reason not advanced to the Borrower on or before the Availability Termination Date, and the Agent and the Borrower have entered into any Transactions on or before the Availability Termination Date, for the purposes of the Master Agreement an Additional Termination Event (with the Agent as the Affected Party) shall be deemed to have occurred on the Availability Termination Date.

7.3 Adjustment of Notional Amounts If the aggregate amount of the Loan actually advanced by the Banks to the Borrower is less than the Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions entered into on or before the Drawdown Date, the obligations of the Borrower in respect of those Hedging Transactions shall, unless otherwise agreed by the Agent, be calculated, so far as the Agent considers it practicable to do so, by reference to a Notional Amount (or aggregate Notional Amounts) equal to the amount of the Loan actually advanced, reduced on each Repayment Date by the amount of the Repayment Instalment due on that Repayment Date, adjusted if necessary in accordance with Clause 5.2.

7.4 Effect of prepayment If the Borrower, subject always to Clause 5, prepays part of the Loan (whether pursuant to Clause 5, Clause 11.2.5 or any other provision of this Agreement), and the amount of the Loan remaining outstanding after application of that prepayment is less than the Notional Amount (or the aggregate Notional Amounts) of the Hedging Transactions then in effect (reduced, if appropriate, in accordance with the Confirmations relating to those Hedging Transactions), the obligations of the Borrower in respect of those Hedging Transactions shall, unless otherwise agreed by the Agent, be calculated, so far as the Agent considers it practicable to do so, by reference to a Notional Amount (or aggregate Notional Amounts) equal to the amount of the Loan remaining outstanding after application of the prepayment in question, reduced on each Repayment Date by the amount of the Repayment Instalment due on that Repayment Date after taking into account the application of the prepayment.

7.5 Authority In order to give effect to Clauses 7.3 and 7.4, or in the event of voluntary or mandatory prepayment by the Borrower of the whole of the Loan, the Borrower irrevocably authorises the Agent to amend, restructure, unwind, cancel, net out, terminate, liquidate, transfer or assign any of the rights and/or obligations created pursuant to the Master Agreement in respect of those Hedging Transactions, and/or to enter into any other interest rate exchange and/or hedging transaction or commitment with the Borrower or with any other counterparty approved by the Agent.

7.6 Termination of Transactions If the exercise of the Agent's rights under Clause 7.5 results in the termination of any Transaction, that Transaction shall, for the purposes of the Master Agreement (including, without limitation, section 6(e)(i) of the Master Agreement) be treated as a Terminated Transaction resulting from an Event of Default by the Borrower.

7.7 Indemnity The Borrower will indemnify the Agent from time to time on demand in respect of all liabilities, losses, costs or expenses suffered, incurred or sustained by the Agent arising in any way in relation to the exercise by the Agent of its rights under this Clause, or arising in any way from any other termination, cancellation, unwinding or restructuring of any Transaction, together (in each case) with interest at the Default Rate from the date of the Agent's demand until the date on which the Agent receives payment or reimbursement, before or after any relevant judgment.

8 Fee

The Borrower shall pay to or to the order of the Agent on the date of this Agreement an arrangement fee in an amount equal to forty one thousand two hundred and fifty Dollars ($41,250).

9 Security Documents

As security for the repayment of the Indebtedness, the Borrower shall execute and deliver to the Agent or cause to be executed and delivered to the Agent, on or before the Drawdown Date, the following Security Documents in such forms and containing such terms and conditions as the Agent shall require:-

9.1 the Mortgage a first preferred Marshall Islands ship mortgage over the Vessel;

9.2 the Assignment a deed of assignment of the Insurances, Earnings, Charter Rights and Requisition Compensation of the Vessel;

9.3 the Corporate Guarantee the guarantee and indemnity of the Corporate Guarantor;

9.4 the Accounts Security Deed an accounts security deed in respect of all amounts from time to time standing to the credit of the Accounts; and

9.5 Manager's Undertakings an undertaking from the Managers in respect of the Vessel and the Borrower.

10 Agency and Trust

10.1 Appointment Each of the Banks appoints the Agent its agent for the purpose of administering the Loan and the Security Documents.

10.2 Authority Each of the Banks irrevocably authorises the Agent (subject to Clauses 10.4 and 10.19):-

10.2.1    to  execute  the   Security   Documents   (other  than  this
          Agreement) in its capacity as Agent;

10.2.2    to collect, receive, release or pay any money on its behalf;

10.2.3    acting  on  the  instructions   from  time  to  time  of  an
          Instructing Group to give or withhold any waivers,  consents
          or  approvals  under  or  pursuant  to any  of the  Security
          Documents;

10.2.4    acting  on  the  instructions  from  time  to  time  of  and
          Instructing  Group to exercise,  or refrain from exercising,
          any  discretions  under or pursuant  to any of the  Security
          Documents; and

10.2.5    to enforce the Security  Documents  on its behalf  acting on
          its instructions.

The Agent shall have no duties or responsibilities as agent or as security trustee other than those expressly conferred on it by the Security Documents and shall not be obliged to act on any instructions from the Banks or an Instructing Group if to do so would, in the opinion of the Agent, be contrary to any provision of the Security Documents or to any law, or would expose the Agent to any actual or potential liability to any third party.

10.3 Trust The Agent agrees and declares, and each of the Banks acknowledges, that, subject to the terms and conditions of this Clause, the Agent holds the Trust Property on trust for the Banks, in accordance with their respective Proportionate Shares, absolutely. Each of the Banks agrees that the obligations, rights and benefits vested in the Agent in its capacity as security trustee shall be performed and exercised in accordance with this Clause. The Agent in its capacity as security trustee shall have the benefit of all of the provisions of this Agreement benefitting it in its capacity as agent for the Banks, and all the powers and discretions conferred on trustees by the Trustee Act 1925 (to the extent not inconsistent with this Agreement). In addition:-

10.3.1    the Agent (and any attorney, agent or delegate of the Agent)
          may  indemnify  itself or himself out of the Trust  Property
          against all  liabilities,  costs,  fees,  damages,  charges,
          losses and  expenses  sustained  or incurred by it or him in
          relation  to the  taking  or  holding  of  any of the  Trust
          Property or in  connection  with the  exercise or  purported
          exercise  of the  rights,  trusts,  powers  and  discretions
          vested in the Agent or any other such  person by or pursuant
          to the  Security  Documents  or in respect of anything  else
          done  or  omitted  to be done  in any  way  relating  to the
          Security Documents; and

10.3.2    the  Banks  acknowledge  that  the  Agent  shall be under no
          obligation  to insure any  property nor to require any other
          person to insure any property  and shall not be  responsible
          for any loss which may be suffered by any person as a result
          of the lack or insufficiency of any insurance; and

10.3.3    the Agent and the Banks  agree  that the  perpetuity  period
          applicable to the trusts declared by this Agreement shall be
          the period of eighty years from the date of this Agreement.

10.4 Limitations on authority Except with the prior written consent of each of the Banks, the Agent shall not be entitled to :-

10.4.1    release  or vary  any  security  given  for  the  Borrower's
          obligations under this Agreement; nor

10.4.2    waive the payment of any sum of money  payable by any of the
          Security Parties under the Security Documents; nor

10.4.3    change the meaning of the expressions "Instructing Group" or
          "Margin"; nor

10.4.4    exercise,  or refrain from  exercising,  any discretion,  or
          give or  withhold  any  consent,  the  exercise or giving of
          which is, by the terms of this Agreement, expressly reserved
          to the Banks; nor

10.4.5    extend  the due  date  for the  payment  of any sum of money
          payable by any of the  Security  Parties  under the Security
          Documents; nor

10.4.6    take or refrain  from  taking any step if the effect of such
          action  or  inaction   may  lead  to  the  increase  of  the
          obligations  of a Bank under any of the Security  Documents;
          nor

10.4.7    agree to change  the  currency  in which any sum is  payable
          under the Security  Documents (other than in accordance with
          the terms of the Security Documents); nor

10.4.8    agree to change the covenants contained in Clause 11.2; nor

10.4.9    agree to amend this Clause 10.4.

10.5 Liability Neither the Agent nor any of its directors, officers, employees or agents shall be liable to the Banks for anything done or omitted to be done by the Agent under or in connection with the Security Documents unless as a result of the Agent's wilful misconduct or gross negligence.

10.6 Acknowledgement Each of the Banks acknowledges that:-

10.6.1    it has not relied on any representation made by the Agent or
          any of the Agent's directors,  officers, employees or agents
          or by any other person acting or purporting to act on behalf
          of the Agent to induce it to enter into any of the  Security
          Documents;

10.6.2    it has made and will  continue to make  without  reliance on
          the Agent, and based on such documents and other evidence as
          it considers appropriate,  its own independent investigation
          of the  financial  condition  and  affairs  of the  Security
          Parties in connection  with the making and  continuation  of
          the Loan;

10.6.3    it has made its own appraisal of the creditworthiness of the
          Security Parties;

10.6.4    the Agent shall not have any duty or  responsibility  at any
          time to  provide  it with any  credit  or other  information
          relating  to  any  of  the  Security   Parties  unless  that
          information is received by the Agent pursuant to the express
          terms of the Security Documents.

Each of the Banks agrees that it will not assert nor seek to assert against any director, officer, employee or agent of the Agent or against any other person acting or purporting to act on behalf of the Agent any claim which it might have against them in respect of any of the matters referred to in this Clause.

10.7 Limitations on responsibility The Agent shall have no responsibility to any of the Security Parties or to the Banks on account of:-

10.7.1    the failure of a Bank or of any of the  Security  Parties to
          perform  any  of  their  respective  obligations  under  the
          Security Documents;

10.7.2    the financial condition of any of the Security Parties;

10.7.3    the    completeness   or   accuracy   of   any   statements,
          representations  or warranties made in or pursuant to any of
          the  Security  Documents,  or in or pursuant to any document
          delivered  pursuant  to or in  connection  with  any  of the
          Security Documents;

10.7.4    the  negotiation,  execution,  effectiveness,   genuineness,
          validity,  enforceability,   admissibility  in  evidence  or
          sufficiency  of  any  of the  Security  Documents  or of any
          document executed or delivered  pursuant to or in connection
          with any of the Security Documents.

10.8 The Agent's rights The Agent may:-

10.8.1    assume that all representations or warranties made or deemed
          repeated  by any of the  Security  Parties in or pursuant to
          any of the Security Documents are true and complete, unless,
          in  its  capacity  as the  Agent,  it  has  acquired  actual
          knowledge to the contrary; and

10.8.2    assume  that no  Event  of  Default  or  Potential  Event of
          Default has occurred  unless,  in its capacity as the Agent,
          it has acquired actual knowledge to the contrary; and

10.8.3    rely on any document or  Communication  believed by it to be
          genuine; and

10.8.4    rely as to legal or other  professional  matters on opinions
          and statements of any legal or other  professional  advisers
          selected or approved by it; and

10.8.5    rely as to any factual  matters  which might  reasonably  be
          expected to be within the  knowledge  of any of the Security
          Parties  on a  certificate  signed  by or on  behalf of that
          Security Party; and

10.8.6    refrain from  exercising  any right,  power,  discretion  or
          remedy  unless and until  instructed to exercise that right,
          power,  discretion  or  remedy  and as to the  manner of its
          exercise  by  the  Banks  (or,  where   applicable,   by  an
          Instructing  Group)  and  unless  and  until  the  Agent has
          received  from the  Banks  any  payment  which the Agent may
          require on account of, or any  security  which the Agent may
          require for, any costs,  claims,  expenses  (including legal
          and  other  professional  fees)  and  liabilities  which  it
          considers  it may incur or sustain in  complying  with those
          instructions.

10.9 The Agent's duties The Agent shall:-

10.9.1    if requested in writing to do so by a Bank, make enquiry and
          advise the Banks as to the  performance or observance of any
          of the  provisions  of the Security  Documents by any of the
          Security  Parties  or as to the  existence  of an  Event  of
          Default; and

10.9.2    inform the Banks  promptly  of any Event of Default of which
          the Agent has actual knowledge.

10.10 No deemed knowledge The Agent shall not be deemed to have actual knowledge of the falsehood or incompleteness of any representation or warranty made or deemed repeated by any of the Security Parties or actual knowledge of the occurrence of any Event of Default or Potential Event of Default unless a Bank or any of the Security Parties shall have given written notice thereof to the Agent in its capacity as the Agent. Any information acquired by the Agent other than specifically in its capacity as the Agent shall not be deemed to be information acquired by the Agent in its capacity as the Agent.

10.11 Other business The Agent may, without any liability to account to the Banks, generally engage in any kind of banking or trust business with any of the Security Parties or any of their respective subsidiaries or associated companies or with a Bank as if it were not the Agent.

10.12 Indemnity The Banks shall, promptly on the Agent's request, reimburse the Agent in their respective Proportionate Shares, for, and keep the Agent fully indemnified in respect of:-

10.12.1 all amounts payable by the Borrower to the Agent pursuant to Clause 18.2 to the extent that those amounts are not paid by the Borrower;

10.12.2 all liabilities, damages, costs and claims sustained or incurred by the Agent in connection with the Security Documents, or the performance of its duties and obligations, or the exercise of its rights, powers, discretions or remedies under or pursuant to any of the Security Documents; or in connection with any action taken or omitted by the Agent under or pursuant to any of the Security Documents, unless in any case those liabilities, damages, costs or claims arise solely from the Agent's wilful misconduct or gross negligence.

10.13 Employment of agents In performing its duties and exercising its rights, powers, discretions and remedies under or pursuant to the Security Documents, the Agent shall be entitled to employ and pay agents to do anything which the Agent is empowered to do under or pursuant to the Security Documents (including the receipt of money and documents and the payment of money) and to act or refrain from taking action in reliance on the opinion of, or advice or information obtained from, any lawyer, banker, broker, accountant, valuer or any other person believed by the Agent in good faith to be competent to give such opinion, advice or information.

10.14 Distribution of payments The Agent shall pay promptly to the order of each of the Banks that Bank's Proportionate Share of every sum of money received by the Agent pursuant to the Security Documents or the Mortgagees' Insurances (with the exception of any amounts payable pursuant to Clause 8 and any amounts which, by the terms of the Security Documents, are paid to the Agent for the account of the Agent alone or specifically for the account of one or more Banks) and until so paid such amount shall be held by the Agent on trust absolutely for that Bank.

10.15 Reimbursement The Agent shall have no liability to pay any sum to a Bank until it has itself received payment of that sum. If, however, the Agent does pay any sum to a Bank on account of any amount prospectively due to that Bank pursuant to Clause 10.14 before it has itself received payment of that amount, and the Agent does not in fact receive payment within five Business Days after the date on which that payment was required to be made by the terms of the Security Documents or the Mortgagees' Insurances, each Bank receiving any such payment will, on demand by the Agent, refund to the Agent an amount equal to the amount received by it, together with an amount sufficient to reimburse the Agent for any amount which the Agent may certify that it has been required to pay by way of interest on money borrowed to fund the amount in question during the period beginning on the date on which that amount was required to be paid by the terms of the Security Documents or the Mortgagees' Insurances and ending on the date on which the Agent receives reimbursement.

10.16 Redistribution of payments Unless otherwise agreed between the Banks and the Agent, if at any time a Bank receives or recovers by way of set-off, the exercise of any lien or otherwise (other than from any assignee or transferee of or sub-participant in that Bank's Commitment), an amount greater than that Bank's Proportionate Share of any sum due from any of the Security Parties under the Security Documents (the amount of the excess being referred to in this Clause as the "Excess Amount") then:-

10.16.1 that Bank shall promptly notify the Agent (which shall promptly notify each other Bank);

10.16.2 that Bank shall pay to the Agent an amount equal to the Excess Amount within ten days of its receipt or recovery of the Excess Amount; and

10.16.3 the Agent shall treat that payment as if it were a payment by the Security Party in question on account of the sum owed to the Banks as aforesaid and shall account to the Banks in respect of the Excess Amount in accordance with the provisions of this Clause.

However, if a Bank has commenced any Proceedings to recover sums owing to it under the Security Documents and, as a result of, or in connection with, those Proceedings has received an Excess Amount, the Agent shall not distribute any of that Excess Amount to any other Bank which had been notified of the Proceedings and had the legal right to, but did not, join those Proceedings or commence and diligently prosecute separate Proceedings to enforce its rights in the same or another court.

10.17 Rescission of Excess Amount If all or any part of any Excess Amount is rescinded or must otherwise be restored to any of the Security Parties or to any other third party, the Banks which have received any part of that Excess Amount by way of distribution from the Agent pursuant to this Clause shall repay to the Agent for the account of the Bank which originally received or recovered the Excess Amount, the amount which shall be necessary to ensure that the Banks share rateably in accordance with their Proportionate Shares in the amount of the receipt or payment retained, together with interest on that amount at a rate equivalent to that (if any) paid by the Bank receiving or recovering the Excess Amount to the person to whom that Bank is liable to make payment in respect of such amount, and Clause 10.16.3 shall apply only to the retained amount.

10.18 Proceedings Each of the Banks and the Agent shall notify one another of the proposed commencement of any Proceedings under any of the Security Documents prior to their commencement.

10.19 Instructions Where the Agent is authorised or directed to act or refrain from acting in accordance with the instructions of the Banks or of an Instructing Group each of the Banks shall provide the Agent with instructions within three Business Days of the Agent's request (which request may be made orally or in writing). If a Bank does not provide the Agent with instructions within that period, that Bank shall be bound by the decision of the Agent. Nothing in this Clause shall limit the right of the Agent to take, or refrain from taking, any action without obtaining the instructions of the Banks or an Instructing Group if the Agent in its discretion considers it necessary or appropriate to take, or refrain from taking, such action in order to preserve the rights of the Banks under or in connection with the Security Documents. In that event, the Agent will notify the Banks of the action taken by it as soon as reasonably practicable, and the Banks agree to ratify any action taken by the Agent pursuant to this Clause.

10.20 Communications Any Communication under this Clause shall be given, delivered, made or served, in the case of the Agent (in its capacity as Agent or as one of the Banks), and in the case of the other Banks, at the address or fax number indicated in Schedule 1.

10.21 Payments All amounts payable to a Bank under this Clause shall be paid to such account at such bank as that Bank may from time to time direct in writing to the Agent.

10.22 Retirement Subject to a successor acceptable to the Borrower being appointed in accordance with this Clause, the Agent may retire as agent and/or security trustee at any time without assigning any reason by giving to the Borrower and the Banks notice of its intention to do so, in which event the following shall apply:-

10.22.1 the Banks may within thirty days after the date of the Agent's notice appoint a successor to act as agent and/or security trustee or, if they fail to do so, the Agent may appoint any other bank or financial institution as its successor;

10.22.2 the resignation of the Agent shall take effect simultaneously with the appointment of its successor on written notice of that appointment being given to the Borrower and the Banks;

10.22.3 the Agent shall thereupon be discharged from all further obligations as agent and/or security trustee but shall remain entitled to the benefit of the provisions of this Clause;

10.22.4 the Agent's successor and each of the other parties to this Agreement shall have the same rights and obligations amongst themselves as they would have had if that successor had been a party to this Agreement.

10.23 No fiduciary relationship Except as provided in Clauses 10.3 and 10.14, the Agent shall not have any fiduciary relationship with or be deemed to be a trustee of or for a Bank and nothing contained in any of the Security Documents shall constitute a partnership between any two or more Banks or between the Agent and any Bank.

10.24 The Agent as a Bank The expression "the Banks" when used in the Security Documents includes the Agent in its capacity as one of the Banks. The Agent shall be entitled to exercise its rights, powers, discretions and remedies under or pursuant to the Security Documents in its capacity as one of the Banks in the same manner as any other Bank and as if it were not also the Agent.

10.25 The Agent as security trustee Unless the context otherwise requires, the expression "the Agent" when used in the Security Documents includes the Agent acting in its capacities both as agent and security trustee.

11 Covenants

11.1 Negative covenants

The Borrower will not without the Agent's prior written consent:-

11.1.1    no disposals  or third party rights  dispose of or create or
          permit to arise or continue any  Encumbrance  or other third
          party  right on or over all or any  part of its  present  or
          future assets or undertaking (including, without limitation,
          any of its  rights  under or in  connection  with the Master
          Agreement  and any  amount at any time  payable by it to the
          Agent under or pursuant to the Master Agreement); nor

11.1.2    no  borrowings  borrow  any money or incur  any  obligations
          under leases, except monies borrowed under this Agreement or
          from  shareholders   and/or   affiliates,   which  shall  be
          subordinated to the Agent; nor

11.1.3    no repayments repay any loans made to it; nor

11.1.4    no substantial  liabilities except in the ordinary course of
          business, incur any liability to any third party which is in
          the opinion of the Agent of a substantial nature; nor

11.1.5    no dealings with Master Agreement  assign,  novate or in any
          other way transfer any of its rights or obligations under or
          pursuant  to  the  Master  Agreement,  nor  enter  into  any
          interest  rate  exchange  or hedging  agreement  with anyone
          other than the Agent,  nor any other agreement or commitment
          the  effect  of  which  is,  in the  opinion  of the  Agent,
          materially  to  prejudice  the  hedging  of  the  Borrower's
          interest rate risk effected by the Hedging Transactions from
          time to time  entered  into  between  the  Borrower  and the
          Agent; nor

11.1.6    no other  business  engage in any  business  other  than the
          ownership,  operation,  chartering  and  management  of  the
          Vessel; nor

11.1.7    no loans or other  financial  commitments  make any loan nor
          enter  into  any   guarantee   or   indemnity  or  otherwise
          voluntarily  assume any actual or  contingent  liability  in
          respect of any obligation of any other person; nor

11.1.8    no sale of Vessel sell or otherwise dispose of the Vessel or
          any shares in the Vessel nor agree to do so; nor

11.1.9    no   chartering   after  Event  of  Default   following  the
          occurrence  and  during  the  continuation  of an  Event  of
          Default  let the  Vessel on  charter  or renew or extend any
          charter or other  contract of  employment of the Vessel (nor
          agree to do so); nor

11.1.10 no change in Vessel's managers appoint anyone other than the Managers as commercial or technical managers of the Vessel, nor terminate or materially vary the arrangements for the commercial or technical management of the Vessel, nor permit the Managers to sub-contract or delegate the commercial or technical management of the Vessel to any third party; nor

11.1.11 no change in ownership or control permit any change in the Borrower's and/or the Corporate Guarantor's intermediate or ultimate beneficial ownership and control from that advised to the Agent at the date of this Agreement; nor

11.1.12 negative pledge permit any Encumbrance (other than in favour of the Banks) to subsist, arise or be created or extended over all or any part of its present or future undertakings, assets, rights or revenues to secure or prefer any present or future Indebtedness or other liability or obligation of the Borrower or any other person; nor

11.1.13 no merger merge or consolidate with any other person; nor

11.1.14 acquisitions acquire any further assets other than the Vessel and rights arising under contracts entered into by or on behalf of the Borrower in the ordinary course of its business of owning, operating and chartering the Vessel; nor

11.1.15 other obligations incur any obligations except for obligations arising under the Security Documents or contracts entered into in the ordinary course of its business of owning, operating and chartering the Vessel; nor

11.1.16 guarantees it will not issue any guarantees or indemnities or otherwise become directly or contingently liable for the obligations of any person, firm, or corporation except pursuant to the Security Documents and except for guarantees or indemnities from time to time required in the ordinary course by any protection and indemnity or war risks association with which the Vessel is entered, guarantees required to procure the release of the Vessel from any arrest, detention, attachment or levy or guarantees or undertakings required for the salvage of the Vessel.

11.2 Positive covenants

11.2.1    Registration  of Vessel The Borrower  undertakes to maintain
          the registration of the Vessel under the flag referred to in
          Recital (A) for the duration of the Facility Period.

11.2.2    Provision of valuation certificate The Agent will within the
          last ninety (90) days of each calendar year commencing after
          the  Drawdown  Date  obtain  at  the  Borrower's  expense  a
          valuation  certificate  addressed  to  the  Agent  from  two
          Approved Brokers  certifying the market value of the Vessel.
          Such  valuation  shall be for the cost of the Borrower  once
          during  each  period of twelve  calendar  months  during the
          Facility Period (commencing on the Drawdown Date) and may be
          made with or without  physical  inspection of the Vessel (as
          the Agent  may  require)  on the basis of a sale for  prompt
          delivery for cash at arm's length on normal commercial terms
          as between a willing  seller and a willing buyer and (at the
          option  of the  Agent)  either  free  of or  subject  to any
          existing charter or other contract of employment.  The Agent
          may  obtain  additional   valuations  at  any  time  at  its
          discretion  at its own  cost  (unless  there  is an Event of
          Default  which is continuing in which case the cost shall be
          for the Borrower's account).

11.2.3    Vessel valuations for purposes of Security Documents For the
          purposes of the Security Documents,  the market value of the
          Vessel shall be the value  certified  in the last  valuation
          certificate obtained by the Agent pursuant to Clauses 11.2.2
          PROVIDED  THAT if the  Vessel  at the  date  of the  Agent's
          request  shall be subject to any charter or other contact of
          employment or any  Encumbrance  (other than as created by or
          pursuant to the Security  Documents) the Agent shall for the
          purpose of the  Security  Documents,  be  entitled to deduct
          from the market value (determined as aforesaid) such sum (if
          any) as in the Agent's discretion shall represent the amount
          of the  diminution in the market value of the Vessel arising
          as a  result  of the  existence  of such  charter  or  other
          contract of employment or Encumbrance and in that event, for
          the purposes of the Security Documents,  the market value of
          the  Vessel  shall be the said  value  less  any  amount  so
          deducted by the Agent.

11.2.4    Additional  security If and so often as the aggregate of the
          market  value  of the  Vessel  (determined  by the  Agent in
          accordance  with  Clause  11.2.3)  plus  the  value  of  any
          additional security for the time being provided to the Agent
          pursuant to this  Clause  shall be less than (i) one hundred
          and  twenty   per  centum   (120%)  of  the  amount  of  the
          Indebtedness for the period  commencing on the Drawdown Date
          and  ending on 31  December  2008 and (ii) one  hundred  and
          twenty  five  per  centum   (125%)  of  the  amount  of  the
          Indebtedness for the remainder of the Facility  Period,  the
          Borrower  will,  within  thirty  days of the  request of the
          Agent to do so, at the Borrower's option:-

          (a)  pay to the Agent or to its  nominee a cash  deposit  in
               the amount of the  shortfall to be secured in favour of
               the  Banks  (or  to  the  Agent  on  their  behalf)  as
               additional security for the payment of the Loan; or

          (b)  give to the Banks other  additional  security in amount
               and form  acceptable to the Banks in their  discretion;
               or

          (c)  prepay the amount of the Loan  which will  ensure  that
               the  aggregate  of  the  market  value  of  the  Vessel
               (determined  as  aforesaid)  plus the value of any such
               additional  security  is not less than (i) one  hundred
               and  twenty  per  centum  (120%)  of the  amount of the
               Indebtedness for the period  commencing on the Drawdown
               Date  and  ending  on 31  December  2008  and  (ii) one
               hundred and twenty five per centum (125%) of the amount
               of the  Indebtedness  for the remainder of the Facility
               Period.

          Clauses 5.4, 5.5 and 5.6 shall apply,  mutatis mutandis,  to
          any prepayment made pursuant to this Clause and the value of
          any  additional  security  provided  pursuant to this Clause
          shall be determined by the Agent in its discretion.

11.2.5    Financial  statements  The Borrower will supply to the Agent
          without request:

          (a)  the Borrower's and Corporate Guarantor's annual audited
               financial  statements  for each  financial  year of the
               Borrower and the Corporate  Guarantor ending during the
               Facility Period,  containing (amongst other things) the
               Borrower's  and Corporate  Guarantor's  profit and loss
               account for,  and balance  sheet within one hundred and
               eighty (180) days after the end of, each such financial
               year,  prepared in accordance  with generally  accepted
               accounting   principles  and  practices  applicable  to
               companies  incorporated in the Borrower's and Corporate
               Guarantor's   country  of  incorporation   consistently
               applied, and audited by a firm of chartered accountants
               (or equivalent) acceptable to the Agent and in the case
               of the Corporate Guarantor  consolidated,  in each case
               within one  hundred  and eighty  days of the end of the
               financial year to which they relate;

          (b)  the  Borrower's and Corporate  Guarantor's  semi-annual
               audited  management  accounts and financial  statements
               within ninety days (90) after the end of each financial
               half year.

11.2.6    Other information The Borrower will promptly supply and will
          procure that the Corporate  Guarantor  supplies to the Agent
          copies of all financial and other  information  from time to
          time given by the  Borrower and the  Corporate  Guarantor to
          its  shareholders  and such  information and explanations as
          the Agent may from time to time require in  connection  with
          the  operation  of the  Vessel  and the  Borrower's  and the
          Corporate  Guarantor's  profit  and  liquidity  based on the
          applicable laws and regulations and the Agent's own internal
          guidelines  relating  to  the  Agent's  verification  of the
          identity and  knowledge of its  customers,  and will procure
          that  the   Agent  be  given   the  like   information   and
          explanations relating to all other Security Parties.

11.2.7    Evidence of goodstanding The Borrower will from time to time
          on the request of the Bank  provide the Agent with  evidence
          in form and  substance  satisfactory  to the Agent  that the
          Security  Parties and all corporate  shareholders  of any of
          the Security Parties remain in good standing.

11.2.8    Evidence of current  COFR Without  limiting  the  Borrower's
          obligations  under  Clause  11.2.6,  and prior to the Vessel
          entering any location  that is subject to the United  States
          Oil Pollution Act 1990 (or any  re-enactment  thereof),  the
          Borrower  shall notify the Agent and the Borrower shall (and
          shall from time to time  whilst the  Vessel is  situated  in
          such location) at the request of the Agent provide the Agent
          with such evidence as the Agent may reasonably  require that
          the Vessel has a valid and current  Certificate of Financial
          Responsibility  pursuant to the United  States Oil Pollution
          Act 1990.

11.2.9    ISM Code compliance The Borrower will:-

          (a)  procure that the Vessel remains for the duration of the
               Facility Period subject to a SMS;

          (b)  maintain  a  valid  and  current  SMC  for  the  Vessel
               throughout the Facility Period;

          (c)  if not itself the  Company,  procure  that each Company
               maintains  a  valid  and  current  DOC  throughout  the
               Facility Period;

          (d)  immediately  notify  the Agent in writing of any actual
               or threatened withdrawal,  suspension,  cancellation or
               modification  of the Vessel's  SMC or of the  Company's
               DOC;

          (e)  immediately   notify   the  Agent  in  writing  of  any
               "accident" or "major non-conformity",  as each of those
               terms   is   defined   in   the   Guidelines   on   the
               Implementation of the  International  Safety Management
               Code by Administrations  adopted by the Assembly of the
               International   Maritime   Organisation   pursuant   to
               Resolution  A.788(19),  and of the steps being taken to
               remedy the situation; and

          (f)  not  without  the prior  written  consent  of the Agent
               (which will not be  unreasonably  withheld)  change the
               identity of the Company.

11.2.10 ISPS Code compliance The Borrower will:-

(a) procure that the Vessel and the Company responsible for the Vessel's compliance with the ISPS Code comply with the ISPS Code; and

(b) maintain for the Vessel throughout the Facility Period a valid and current International Ship Security Certificate issued under the ISPS Code ("ISSC"); and

(c) notify the Agent immediately in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the ISSC.

11.2.11 Annex VI compliance The Borrower will:

(a) for the duration of the Facility Period comply with Annex VI in relation to the Vessel and procure that the Vessel's master and crew are familiar with, and that the Vessel complies with, Annex VI;

(b) maintain a valid and current IAPPC for the Vessel throughout the Facility Period and provide a copy to the Agent; and

(c) immediately notify the Agent in writing of any actual or threatened withdrawal, suspension, cancellation or modification of the IAPPC of the Vessel.

11.2.12 Environment The Borrower covenants with the Agent as follows:

(a) it shall comply with all applicable Environmental Laws including, without limitation, requirements relating to the establishment of financial responsibility (and shall require that all Environmental Affiliates of the Borrower comply with all applicable Environmental Laws and obtain and comply with all required Environmental Approvals, which Environmental Laws and Environmental Approvals relate to the Vessel or its operation or its carriage or cargo), except where that non-compliance would not have a Material Adverse Effect;

(b) it shall conduct and complete all reasonably necessary investigations, studies, sampling, audits and testings required in connection with any known (or threatened) Release of Materials of Environmental Concern which would have a Material Adverse Effect; and

(c) it shall, promptly upon the occurrence of any of the following events, provide to the Agent a certificate of an officer of the Borrower or of the Borrower's agents specifying in detail the nature of the event concerned:-

(i) the receipt by the Borrower or any Environmental Affiliate (where the Borrower has knowledge of the receipt) of any Environmental Claim which would have a Material Adverse Effect; or

(ii) any (or any threatened) Release of Materials of Environmental Concern which would have a Material Adverse Effect;

and upon the written request of the Agent, the Borrower shall submit to the Agent, at reasonable intervals, a report updating the status of any occurrence of an Environmental Claim or a Release of Materials of Environmental Concern, that would have a Material Adverse Effect.

11.2.13 Inspection of records The Borrower will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.

11.2.14 Pari passu obligations The Borrower will ensure that, throughout the Facility Period, the obligations of the Security Parties under or pursuant to the Security Documents rank at least pari passu with all other existing or future indebtedness, obligations or liabilities of the Security Parties, other than any mandatorily preferred by law.

11.2.15 Notification of Event of Default The Borrower will immediately notify the Agent in writing of the occurrence of any Event of Default or Potential Event of Default.

11.2.16 Not imperil Flag, Ownership, Insurances The Borrower will ensure that the Vessel is maintained and trade in conformity with the laws of the Marshall Islands, of the Borrower or of the nationality of its officers, and in accordance with the requirements of the Insurances and will ensure that nothing is done or permitted to be done which could endanger the flag of the Vessel or its unencumbered (other than Encumbrances in favour of the Banks and/or permitted by this Agreement) ownership or its Insurances.

11.2.17 Chartering The Borrower will ensure and procure that in the event of the Vessel being employed under a charterparty, the duration of which exceeds twelve (12) months, the Agent shall be furnished forthwith with (a) details of the new employment, (b) (if required by the Agent) a specific charterparty assignment in favour of the Agent of the benefit of such charterparty and (c) a notice of any such assignment addressed to the relevant charterer and endorsed with an acknowledgement of receipt by the relevant charterer, all in form and substance satisfactory to the Agent.

11.2.18 Earnings The Borrower will ensure and procure that, unless and until directed by the Agent otherwise upon an Event of Default (i) all the Earnings of the Vessel shall be paid to the Earnings Accounts and (ii) the persons from whom the Earnings are from time to time due are irrevocably instructed to pay them to the Earnings Accounts or to such account in the name of the Borrower as shall be from time to time determined by the Agent in accordance with the provisions hereof and of the relevant Security Documents.

11.2.19 Additional Documents The Borrower will from time to time and within ten (10) days after the Agent's request execute and deliver to the Agent or procure the execution and delivery to the Agent of all such documents as shall be deemed desirable at the reasonable discretion of the Agent for giving full effect to this Agreement, and for perfecting, protecting the value of or enforcing any rights or securities granted to the Agent under any one or more of this Agreement, the other Security Documents and any other documents executed pursuant hereto or thereto and in case that any conditions precedent (with the Agent's consent) have not been fulfilled prior to the Drawdown Date, such conditions shall be complied with within fourteen (14) days of the Drawdown Date (unless the Agent agrees otherwise in writing) and failure to comply with this covenant shall be an Event of Default.

11.2.20 Physical condition survey of the Vessel and inspection of records The Borrower will permit the Agent to conduct a physical condition survey of the Vessel and to conduct a comprehensive inspection of the class and other records of the Vessel by a surveyor appointed by the Agent (in its discretion) from time to time during the Facility Period and at the Borrower's expense.

11.2.21 Majority control of Corporate Guarantor The Borrower shall procure that members of the family of the ultimate beneficial shareholder of the Borrower and the Corporate Guarantor shall maintain the majority control over the shares of the Corporate Guarantor.

11.2.22 Financial covenants of Corporate Guarantor The Borrower and the Corporate Guarantor shall procure that at all times during the Facility Period:

(a) the Leverage in relation to the Corporate Guarantor does not exceed 75%; and

(b) the Corporate Guarantor shall maintain a minimum Market Adjusted Net Worth (basis book value) of not less than fifteen million Dollars ($15,000,000); and

(c) the Corporate Guarantor shall maintain minimum Free Liquidity of not less than three hundred thousand Dollars ($300,000) per Fleet Vessel.

The expressions used in this Clause 11.2.22 shall be construed in accordance with law and accounting principles internationally accepted as used in the financial statements produced in accordance with Clause 11.2.5, and for the purposes of this Agreement:

"Accounting Information" means the semi-annual financial statements and/or the annual financial statements to be provided by the Borrower and the Corporate Guarantor to the Agent in accordance with Clause 11.2.5.

"Accounting Period" means each consecutive period of approximately six months falling during the Facility Period
(ending on the last day in June and December of each year)
for which semi-annual Accounting Information is required to be delivered pursuant to this Agreement.

"Current Assets" means, in respect of the Corporate Guarantor, the aggregate (as of the date of calculation) of the Corporate Guarantor's cash, marketable securities, trade and other receivables realisable within one year, inventories and prepaid expenses which are to be charged to income within one year as well as any other assets listed under the definition of Total Assets as stated in the Accounting Information then most recently required to be delivered pursuant to Clause 11.2.5.

"Debt" means the aggregate (as of the date of calculation) of all obligations of the Corporate Guarantor then outstanding for the payment or repayment of money as stated in the Accounting Information then most recently required to be delivered pursuant to Clause 11.2.5 including, without limitation:

(a) any amounts payable by the Corporate Guarantor under leases or similar arrangements over their respective periods;

(b) any credit to the Corporate Guarantor from a supplier of goods or under any instalment purchase or other similar arrangement;

(c) the aggregate amount then outstanding of liabilities and obligations of third parties to the extent that they are guaranteed by the Corporate Guarantor;

(d) any contingent liabilities (including any taxes or other payments under dispute or arbitration) which have been or, under GAAP, should be recorded in the notes to the Corporate Guarantor's financial statements; and

(e) any deferred tax liabilities.

"Fleet Market Value" means the aggregate of the Market Value of the Fleet Vessels.

"Fleet Vessels" means any vessel (including, but not limited to, the Vessel) from time to time owned by the Corporate Guarantor (each a "Fleet Vessel").

"Free Liquidity" means the sum of cash and bank deposits, free of any Encumbrances.

"GAAP" means accounting principles, concepts, bases and policies generally adopted and accepted in the United States of America consistently applied.

"Leverage" means Total Long Term Debt divided by Total Market Adjusted Assets.

"Market Adjusted Net Worth" means, in respect of an Accounting Period, the amount of the Corporate Guarantor's total shareholders' equity, as such equity is reflected in the most recent Accounting Information, adjusted by the difference between the Fleet Market Value and the book value of Tangible Fixed Assets.

"Tangible Fixed Assets" means, in respect of an Accounting Period, the value (less depreciation) on a consolidated basis of all tangible fixed assets of the Corporate Guarantor as stated in the then most recent Accounting Information.

"Total Assets" means, in respect of an Account Period, the aggregate of Current Assets and Tangible Fixed Assets, as well as any other assets listed under the definition Total Assets as stated in the then most recent Accounting Information.

"Total Long Term Debt" means the aggregate (as of the date of calculation) of all those component parts of the Debt which fall due or whose final payment is due more than one year after the respective dates of the agreements providing for such component parts of the Debt (including for the avoidance of doubt the current portion of such Debt) as stated in the Accounting Information then most recently required to be delivered pursuant to Clause 11.2.5.

"Total Market Adjusted Assets" means the aggregate at any time of Current Assets and Value Adjusted Long Term Assets.

"Value Adjusted Long Term Assets" means the aggregate at any time of the Fleet Market Value (as most recently required to be calculated) and the Corporate Guarantor's other long term tangible assets as stated in its Accounting Information then most recently required to be delivered pursuant to Clause 11.2.5.

12 Accounts

12.1 Maintenance of Accounts The Borrower shall maintain the Accounts with the Agent for the duration of the Facility Period free of Encumbrances and rights of set off other than as created by or pursuant to the Security Documents.

12.2 Earnings The Borrower shall procure that there is credited to the Earnings Account, all Earnings and any Requisition Compensation of the Vessel.

12.3 Transfers to Retention Account On the day in each calendar month during the Facility Period which numerically corresponds to the day on which the Drawdown Date occurred (or, in any month in which there is no such day, on the last Business Day of that month), the Borrower shall procure that there is transferred from the Earnings Account (and irrevocably authorise the Agent to transfer from the Earnings Account) to the Retention Account :-

12.3.1    any costs or other amounts due and payable or outstanding in
          respect of the Loan, other than interest and principal; and

12.3.2    one-third of the amount of the Repayment  Instalment  due on
          the next Repayment Date; and

12.3.3    the amount of interest due on the next Interest Payment Date
          divided by the number of months  between  the last  Interest
          Payment Date and the Interest Payment Date in question.

12.4 Additional payments to Retention Account If for any reason the amount standing to the credit of the Earnings Account shall be insufficient to make any transfer to the Retention Account required by Clause 12.3, the Borrower shall, without demand, procure that there is credited to the Retention Account, on the date on which the relevant amount would have been transferred from the Earnings Account, an amount equal to the amount of the shortfall.

12.5 Application of Retention Account The Borrower shall procure that there is transferred from the Retention Account (and irrevocably authorise the Agent to transfer from the Retention Account) to the Agent on behalf of the Banks:-

12.5.1    on  each  Repayment   Date,  the  amount  of  the  Repayment
          Instalment then due; and

12.5.2    on each Interest  Payment Date,  the amount of interest then
          due.

12.6 Borrower's obligations not affected If for any reason the amount standing to the credit of the Retention Account shall be insufficient to pay any Repayment Instalment or to make any payment of interest when due, the Borrower's obligation to pay that Repayment Instalment or to make that payment of interest shall not be affected.

12.7 Release of surplus Any amount remaining to the credit of the Earnings Account following the making of any transfer required by Clause 12.3 shall (unless an Event of Default or Potential Event of Default shall have occurred and be continuing) be released to or to the order of the Borrower.

12.8 Restriction on withdrawal During the Facility Period no sum may be withdrawn from the Retention Account (except in accordance with this Clause) without the prior written consent of the Agent.

12.9 Relocation of Accounts At any time following the occurrence and during the continuation of an Event of Default, the Agent may without the consent of the Borrower relocate either of the Accounts to any other branch of the Agent, without prejudice to the continued application of this Clause and the rights of the Agent and the Banks under or pursuant to the Security Documents.

13 Events of Default

13.1 The Agent's rights If any of the events set out in Clause 13.2 occurs, the Agent may at its discretion by notice to the Borrower declare itself to be under no further obligation to the Borrower under or pursuant to this Agreement and may declare all or any part of the Indebtedness (including such unpaid interest as shall have accrued) to be immediately payable, in which event the Indebtedness (or the part of the Indebtedness referred to in the Bank's notice) shall immediately become due and payable without any further demand or notice of any kind.

13.2 Events of Default The events referred to in Clause 13.1 are:-

13.2.1    payment  default if the Borrower  defaults in the payment of
          any part of the  Indebtedness  when due; or if the Charterer
          defaults  in the  payment  of any part of the hire under the
          Charter when due;

13.2.2    other  default  if any  of the  Security  Parties  fails  to
          observe  or  perform  any  of  the  covenants,   conditions,
          undertakings,   agreements  or   obligations   on  its  part
          contained in any of the Security  Documents  and, where such
          default is capable of remedy,  such  default is not remedied
          within  thirty (30) days if the date of its  occurrence,  or
          shall in any  other way be in breach of or do or cause to be
          done any act  repudiating  or  evidencing  an  intention  to
          repudiate any of the Security Documents; or

13.2.3    misrepresentation    or   breach   of    warranty   if   any
          representation  or warranty  made or repeated,  or any other
          information  given,  by any of the  Security  Parties to the
          Agent in or leading up to or during the  currency  of any of
          the Security  Documents,  or in or pursuant to any notice or
          other  document  delivered to the Agent under or pursuant to
          any of the  Security  Documents,  is false or  incorrect  or
          misleading in any respect which the Agent in its  discretion
          considers to be material; or

13.2.4    execution if a distress or  execution or other  process of a
          court or  authority  is levied on any of the property of any
          of the Security Parties before or after final judgment or by
          order  of  any  competent  court  or  authority  and  is not
          satisfied within seven days of levy; or

13.2.5    insolvency  events  if any of the  Security  Parties  or the
          Charterer:-

          (a)  resolves to appoint,  or applies for or consents to the
               appointment  of, a receiver,  administrative  receiver,
               trustee,  administrator  or  liquidator of itself or of
               all or part of its assets; or

          (b)  is unable or admits its  inability  to pay its debts as
               they fall due; or

          (c)  makes a general assignment for the benefit of creditors
               or enters  into a  moratorium  on payment of any of its
               indebtedness; or

          (d)  ceases trading or threatens to cease trading; or

          (e)  has appointed an Inspector under the Companies Act 1985
               or any  statutory  provision  which  the  Agent  in its
               discretion considers analogous thereto; or

13.2.6    insolvency  proceedings if any  proceedings are commenced or
          threatened,  or any order or judgment is given by any court,
          for the bankruptcy,  liquidation, winding up, administration
          or re-organisation of any of the Security Parties or for the
          appointment   of  a   receiver,   administrative   receiver,
          administrator,  liquidator or trustee of any of the Security
          Parties  or of  all or  part  of  the  assets  of any of the
          Security  Parties,  or if any person appoints or purports to
          appoint    such    receiver,     administrative    receiver,
          administrator, liquidator or trustee; or

13.2.7    impossibility or illegality if any event occurs which would,
          or would with the passage of time, render performance of any
          of the Security  Documents  by any of the  Security  Parties
          impossible, unlawful or unenforceable by the Agent; or

13.2.8    conditions  subsequent if any of the  conditions  set out in
          Clause  3.2 is not  satisfied  within  the  time  reasonably
          required by the Agent; or

13.2.9    covenants  if any of the  covenants  set out in Clause 11 is
          not  satisfied  within  thirty  days;  or 13.2.10  change in
          ownership or control if any change occurs in the  Borrower's
          and/or the Corporate  Guarantor's  beneficial  ownership and
          control  from that  advised to the Agent at the date of this

Agreement, or otherwise in accordance with Clause 11.1.12 (or in the case of the Borrower) or Clause 8.1. of the Corporate Guarantee (in the case of the Corporate Guarantor).

13.2.11 revocation or modification of consents etc. if any consent, licence, approval, authorisation, filing, registration or other requirement of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties to comply with any of their obligations in or pursuant to any of the Security Documents is not obtained or is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, prejudicial to its interests, or ceases to remain in full force and effect; or

13.2.12 Master Agreement termination if a notice is sent by the Agent under section 6(a) of the Master Agreement, or by any person under section 6(b)(iv) of the Master Agreement, in either case designating an Early Termination Date for the purpose of the Master Agreement, or if the Master Agreement is for any other reason terminated, cancelled, suspended, rescinded, revoked or otherwise ceases to remain in full force and effect; or

13.2.13 curtailment of business if the business of any of the Security Parties is wholly or partially curtailed or suspended by any intervention by or under authority of any government, or if all or a substantial part of the undertaking, property or assets of any of the Security Parties is seized, nationalised, expropriated or compulsorily acquired by or under authority of any government; or

13.2.14 acceleration of other indebtedness if any other indebtedness or obligation for borrowed money of any of the Security Parties becomes due or capable of being declared due prior to its stated maturity by reason of default on the part of that Security Party, or is not repaid or satisfied at maturity; or

13.2.15 reduction of capital if any of the Security Parties reduces its authorised or issued or subscribed capital; or

13.2.16 challenge to registration if the registration of the Vessel or the Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or if the validity or priority of the Mortgage is contested; or

13.2.17 war if the country of registration of the Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion considers that, as a result, the security conferred by the Security Documents is materially prejudiced; or

13.2.18 notice of termination if the Corporate Guarantor gives notice to the Agent to determine its obligations under the Corporate Guarantee; or

13.2.19 material adverse change etc. if anything is done or permitted or omitted to be done by any of the Security Parties which in the reasonable opinion of the Agent jeopardises or imperils (or may jeopardise or imperil) the rights conferred on the Agent by the Security Documents, or if there occurs (in the opinion of the Agent) any material adverse change in the business, affairs or financial condition of any of the Security Parties from that pertaining at the date of this Agreement; or

13.2.20 environment if the Borrower fails to observe or perform any of the covenants, conditions, undertakings, agreements or obligations contained in Clause 11.2.12 or shall in any other way be in breach of or do or cause to be done any act repudiating or evidencing an intention to repudiate any of the covenants, conditions, undertakings, agreements or obligations contained in Clause 11.2.12; or

13.2.21 cross-default an event of default (howsoever defined) occurs in relation to any other loan agreement facility entered into by the Borrower and/or the Corporate Guarantor or any subsidiary of the Corporate Guarantor; or

13.2.22 Charter the Charter is terminated, cancelled or repudiated or is not in force at any time during the Facility Period, unless it has expired by effluxion of time, or the Borrower or the Charterer defaults in the performance of any of their respective material obligations under or pursuant to the Charter and unless the Charter is replaced within a period of one month with another charter or contract of employment satisfactory to the Agent in all respects in its absolute discretion; or

13.2.23 analogous events if any event which (in the opinion of the Agent or ) is analogous to any of the events set out above shall occur.

14 Set-Off and Lien

14.1 Set-off The Borrower irrevocably authorises the Agent and the Banks at any time after all or any part of the Indebtedness shall have become due and payable to set off without notice any liability of the Borrower to any of the Banks or the Agent (whether present or future, actual or contingent, and irrespective of the branch or office, currency or place of payment) against any credit balance from time to time standing on any account of the Borrower (whether current or otherwise and whether or not subject to notice) with any branch of the Agent or of any Bank in or towards satisfaction of the Indebtedness and, in the name of the Agent or that Bank or the Borrower, to do all acts (including, without limitation, converting or exchanging any currency) and execute all documents which may be required to effect such application.

14.2 Lien The Agent and each Bank shall have a lien on and be entitled to retain and realise as additional security for the repayment of the Indebtedness any cheques, drafts, bills, notes or negotiable or non-negotiable instruments and any stocks, shares or marketable or other securities and property of any kind of the Borrower (or of the Agent or that Bank as agent or nominee of the Borrower) from time to time held by the Agent, whether for safe custody or otherwise.

14.3 Restrictions on withdrawal Despite any term to the contrary in relation to any deposit or credit balance at any time on any account of the Borrower with any of Banks or with the Agent, no such deposit or balance shall be repayable or capable of being assigned, mortgaged, charged or otherwise disposed of or dealt with by the Borrower during the Facility Period except in accordance with the Security Documents, but the Agent may from time to time permit the withdrawal of all or any part of any such deposit or balance without affecting the continued application of this Clause.

14.4 Application The Borrower irrevocably authorises the Agent to apply all sums which the Agent may receive:-

14.4.1    pursuant to a sale or other disposition of the Vessel or any
          right, title or interest in the Vessel; or

14.4.2    by way of  payment to the Agent of any sum in respect of the
          Insurances,   Earnings,   Charter   Rights  or   Requisition
          Compensation; or

14.4.3    otherwise  arising  under or in  connection  with any of the
          Security Documents

in or towards satisfaction, or by way of retention on account, of the Indebtedness, in such manner as the Agent may in its discretion determine.

14.5 Master Agreement rights The rights conferred on the Agent by this Clause shall be in addition to, and without prejudice to or limitation of, the rights of netting and set off conferred on the Agent by the Master Agreement. The Borrower acknowledges that the Agent shall be under no obligation to make any payment to the Borrower under or pursuant to the Master Agreement if, at the time that payment becomes due, there shall have occurred an Event of Default or Potential Event of Default, or an Event of Default or Termination Event (as those terms are respectively defined in the Master Agreement).

15 Assignment and Sub-Participation

15.1 Right to assign The Original Bank may grant sub-participations in all or any part of the Loan and may assign or transfer all or any of its rights under or pursuant to the Security Documents to any other branch of that Bank or (in consultation with the Borrower) to one or more other banks or financial institutions.

15.2 Borrower's co-operation The Borrower will co-operate fully with the Banks in connection with any assignment, transfer or sub-participation; will execute and procure the execution of such documents as the Banks may require in connection therewith; and irrevocably authorises the Agent to sign any Transfer Certificate on its behalf, and irrevocably authorises the Agent and the Banks disclose to any proposed assignee, transferee or sub-participant (whether before or after any assignment, transfer or sub-participation and whether or not any assignment, transfer or sub-participation shall take place) all information relating to the Security Parties, the Loan or the Security Documents which the Agent or the Banks may in their discretion consider necessary or desirable.

15.3 Rights of assignee Any assignee, transferee or sub-participant of a Bank shall (unless limited by the express terms of the assignment, transfer or sub-participation) take the full benefit of every provision of the Security Documents benefitting that Bank.

15.4 Transfer Certificates If any Bank wishes to transfer any of its rights and/or obligations under or pursuant to this Agreement, it may do so by delivering to the Agent a duly completed Transfer Certificate, in which event on the Transfer Date:-

15.4.1    to the extent  that that Bank seeks to  transfer  its rights
          and/or  obligations,  the Borrower (on the one hand) and the
          Bank in question (on the other)  shall be released  from all
          further obligations towards the other(s);

15.4.2    the  Borrower (on the one hand) and the  Transferee  (on the
          other)  shall  assume   obligations   towards  the  other(s)
          identical to those released pursuant to Clause 15.4.1;

15.4.3    the Agent,  each of the Banks and the Transferee  shall have
          the same rights and obligations  between  themselves as they
          would have had if the  Transferee had been an original party
          to this Agreement as a Bank; and

15.4.4    the Transferee  shall pay to the Agent for its own account a
          transfer fee of five thousand Dollars.

Each Bank irrevocably authorises the Agent to sign on its behalf any Transfer Certificate relating to the transfer of any of the rights and/or obligations of any other Bank.

15.5 Security Documents Unless otherwise expressly provided in any Security Document or otherwise expressly agreed between a Bank and any proposed Transferee and notified by that Bank to the Agent on or before the relevant Transfer Date, there shall automatically be assigned to the Transferee with any transfer of a Bank's rights and/or obligations under or pursuant to this Agreement the rights of that Bank under or pursuant to the Security Documents (other than this Agreement) which relate to the portion of the Bank's rights and/or obligations transferred by the relevant Transfer Certificate.

16 Payments, Mandatory Prepayment, Reserve Requirements and Illegality

16.1 Payments All amounts payable by the Borrower under or pursuant to any of the Security Documents shall be paid to such accounts at such banks as the Agent may from time to time direct to the Borrower, and (unless payable in any other Currency of Account) shall be paid in Dollars in same day funds (or such funds as are required by the authorities in the United States of America for settlement of international payments for immediate value). Payments shall be deemed to have been received by the Agent on the date on which the Agent receives authenticated advice of receipt, unless that advice is received by the Agent on a day other than a Business Day or at a time of day (whether on a Business Day or not) when the Agent in its discretion considers that it is impossible or impracticable for the Agent to utilise the amount received for value that same day, in which event the payment in question shall be deemed to have been received by the Agent on the Business Day next following the date of receipt of advice by the Agent.

16.2 No deductions or withholdings All payments (whether of principal or interest or otherwise) to be made by the Borrower pursuant to the Security Documents shall, subject only to Clause 16.3, be made free and clear of and without deduction for or on account of any Taxes or other deductions, withholdings, restrictions, conditions or counterclaims of any nature.

16.3 Grossing-up If at any time any law requires (or is interpreted to require) the Borrower to make any deduction or withholding from any payment, or to change the rate or manner in which any required deduction or withholding is made, the Borrower will promptly notify the Agent and, simultaneously with making that payment, will pay to the Agent whatever additional amount (after taking into account any additional Taxes on, or deductions or withholdings from, or restrictions or conditions on, that additional amount) is necessary to ensure that, after making the deduction or withholding, the Agent and the Banks receive a net sum equal to the sum which it would have received had no deduction or withholding been made.

16.4 Evidence of deductions If at any time the Borrower is required by law to make any deduction or withholding from any payment to be made by it pursuant to any of the Security Documents, the Borrower will pay the amount required to be deducted or withheld to the relevant authority within the time allowed under the applicable law and will, no later than thirty days after making that payment, deliver to the Agent an original receipt issued by the relevant authority, or other evidence acceptable to the Agent, evidencing the payment to that authority of all amounts required to be deducted or withheld.

16.5 Adjustment of due dates If any payment or transfer of funds to be made under any of the Security Documents, other than a payment of interest on the Loan or a payment pursuant to the Master Agreement, shall be due on a day which is not a Business Day, that payment shall be made on the next succeeding Business Day (unless the next succeeding Business Day falls in the next calendar month in which event the payment shall be made on the next preceding Business Day). Any such variation of time shall be taken into account in computing any interest in respect of that payment.

16.6 Change in law If, by reason of the introduction of any law, or any change in any law, or the interpretation or administration of any law, or in compliance with any request or requirement from any central bank or any fiscal, monetary or other authority:-

16.6.1    any Bank or the Agent (or the holding company of the Bank or
          the  Agent)  shall be  subject  to any Tax with  respect  to
          payments of all or any part of the Indebtedness; or

16.6.2    the basis of  Taxation  of payments to any Bank or the Agent
          in respect of all or any part of the  Indebtedness  shall be
          changed; or

16.6.3    any  reserve  requirements  shall be  imposed,  modified  or
          deemed  applicable  against assets held by or deposits in or
          for the account of or loans by any branch of any Bank or the
          Agent; or

16.6.4    the manner in which any Bank or the Agent allocates  capital
          resources to its obligations under this Agreement and/or the
          Master  Agreement  or  any  ratio  (whether  cash,   capital
          adequacy,  liquidity  or  otherwise)  which  any Bank or the
          Agent  is  required  or  requested  to  maintain   shall  be
          affected; or

16.6.5    there is imposed on any Bank or the Agent (or on the holding
          company  of any Bank or the Agent)  any other  condition  in
          relation to the Indebtedness or the Security Documents;

and the result of any of the above shall be to increase the cost to any Bank (or to the holding company of any Bank) of that Bank making or maintaining the Loan or of maintaining its obligations under the Master Agreement, or to cause the any Bank or the Agent to suffer (in its opinion) a material reduction in the rate of return on its overall capital below the level which it reasonably anticipated at the date of this Agreement and which it would have been able to achieve but for its entering into this Agreement or the Master Agreement and/or performing its obligations under this Agreement or the Master Agreement, the Bank affected shall notify the Agent and the Borrower shall from time to time pay to the Agent on demand for the account of the Bank affected (or, in retention to the Master Agreement, for the Agent's own account) the amount which shall compensate that Bank (or the holding company of the Bank) for such additional cost or reduced return. A certificate signed by an authorised signatory of the Bank affected setting out the amount of that payment and the basis of its calculation shall be submitted to the Borrower and shall be conclusive evidence of such amount save for manifest error or on any question of law. The Borrower shall have the right to prepay the Loan in full, subject to Clauses 5.4, 5.5 and 5.6.

16.7 Illegality and impracticality Notwithstanding anything contained in the Security Documents, the obligation of the Banks to advance or maintain the Loan shall terminate in the event that a change in any law or in the interpretation of any law by any authority charged with its administration shall make it unlawful or, in the opinion of any Bank, impracticable for that Bank to advance or maintain the Loan. In that event the Bank affected shall, by written notice to the Borrower, declare its obligations to be immediately terminated. If all or any part of the Loan shall have been advanced by the Banks to the Borrower, the Indebtedness (including all accrued interest) shall be prepaid within thirty days from the date of such notice. Clause 5.4 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period.

16.8 Changes in market circumstances If at any time a Bank determines (which determination shall be final and conclusive and binding on the Borrower) that, by reason of changes affecting the London Interbank market, adequate and fair means do not exist for ascertaining the rate of interest on the Loan pursuant to this Agreement:-

16.8.1    that  Bank  shall  give  notice  to  the   Borrower  of  the
          occurrence of such event; and

16.8.2    the Agent shall as soon as reasonably practicable certify to
          the Borrower in writing the  effective  cost to the Banks of
          maintaining  the Loan for such  further  period  as shall be
          selected  by the Banks and the rate of  interest  payable by
          the Borrower for that period;  or, if that is not acceptable
          to the Borrower,

16.8.3    the Agent will  negotiate  with the  Borrower  in good faith
          with a  view  to  modifying  this  Agreement  to  provide  a
          substitute  basis  for  the  Loan  which  is  financially  a
          substantial  equivalent  to the basis  provided  for in this
          Agreement.

If, within thirty days of the giving of the notice referred to in Clause 16.8.1, the Borrower and the Agent fail to agree in writing on a substitute basis for the Loan, the Borrower will immediately prepay the Indebtedness. Clause 5.4 shall apply to that prepayment if it is made on a day other than the last day of an Interest Period.

16.9 Non-availability of currency If a Bank is for any reason unable to obtain Dollars in the London Interbank market and is, as a result, or as a result of any other contingency affecting the London Interbank market, unable to advance or maintain the Loan in Dollars, that Bank shall give notice to the Agent and the Agent shall give notice to the Borrowers and the Banks' obligations to make the Loan available shall immediately cease. In that event, if all or any part of the Loan shall have been advanced by the Banks to the Borrower, the Agent on behalf of the Banks will negotiate with the Borrower in good faith with a view to establishing a mutually acceptable basis for funding the Loan from an alternative source. If the Agent and the Borrower have failed to agree in writing on a basis for funding the Loan from an alternative source by 11.00 a.m. on the second Business Day prior to the end of the then current Interest Period, the Borrower will (without prejudice to its other obligations under or pursuant to this Agreement, including, without limitation, its obligation to pay interest on the Loan, arising on the expiry of the then current Interest Period) prepay the Indebtedness to the Agent on behalf of the Banks on the expiry of the then current Interest Period.

17 Communications

17.1 Method Any Communication may be given, delivered, made or served (as the case may be) under or in relation to this Agreement by letter or fax and shall be in the English language and sent addressed:-

17.1.1    in the case of the  Banks or the  Agent to the  Agent at its
          address at the head of this  Agreement  (fax no: +30 210 954
          4368) marked for the attention of:  Global  Shipping  Group;
          and

17.1.2    in the case of the Borrower to the Communications Address;

or to such other address or fax number as the Banks, the Agent or the Borrower may designate for itself by written notice to the other.

17.2 Timing A Communication shall be deemed to have been duly given, delivered, made or served to or on, and received by, the Borrower:-

17.2.1    in the case of a fax when the  sender  receives  one or more
          transmission  reports showing the whole of the Communication
          to have been transmitted to the correct fax number;

17.2.2    if  delivered  to an officer of the  Borrower or left at the
          Communications  Address at the time of  delivery or leaving;
          or

17.2.3    if posted, at 9.00 a.m. on the Business Day after posting by
          prepaid first class post.

A Communication shall only be deemed to have been duly given, delivered, made or served to or on, and received by, the Banks or the Agent on actual receipt of the whole of that Communication by the Agent.

17.3 Indemnity The Borrower shall indemnify the Agent against any cost, claim, liability, loss or expense (including legal fees and any Value Added Tax or any similar or replacement tax (if applicable)) which the Agent or any of the Banks may sustain or incur as a consequence of any Communication sent by or on behalf of the Borrower by fax not being received by its intended recipient, or being received incomplete, or by reason of any Communication purportedly having been sent by or on behalf of the Borrower having been sent fraudulently.

18 General Indemnities

18.1 Currency In the event of the Agent or a Bank receiving or recovering any amount payable under any of the Security Documents in a currency other than the Currency of Account, and if the amount received or recovered is insufficient when converted into the Currency of Account at the date of receipt to satisfy in full the amount due, the Borrower shall, on the Agent's written demand, pay to the Bank such further amount in the Currency of Account as is sufficient to satisfy in full the amount due and that further amount shall be due to the Agent as a separate debt under this Agreement.

18.2 Costs and expenses The Borrower will, within fourteen days of the Agent's written demand, reimburse the Agent for all costs and expenses (including Value Added Tax or any similar or replacement tax if applicable) of and incidental to:-

18.2.1    the negotiation,  preparation, execution and registration of
          the Security  Documents  (whether or not any of the Security
          Documents are actually executed or registered and whether or
          not all or any part of the Loan is advanced);

18.2.2    any  amendments,  addenda  or  supplements  to  any  of  the
          Security Documents (whether or not completed);

18.2.3    any other documents which may at any time be required by the
          Bank or the  Agent  to give  effect  to any of the  Security
          Documents or which any Bank or the Agent is entitled to call
          for or  obtain  pursuant  to any of the  Security  Documents
          (including,  without limitation, all premiums and other sums
          from time to time  payable by the Agent in  relation  to the
          Mortgagees' Insurances); and

18.2.4    the exercise of the rights, powers, discretions and remedies
          of the Banks  and/or  the  Agent  under or  pursuant  to the
          Security Documents.

18.3 Events of Default The Borrower shall indemnify the Banks and the Agent from time to time on demand against all losses and costs incurred or sustained by any Bank and/or the Agent as a consequence of any Event of Default, including (without limitation) any Break Costs.

18.4 Funding costs The Borrower shall indemnify the Banks and the Agent from time to time on demand against all losses and costs incurred or sustained by any Bank or by the Agent if, for any reason, the Loan is not advanced to the Borrower after the Drawdown Notice has been given to the Agent, or is advanced on a date other than that requested in the Drawdown Notice (unless, in either case, as a result of any default by the Agent or any of the Banks), including (without limitation) any Break Costs.

18.5 Protection and enforcement The Borrower shall indemnify the Banks and the Agent from time to time on demand against all losses, costs and liabilities which any Bank or the Agent may from time to time sustain, incur or become liable for in or about the protection, maintenance or enforcement of the rights conferred on the Banks and/or the Agent by the Security Documents or in or about the exercise or purported exercise by the Banks and/or the Agent of any of the rights, powers, discretions or remedies vested in them under or arising out of the Security Documents, including (without limitation) any losses, costs and liabilities which any Bank or the Agent may from time to time sustain, incur or become liable for by reason of the Banks or the Agent being mortgagees of the Vessel and/or a lender to the Borrower, or by reason of any Bank or the Agent being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of the Vessel.

18.6 Liabilities of Banks and Agent The Borrower will from time to time reimburse the Banks and the Agent on demand for all sums which any Bank or the Agent may pay or become actually or contingently liable for on account of the Borrower or in connection with the Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which any Bank or the Agent may pay or guarantees which any Bank or the Agent may give in respect of the Insurances, any expenses incurred by any Bank or the Agent in connection with the maintenance or repair of the Vessel or in discharging any lien, bond or other claim relating in any way to the Vessel, and any sums which any Bank or the Agent may pay or guarantees which it may give to procure the release of the Vessel from arrest or detention.

18.7 Taxes The Borrower shall pay all Taxes to which all or any part of the Indebtedness or any of the Security Documents may be at any time subject and shall indemnify the Agent and the Banks on demand against all liabilities, costs, claims and expenses resulting from any omission to pay or delay in paying any such Taxes.

19 Miscellaneous

19.1 Waivers No failure or delay on the part of the Agent or of a Bank in exercising any right, power, discretion or remedy under or pursuant to any of the Security Documents, nor any actual or alleged course of dealing between the Agent and any Bank and the Borrower, shall operate as a waiver of, or acquiescence in, any default on the part of any Security Party, unless expressly agreed to do so in writing by the Agent, nor shall any single or partial exercise by the Agent or a Bank of any right, power, discretion or remedy preclude any other or further exercise of that right, power, discretion or remedy, or the exercise by the Agent or a Bank of any other right, power, discretion or remedy.

19.2 No oral variations No variation or amendment of any of the Security Documents shall be valid unless in writing and signed on behalf of the Banks and the Agent.

19.3 Severability If at any time any provision of any of the Security Documents is invalid, illegal or unenforceable in any respect that provision shall be severed from the remainder and the validity, legality and enforceability of the remaining provisions shall not be affected or impaired in any way.

19.4 Successors etc. The Security Documents shall be binding on the Security Parties and on their successors and permitted transferees and assignees, and shall inure to the benefit of the Banks and the Agent and its successors, transferees and assignees. The Borrower may not assign nor transfer any of its rights under or pursuant to any of the Security Documents without the prior written consent of the Agent.

19.5 Further assurance If any provision of the Security Documents shall be invalid or unenforceable in whole or in part by reason of any present or future law or any decision of any court, or if the documents at any time held by the Banks or by the Agent on their behalf are considered by the Banks for any reason insufficient to carry out the terms of this Agreement, then from time to time the Borrower will promptly, on demand by the Agent, execute or procure the execution of such further documents as in the opinion of the Banks are necessary to provide adequate security for the repayment of the Indebtedness.

19.6 Other arrangements The Banks and the Agent may, without prejudice to its rights under or pursuant to the Security Documents, at any time and from time to time, on such terms and conditions as it may in its discretion determine, and without notice to the Borrower, grant time or other indulgence to, or compound with, any other person liable (actually or contingently) to the Banks and/or the Agent in respect of all or any part of the Indebtedness, and may release or renew negotiable instruments and take and release securities and hold funds on realisation or suspense account without affecting the liabilities of the Borrower or the rights of the Banks and the Agent under or pursuant to the Security Documents.

19.7 Advisers The Borrower irrevocably authorise the Agent, at any time and from time to time during the Facility Period, to consult insurance advisers on any matters relating to the Insurances, including, without limitation, the collection of insurance claims, and from time to time to consult or retain advisers or consultants to monitor or advise on any other claims relating to the Vessel. The Borrower will provide such advisers and consultants with all information and documents which it may from time to time require and will reimburse the Agent on demand for all costs and expenses incurred by the Agent in connection with the consultation or retention of such advisers or consultants.

19.8 Delegation The Banks and the Agent may at any time and from time to time delegate to any person any of its rights, powers, discretions and remedies pursuant to the Security Documents on such terms as it may consider appropriate (including the power to sub-delegate).

19.9 Rights etc. cumulative Every right, power, discretion and remedy conferred on the Banks and/or the Agent under or pursuant to the Security Documents shall be cumulative and in addition to every other right, power, discretion or remedy to which it may at any time be entitled by law or in equity. The Banks and the Agent may exercise each of their rights, powers, discretions and remedies as often and in such order as they deem appropriate. The exercise or the beginning of the exercise of any right, power, discretion or remedy shall not be interpreted as a waiver of the right to exercise that or any other right, power, discretion or remedy either simultaneously or subsequently.

19.10 No enquiry The Banks and the Agent shall not be concerned to enquire into the powers of the Security Parties or of any person purporting to act on behalf of any of the Security Parties, even if any of the Security Parties or any such person shall have acted in excess of their powers or if their actions shall have been irregular, defective or informal, whether or not any Bank or the Agent had notice thereof.

19.11 Continuing security The security constituted by the Security Documents shall be continuing and shall not be satisfied by any intermediate payment or satisfaction until the Indebtedness shall have been repaid in full and neither the Banks nor the Agent shall be under no further actual or contingent liability to any third party in relation to the Vessel, the Insurances, Earnings or Requisition Compensation or any other matter referred to in the Security Documents.

19.12 Security cumulative The security constituted by the Security Documents shall be in addition to any other security now or in the future held by the Banks or by the Agent for or in respect of all or any part of the Indebtedness, and shall not merge with or prejudice or be prejudiced by any such security or any other contractual or legal rights of the Banks or the Agent, nor affected by any irregularity, defect or informality, or by any release, exchange or variation of any such security. Section 93 of the Law of Property Act 1925 and all provisions which the Agent considers analogous thereto under the law of any other relevant jurisdiction shall not apply to the security constituted by the Security Documents. 19.13 Re-instatement If the Banks or the Agent takes any steps to exercise any of its rights, powers, remedies or discretions pursuant to the Security Documents and the result shall be adverse to the Banks and/or the Agent, the Borrower and the Banks and the Agent shall be restored to their former positions as if no such steps had been taken.

19.14 No liability Neither the Banks nor the Agent, nor any agent or employee of any Bank or of the Agent, nor any receiver and/or manager appointed by the Agent, shall be liable for any losses which may be incurred in or about the exercise of any of the rights, powers, discretions or remedies of the Banks and/or the Agent under or pursuant to the Security Documents nor liable as mortgagee in possession for any loss on realisation or for any neglect or default of any nature for which a mortgagee in possession might otherwise be liable.

19.15 Rescission of payments etc. Any discharge, release or reassignment by the Banks and/or the Agent of any of the security constituted by, or any of the obligations of any Security Party contained in, any of the Security Documents shall be (and be deemed always to have been) void if any act (including, without limitation, any payment) as a result of which such discharge, release or reassignment was given or made is subsequently wholly or partially rescinded or avoided by operation of any law.

19.16 Subsequent Encumbrances If the Agent receives notice of any subsequent Encumbrance affecting the Vessel or all or any part of the Insurances, Earnings, Charter Rights or Requisition Compensation or the Accounts, the Agent may open a new account in its books for the Borrower. If the Agent does not open a new account, then (unless the Agent gives written notice to the contrary to the Borrower) as from the time of receipt by the Agent of notice of such subsequent Encumbrance, all payments made to the Agent shall be treated as having been credited to a new account of the Borrower and not as having been applied in reduction of the Indebtedness.

19.17 Releases If any Bank or the Agent shall at any time in its discretion release any party from all or any part of any of the Security Documents, the liability of any other party to the Security Documents shall not be varied or diminished.

19.18 Discretions Unless otherwise expressly indicated, where any Bank or the Agent is stated in the Security Documents to have a discretion and/or where the opinion of any Bank or the Agent is referred to and/or where the consent, agreement or approval of any Bank or the Agent is required for any course of action, or where anything is required to be acceptable to any Bank or the Agent, the Banks and the Agent shall have a sole, absolute and unfettered discretion and/or may give or withhold their consent, agreement or approval at its sole, absolute and unfettered discretion.

19.19 Certificates Any certificate or statement signed by an authorised signatory of the Agent purporting to show the amount of the Indebtedness (or any part of the Indebtedness) or any other amount referred to in any of the Security Documents shall, save for manifest error or on any question of law, be conclusive evidence as against the Borrower of that amount.

19.20 Survival of representations and warranties The representations and warranties on the part of the Borrower contained in this Agreement shall survive the execution of this Agreement and the advance of the Loan.

19.21 Counterparts This Agreement may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

19.22 Contracts (Rights of Third Parties) Act 1999 No term of the Agreement is enforceable by a person who is not a party to it.

20 Law and Jurisdiction

20.1 Governing law This Agreement shall in all respects be governed by and interpreted in accordance with English law.

20.2 Jurisdiction For the exclusive benefit of the Banks and the Agent, the parties to this Agreement irrevocably agree that the courts of England are to have jurisdiction to settle any disputes which may arise out of or in connection with this Agreement and that any Proceedings may be brought in those courts.

20.3 Alternative jurisdictions Nothing contained in this Clause shall limit the right of the Banks or the Agent to commence any Proceedings against the Borrower in any other court of competent jurisdiction nor shall the commencement of any Proceedings against the Borrower in one or more jurisdictions preclude the commencement of any Proceedings in any other jurisdiction, whether concurrently or not.

20.4 Waiver of objections The Borrower irrevocably waives any objection which it may now or in the future have to the laying of the venue of any Proceedings in any court referred to in this Clause, and any claim that those Proceedings have been brought in an inconvenient or inappropriate forum, and irrevocably agrees that a judgment in any Proceedings commenced in any such court shall be conclusive and binding on it and may be enforced in the courts of any other jurisdiction.

20.5 Service of process Without prejudice to the right of the Agent and the Banks to use any other method of service permitted by law, the Borrower irrevocably agrees that any writ, notice, judgment or other legal process shall be sufficiently served on it if addressed to it and left at or sent by post to the Address for Service, and in that event shall be conclusively deemed to have been served at the time of leaving or, if posted, at 9.00 a.m. on the Business Day after posting by prepaid first class post.

                          The Banks and the Commitments

The Banks                                                      The Commitments

FORTIS BANK N.V./S.A., ATHENS BRANCH                           100%

166, Syngrou Ave.
176 71, Athens
Greece

IN WITNESS of which the parties to this Agreement have executed this Agreement the day and year first before written.

SIGNED  by                                                )
duly authorised for and on behalf                         )
of  XENIA INTERNATIONAL CORP.                             )
in the presence of:-                                      )




SIGNED  by                                                )
duly authorised for and on behalf                         )
of FORTIS BANK N.V./S.A.,                                 )
ATHENS BRANCH (as lender)                                 )
in the presence of:-                                      )



SIGNED  by                                                )
duly authorised for and on behalf                         )
of FORTIS BANK N.V./S.A.,                                 )
ATHENS BRANCH (as agent)                                  )
in the presence of:-                                      )

APPENDIX A

To: FORTIS BANK N.V./S.A., ATHENS BRANCH

From: XENIA INTERNATIONAL CORP.

2006

Dear Sirs,

Drawdown Notice

We refer to the Loan Agreement dated 2006 made between ourselves and yourselves ("the Agreement").

Words and phrases defined in the Agreement have the same meaning when used in this Drawdown Notice.

Pursuant to Clause 2.2 of the Agreement, we irrevocably request that you advance the sum of [ ] to us on 2006, which is a Business Day, by paying the amount of the Loan to [ ].

We warrant that the representations and warranties contained in Clause 4 of the Agreement are true and correct at the date of this Drawdown Notice and will be true and correct on 2006; that no Event of Default nor Potential Event of Default has occurred and is continuing, and that no Event of Default or Potential Event of Default will result from the advance of the Loan requested in this Drawdown Notice.

We select the period of [ ] months as the first Interest Period.

Yours faithfully

.......................

For and on behalf of
XENIA INTERNATIONAL CORP.

APPENDIX B

Form of Transfer Certificate

To: FORTIS BANK N.V./S.A., ATHENS BRANCH

TRANSFER CERTIFICATE

This transfer certificate relates to a secured loan facility agreement (as from time to time amended, varied, supplemented or novated "the Loan Agreement") dated 2006, on the terms and subject to the conditions of which a secured loan facility of up to $8,250,000 was made available to Xenia International Corp. by a syndicate of banks on whose behalf you act as agent and security trustee.

1 Terms defined in the Loan Agreement shall, unless otherwise expressly indicated, have the same meaning when used in this certificate. The terms "Transferor" and "Transferee" are defined in the schedule to this certificate.

2 The Transferor:-

2.1 confirms that the details in the Schedule under the heading "Transferor's Commitment" accurately summarise its Commitment; and

2.2 requests the Transferee to accept by way of novation the transfer to the Transferee of the amount of the Transferor's Commitment specified in the Schedule by counter-signing and delivering this certificate to the Agent at its address for Communications specified in the Loan Agreement.

3 The Transferee requests the Agent to accept this certificate as being delivered to the Agent pursuant to and for the purposes of clause 15.4 of the Loan Agreement so as to take effect in accordance with the terms of that clause on the Transfer Date specified in the Schedule.

4 The Agent (on its own behalf and on behalf of the Borrower and each of the Banks other than the Transferor) confirms its acceptance of this certificate for the purposes of clause 15.4 of the Loan Agreement.

5 The Transferee confirms that:-

5.1 it has received a copy of the Loan Agreement together with all other information which it has required in connection with this transaction;

5.2 it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of any such information; and

5.3 it has not relied and will not in the future rely on the Transferor or any other party to the Loan Agreement to keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any of the Security Parties.

6 Execution of this certificate by the Transferee constitutes its representation to the Transferor and to all other parties to the Loan Agreement that it has the power to become a party to the Loan Agreement as a Bank on the terms of the Loan Agreement and has taken all steps to authorise execution and delivery of this certificate.

7 The Transferee undertakes with the Transferor and each of the other parties to the Loan Agreement that it will perform in accordance with their terms all those obligations which by the terms of the Loan Agreement will be assumed by it after delivery of this certificate to the Agent and the satisfaction of any conditions subject to which this certificate is expressed to take effect.

8 The Transferor makes no representation or warranty and assumes no responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of any of the Security Documents or any document relating to any of the Security Documents, and assumes no responsibility for the financial condition of any of the Security Parties or for the performance and observance by the Security Parties of any of their obligations under any of the Security Documents or any document relating to any of the Security Documents and any conditions and warranties implied by law are expressly excluded.

9 The Transferee acknowledges that nothing in this certificate or in the Loan Agreement shall oblige the Transferor to:-

9.1 accept a re-transfer from the Transferee of the whole or any part of the rights, benefits and/or obligations transferred pursuant to this certificate; or

9.2 support any losses directly or indirectly sustained or incurred by the Transferee for any reason including, without limitation, the non-performance by any party to any of the Security Documents of any obligations under any of the Security Documents.

10 The address and fax number of the Transferee for the purposes of clause 10.20 of the Loan Agreement are set out in the Schedule.

11 This certificate may be executed in any number of counterparts each of which shall be original but which shall together constitute the same instrument.

12 This certificate shall be governed by and interpreted in accordance with English law.

THE SCHEDULE

1 Transferor:

2 Transferee:

3 Transfer Date (not earlier that the fifth Business Day after the date of delivery of the Transfer Certificate to the Agent):

4 Transferor's Commitment:

5 Amount transferred:

6 Transferee's address and fax number for the purposes of clause 10.20 of the Loan Agreement:

[name of Transferor] [name of Transferee]

By: By:

Date: Date:

FORTIS BANK N.V./S.A., ATHENS BRANCH as Agent

for and on behalf of itself, the Borrower and each of the Banks (other than the Transferor)

By:

Date:

SK 02558 0002 700697

EXHIBIT 10.13

Date 30 August 2006

PROSPERO MARITIME INC.
as Borrower

-and-

CALYON
as Lender

LOAN AGREEMENT

relating to a US$15,500,000 facility to finance part of the acquisition cost of
m.v. "TORM TEKLA" (tbn ARISTIDES N.P.)

WATSON, FARLEY & WILLIAMS
Piraeus

                                      INDEX

CLAUSE                                                                     PAGE


1          INTERPRETATION                                                  1

2          FACILITY                                                       12

3          DRAWDOWN                                                       12

4          INTEREST                                                       12

5          INTEREST PERIODS                                               13

6          DEFAULT INTEREST                                               14

7          REPAYMENT AND PREPAYMENT                                       14

8          CONDITIONS PRECEDENT                                           15

9          REPRESENTATIONS AND WARRANTIES                                 16

10         GENERAL UNDERTAKINGS                                           18

11         CORPORATE UNDERTAKINGS                                         21

12         INSURANCE                                                      22

13         SHIP COVENANTS                                                 26

14         SECURITY COVER                                                 29

15         PAYMENTS AND CALCULATIONS                                      30

16         APPLICATION OF RECEIPTS                                        31

17         APPLICATION OF EARNINGS                                        32

18         EVENTS OF DEFAULT                                              33

19         FEES AND EXPENSES                                              37

20         INDEMNITIES                                                    38

21         NO SET-OFF OR TAX DEDUCTION                                    39

22         ILLEGALITY, ETC                                                40

23         INCREASED COSTS                                                40

24         SET-OFF                                                        41

25         TRANSFERS AND CHANGES IN LENDING OFFICE                        42

26         VARIATIONS AND WAIVERS                                         43

27         NOTICES                                                        43

28         SUPPLEMENTAL                                                   44

29         LAW AND JURISDICTION                                           45

SCHEDULE 1  DRAWDOWN NOTICE                                               46

SCHEDULE 2  CONDITION PRECEDENT DOCUMENTS                                 47

EXECUTION PAGE                                                            49

LOAN AGREEMENT made on August 2006

BETWEEN

(1) PROSPERO MARITIME INC., a corporation incorporated in the Republic of Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands (the "Borrower"); and

(2) CALYON, acting through its office at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (the "Lender").

WHEREAS the Lender has agreed to make available to the Borrower a loan facility of the lesser of (a) US$15,500,000, (b) 66 per cent. of the purchase price of
m.v. "TORM TEKLA" (tbn ARISTIDES N.P.) (the "Ship") and (c) 66 per cent. of the market value of the Ship on the Drawdown Date (determined by the valuation of the Ship referred to at paragraph 7 of Schedule 2, Part A) for the purpose of financing part of the acquisition cost of the Ship.

IT IS AGREED as follows:

1 INTERPRETATION

1.1 Definitions. Subject to Clause 1.5, in this Agreement:

"Accounting Information" means the annual audited accounts of the Borrower referred to in Clause 10.6(a), the annual audited consolidated accounts of the Group referred to in Clause 10.6(b) or the quarterly unaudited accounts of each of the Borrower and the Group referred to in Clause 10.6(c) (as the context may require);

"Accounts Pledge" means a deed creating security in respect of the Operating Account and the Retention Account in such form as the Lender may approve or require;

"Approved Manager" means, Eurobulk S.A. a corporation incorporated in the Republic of Liberia and having a place of business at Aethrion Center, 40 Ag. Konstantinou Street, Maroussi 151 24, Athens, Greece or any other company which the Lender may approve from time to time as the manager of the Ship;

"Asset Cover Ratio" means, on each Margin Calculation Date, the ratio
(expressed as an percentage) of (i) the Market Value of the Ship to (ii)
the Loan (after deducting any repayment instalment paid on that Margin Calculation Date);

"Availability Period" means the period commencing on the date of this Agreement and ending on:

(a) 30 September 2006 (or such later date as the Lender may agree with the Borrower); or

(b) if earlier, the date on which the Loan is fully borrowed or the Lender's obligation to advance the Loan is cancelled or terminated;

"Borrower" means Prospero Maritime Inc., a corporation incorporated in the Republic Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands;

"Business Day" means a day on which banks are open in London and Paris and, in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

"Charter" means any charter in respect of the ship which exceeds, or is capable of exceeding 12 months in duration;

"Charter Assignment" means in relation to any Charter, an assignment of the rights of the Borrower under that Charter in such form as the Lender may approve or require;

"Contractual Currency" has the meaning given in Clause 20.5;

"Corporate Guarantee" means the guarantee by the Corporate Guarantor of the obligations of the Borrower under this Agreement and the Finance Documents in such form as the Lender may approve or require;

"Corporate Guarantor" means Euroseas Ltd. a corporation incorporated in the Republic of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands in its capacity as Corporate Guarantor;

"Dollars" and "$" means the lawful currency for the time being of the United States of America;

"Drawdown Date" means the date requested by the Borrower for the Loan to be advanced, or (as the context requires) the date on which the Loan is actually advanced;

"Drawdown Notice" means a notice in the form set out in Schedule 1 (or in any other form which the Lender approves or reasonably requires);

"Earnings" means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower and which arise out of the use or operation of the Ship, including (but not limited to):

(a) all freight, hire and passage moneys, compensation payable to the Borrower in the event of requisition of the Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Ship;

(c) all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(d) if and whenever the Ship is employed on terms whereby any moneys falling within paragraphs (a) or (c) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Ship;

"Environmental Claim" means:

(a) any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Law;

(b) any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and "claim" means a claim for damages, compensation, fines, penalties or any other payment of any kind, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset;

"Environmental Incident" means:

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

(b) any incident in which Environmentally Sensitive Material is released from a vessel other than the Ship and which involves a collision between the Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Ship or the Borrower and/or any operator or manager is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c) any other incident in which Environmentally Sensitive Material is released otherwise than from the Ship and in connection with which the Ship is actually or potentially liable to be arrested and/or where the Borrower and/or any operator or manager of the Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

"Environmental Law" means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

"Environmentally Sensitive Material" means oil, oil products and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous;

"Event of Default" means any of the events or circumstances described in Clause 18.1;

"Finance Documents" means:

(a) this Agreement;

(b) the Corporate Guarantee;

(c) the General Assignment;

(d) any Charter Assignment;

(e) the Mortgage;

(f) the Master Agreement;

(g) the Master Agreement Assignment;

(h) the Accounts Pledge;

(i) the Negative Pledge;

(j) the Manager's Undertaking; and

(k) any other document (whether creating a Security Interest or not) which is executed at any time by the Borrower or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lender under this Agreement or any of the documents referred to in this definition;

"Financial Indebtedness" means, in relation to a person (the "debtor"), a liability of the debtor:

(a) for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b) under any loan stock, bond, note or other security issued by the debtor;

(c) under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d) under a financial lease, a deferred purchase consideration arrangement or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e) under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f) under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

"Financial Year" means, in relation to each of the Borrower and the Group, each period of 1 year commencing on 1 January in respect of which its audited Accounting Information is or ought to be prepared;

"General Assignment" means a general assignment of the Earnings, the Insurances and any Requisition Compensation in such form as the Lender may approve or require;

"Group" means the Borrower, the Corporate Guarantor and all subsidiaries of the Corporate Guarantor from time to time during the Security Period and "member of the Group" shall be construed accordingly;

"Insurances" means:

(a) all policies and contracts of insurance, including entries of the Ship in any protection and indemnity or war risks association, which are effected in respect of the Ship, its Earnings or otherwise in relation to the Ship; and

(b) all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

"Interest Period" means a period determined in accordance with Clause 5;

"ISM Code" means in relation to its application to the Borrower, the Approved Manager, the Ship and its operation:

(a) 'The International Management Code for the Safe Operation of Ships and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b) all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the 'Guidelines on implementation or administering of the International Safety Management (ISM) Code by Administrations' produced by the International Maritime

       Organisation  pursuant  to  Resolution  A.788(19)  adopted  on  25
       November 1995,

as the same may be amended, supplemented or replaced from time to time;

"ISM Code Documentation" includes, in relation to the Ship:

(a) the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to the Ship within the periods specified by the ISM Code; and

(b) all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Lender may require; and

(c) any other documents which are prepared or which are otherwise relevant to establish and maintain the Ship's compliance or the compliance of the Borrower with the ISM Code which the Lender may require;

"ISM SMS" means, in relation to the Ship, the safety management system which is required to be developed, implemented and maintained by the Borrower under the ISM Code;

"ISPS Code" means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924 (22) of the International Maritime Organisation ("IMO") adopted by a Diplomatic conference of the IMO on Maritime Security on 13 December 2002 and now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) to take effect on 1 July 2004;

"ISPS Code Documentation" includes:

(a) the International Ship Security Certificate issued pursuant to the ISPS Code in relation to the Ship within the period specified in the ISPS Code; and

(e) all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Lender may require;

"Lender" means:

(a) Calyon, acting through its branch at 9 Quai du President Paul Doumer, 92400 Courbevoie, La Defense, Paris, France (or through another branch notified to the Lender under Clause 25.6) or its direct or indirect successor;

(b) a direct or indirect assignee of such bank or financial institution or of a successor of it; or

(c) a direct or indirect successor of an assignee such as is mentioned in (b), unless any of the foregoing has assigned all its rights, and novated all its obligations and liabilities, under the Finance Documents;

"LIBOR" means, for an Interest Period, the rate per annum determined by the Lender to be the rate at which deposits in Dollars are offered to the Lender by leading banks in the London Interbank Market at the Lender's request at or about 11.00 a.m. (London time) on the second Business Day prior to the commencement of that Interest Period for a period equal to that Interest Period and for delivery on the first Business Day of it;

"Loan" means the principal amount of the borrowing by the Borrower under this Agreement being in an amount of up to $15,500,000 or, as the context may require, the principal amount for the time being outstanding under this Agreement;

"Major Casualty" means, any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $350,000 or the equivalent in any other currency;

"Management Agreement" means the agreement (a certified true copy of which has been delivered to the Lender) made between the Approved Manager and the Borrower in respect of the management of the Ship;

"Manager's Undertaking" means the undertaking referred to in paragraph 3(a) of Part B of Schedule 2 in such form as the Lender may approve or require;

"Margin" means:

(a) (i) at all times until the first Margin Calculation Date (ii) at all times after the first Margin Calculation Date when the Asset Cover Ratio is equal to or higher than 150 per cent., 0.90 per cent. per annum; and

(b) at all times when the Asset Cover Ratio is less than 150 per cent., 1.10 per cent. per annum;

"Margin Calculation Date" has the meaning given to that term in Clause 4.7;

"Market Value" means the market value of the Ship at any date determined in accordance with Clause 14.5;

"Master Agreement" means the master agreement (on the 1992 ISDA (Multicurrency - Crossborder) form) made or to be made between the Borrower and the Lender and includes all Transactions from time to time entered into and Confirmations from time to time exchanged thereunder;

"Master Agreement Assignment" means the assignment of the Master Agreement by the Borrower in such form as the Lender may approve or require;

"Master Agreement Liabilities" means, at any relevant time, all liabilities actual or contingent, present or future, of the Borrower to the Lender under the Master Agreement;

"MOA" means a memorandum of agreement dated 21 July 2006 (and any amendments or supplements thereto) and entered into between the Seller and the Borrower in respect of the sale and purchase of the Ship for a purchase price of $23,460,000;

"Mortgage" means the first preferred Marshall Islands ship mortgage in respect of the Ship in such form as the Lender may approve or require;

"Negative Pledge" means the negative pledge in respect of the whole of the issued share capital of the Borrower in such form as the Lender may approve or require;

"Net Income" means, in relation to each Financial Year of the Borrower, the aggregate income of the Borrower appearing in the Accounting Information of the Borrower for that Financial Year as determined in accordance with US GAAP consistently applied;

"Operating Account" means an account in the name of the Borrower with the Lender designated "Prospero Maritime Inc. - Operating Account" or any other account (with that or another office of the Lender) which is designated by the Lender as the Operating Account for the purposes of this Agreement;

"Payment Currency" has the meaning given in Clause 20.5;

"Pertinent Jurisdiction", in relation to a company, means:

(a) England and Wales;

(b) the country under the laws of which the company is incorporated or formed;

(c) a country in which the company's central management and control is or has recently been exercised;

(d) a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(e) a country in which assets of the company (other than securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(f) a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

"Potential Event of Default" means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Lender and/or the satisfaction of any other condition, would constitute an Event of Default;

"Relevant Person" has the meaning given in Clause 18.8;

"Repayment Date" means a date on which a repayment is required to be made under Clause 7;

"Requisition Compensation" includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph
(b) of the definition of "Total Loss";

"Retention Account" means an account in the name of the Borrower with the Lender in Paris designated "Prospero Maritime Inc. - Retention Account" or any other account (with that or another office of the Lender) which is designated by the Lender as the Retention Account for the purposes of this Agreement;

"Secured Liabilities" means all liabilities which the Borrower, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

"Security Interest" means:

(a) a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b) the rights of the plaintiff under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and

(c) any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A; but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

"Security Party" means the Approved Manager, the Corporate Guarantor and any other person (except the Lender) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a document falling within the final paragraph of the definition of "Finance Documents";

"Security Period" means the period commencing on the date of this Agreement and ending on the date on which the Lender notifies the Borrower and the Security Parties that:

(a) all amounts which have become due for payment by the Borrower or any Security Party under the Finance Documents have been paid;

(b) no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c) neither the Borrower nor any Security Party has any future or contingent liability under Clause 19, 20 or 21 below or any other provision of this Agreement or another Finance Document; and

(d) the Lender, in its reasonable judgement, does not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of the Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

"Seller" means A/S Dampskibsselskabet TORM a company incorporated under the laws of Denmark;

"Ship" means the 1993-built fully cellular container vessel of 69,268 metric tons deadweight presently registered in the ownership of the Seller under NIS flag with the name "TORM TEKLA" which to be purchased by the Borrower pursuant to the MOA and registered in its ownership under Marshall Islands flag with the name ARISTIDES N.P.;

"Swap Exposure" means, as at any relevant date the aggregate net amount in Dollars which would be payable by the Borrower to the Lender under (and calculated in accordance with) section 6(e) (Payments on Early Termination) of the Master Agreement if an Early Termination Date had occurred on the relevant date in relation to all continuing Transactions entered into between the Borrowers and the Lender;

"Total Loss" means:

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

(b) any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than the Ship's proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension;

(c) any condemnation of the Ship by any tribunal or by any person or person claiming to be a tribunal; and

(d) any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 45 days redelivered to the full control of the Borrower;

"Total Loss Date" means:

(a) in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

(b) in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

(i) the date on which a notice of abandonment is given to the insurers; and

(ii) the date of any compromise, arrangement or agreement made by or on behalf of the Borrower with the Ship's insurers in which the insurers agree to treat the Ship as a total loss; and

(c) in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Lender that the event constituting the total loss occurred; and

"US GAAP" means generally accepted accounting principles as from time to time in effect in the United States of America.

1.2 Construction of certain terms. In this Agreement:

"approved" means, for the purposes of Clause 12, approved in writing by the Lender;

"asset" includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

"company" includes any partnership, joint venture and unincorporated association;

"consent" includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalisation;

"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;

"document" includes a deed; also a letter or fax;

"excess risks" means, in relation to the Ship, the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of its insured value being less than the value at which the Ship is assessed for the purpose of such claims;

"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

"law" includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

"legal or administrative action" means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

"liability" includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

"months" shall be construed in accordance with Clause 1.3;

"obligatory insurances" means, in relation to the Ship, all insurances effected, or which the Borrower is obliged to effect, under Clause 12 below or any other provision of this Agreement or another Finance Document;

"parent company" has the meaning given in Clause 1.4;

"person" includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;

"policy", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

"protection and indemnity risks" means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and 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 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

"regulation" includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

"subsidiary" has the meaning given in Clause 1.4;

"successor" includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person's rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise, is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

"tax" includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

"war risks" includes the risk of mines and all risks excluded by clause 23 of the Institute Time Clauses (Hulls)(1/10/83) or clause 24 of the Institute Time Clauses (Hulls)(1/11/1995).

1.3 Meaning of "month". A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("the numerically corresponding day"), but:

(a) on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b) on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and "month" and "monthly" shall be construed accordingly.

1.4 Meaning of "subsidiary". A company (S) is a subsidiary of another company (P) if:

(a) a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b) P has direct or indirect control over a majority of the voting rights attaching to the issued shares of S; or

(c) P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d) P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,

and any company of which S is a subsidiary is a parent company of S.

1.5 General Interpretation.

(a) In this Agreement:

(i) references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(ii) references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and

(iii) words denoting the singular number shall include the plural and vice versa;

(b) Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears; and

(c) The clause headings shall not affect the interpretation of this Agreement.

2 FACILITY

2.1 Amount of facility. Subject to the other provisions of this Agreement, the Lender shall make available to the Borrower a loan facility of up to the lesser of (a) $15,500,000, (b) 66 per cent. of the purchase price of the Ship payable pursuant to the MOA and (c) 66 per cent. of the Market Value of the Ship (determined by the valuation of the Ship referred to at paragraph 7 of Schedule 2, Part A) to be drawn in a single advance.

2.2 Purpose of the Loan. The Borrower undertakes with the Lender to use the Loan only for the purpose stated in the preamble to this Agreement.

3 DRAWDOWN

3.1 Request for the Loan. The Borrower may request the Loan to be advanced by ensuring that the Lender receives the completed Drawdown Notice not later than 11.00 a.m. (London time) 2 Business Days prior to the intended Drawdown Date subject to the Drawdown Date being a Business Day during the Availability Period.

3.2 Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director or a duly authorised attorney-in-fact of the Borrower; and once served, a Drawdown Notice cannot be revoked without the prior consent of the Lender.

3.3 Disbursement of the Loan. Subject to the provisions of this Agreement, the Lender shall on the Drawdown Date advance the Loan to the Borrower; and payment to the Borrower shall be made to the account of the Seller nominated by the Borrower in accordance with the MOA but subject to such conditions or restrictions as the Lender my impose.

3.4 Disbursement of the Loan to third party. The payment by the Lender under Clause 3.3 to the account of the Seller shall constitute the advancing of the Loan and the Borrower shall thereupon become indebted, as principal and direct obligor, to the Lender in an amount equal to the Loan.

4 INTEREST

4.1 Payment of normal interest. Subject to the provisions of this Agreement, interest on the Loan in respect of each Interest Period shall be paid by the Borrower on the last day of that Interest Period.

4.2 Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on the Loan in respect of an Interest Period shall be the aggregate of the applicable Margin and LIBOR for that Interest Period.

4.3 Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

4.4 Notification of market disruption. The Lender shall promptly notify the Borrower if for any reason the Lender is unable to obtain Dollars in the London Interbank Market in order to fund the Loan (or any part of it) during any Interest Period, stating the circumstances which have caused such notice to be given.

4.5 Suspension of drawdown. If the Lender's notice under Clause 4.4 is served before the Loan is advanced, the Lender's obligation to make the Loan available shall be suspended while the circumstances referred to in the Lender's notice continue.

4.6 Alternative rate of interest. If, after the Loan has been advanced, the Lender is unable to obtain Dollars in the London Interbank Market to fund the Loan (or any part of it) during any Interest Period or adequate and fair means do not exist for ascertaining the rate of interest, the Lender shall set an interest rate representing the cost of funding of the Lender in Dollars or in any available currency of the Loan plus the Margin.

4.7 Calculation of Asset Cover Ratio. The Lender shall calculate the Asset Cover Ratio on each anniversary of the Drawdown Date (each a "Margin Calculation Date") for the purposes of calculating the Margin and shall advise the Borrower in writing, within 10 Business Days of each Margin Calculation Date, of the Margin which will apply for the 12-month period commencing on the relevant Margin Calculation Date Provided that in respect of each Margin Calculation Date other than the first Margin Calculation Date, the Lender shall only be obliged to advise the Borrower of the Margin which will apply for the 12-month period commencing on the relevant Margin Calculation Date if that Margin will be different to the Margin which applied immediately prior to that Margin Calculation Date.

For the purposes of calculating the Asset Cover Ratio pursuant to this Clause 4.7, the Market Value of the Ship shall be determined no more than 30 days prior to the relevant Margin Calculation Date.

5 INTEREST PERIODS

5.1 Commencement of Interest Periods. The first Interest Period applicable to the Loan shall commence on the Drawdown Date and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period.

5.2 Duration of normal Interest Periods. Subject to Clauses 5.3 and 5.4, each Interest Period shall be:

(a) 3, 6 or 12 months as notified by the Borrower to the Lender not later than 11.00 a.m. (London time) 3 Business Days before the commencement of the Interest Period; or

(b) 3 months, if the Borrower fails to notify the Lender by the time specified in paragraph (a) above; or

(c) such other period as the Lender may agree with the Borrower.

5.3 Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 7 on a particular Repayment Date, an Interest Period shall end on that Repayment Date.

5.4 Non-availability of matching deposits for Interest Period selected. If, after the Borrower has selected an Interest Period longer than 6 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 6 months.

6 DEFAULT INTEREST

6.1 Payment of default interest on overdue amounts. The Borrower shall pay interest in accordance with the following provisions of this Clause 6 on any amount payable by the Borrower under any Finance Document which the Lender does not receive on or before the relevant date, that is:

(a) the date on which the Finance Documents provide that such amount is due for payment; or

(b) if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c) if such amount has become immediately due and payable under Clause 18.5, the date on which it became immediately due and payable.

6.2 Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Lender to be 1 per cent. above the Margin plus LIBOR at which deposits in an amount equal to such overdue amount are offered on call or for successive periods of any duration of up to 3 months, as the Lender may determine from time to time.

6.3 Notification of interest periods and default rates. The Lender shall promptly notify the Borrower of each interest rate determined by it under Clause 6.2 and of each period selected by it for the purposes of that Clause; but this shall not be taken to imply that the Borrower is liable to pay such interest only with effect from the date of the Lender's notification.

6.4 Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the last day of the period by reference to which it was determined.

6.5 Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall be compounded every 3 months.

7 REPAYMENT AND PREPAYMENT

7.1 Amount of repayment instalments. The Borrower shall repay the Loan by 14 consecutive six-monthly instalments of (a) in the case of the first and second instalments (inclusive), in the amount of $1,200,000 each, (b) in the case of the third instalment, in the amount of $1,000,000 and (c) in the case of the fourth to fourteenth instalments (inclusive), in the amount of $825,000 each together with a balloon payment of $3,025,000 (the "Balloon").

7.2 Repayment Dates. The first repayment instalment shall be repaid on the date falling 6 months after the Drawdown Date, each subsequent repayment instalment shall be paid at six-monthly intervals thereafter and the last instalment, together with the Balloon, shall be repaid on the date falling on the earlier of (a) the date falling on the seventh anniversary of the Drawdown Date and (b) 30 September 2013.

7.3 Final Repayment Date. On the final Repayment Date, the Borrower shall additionally pay to the Lender all other sums then accrued or owing under any Finance Document.

7.4 Voluntary prepayment. Subject to the following conditions, the Borrower may prepay the whole or any part of the Loan on the last day of an Interest Period.

7.5 Conditions for voluntary prepayment. The conditions referred to in Clause 7.4 are:

(a) that a partial prepayment shall be $250,000 or an integral multiple thereof;

(b) that the Lender has received from the Borrower at least 10 days' prior written notice specifying the amount to be prepaid and the date on which the prepayment is to be made;

(c) that the Borrower has provided evidence satisfactory to the Lender that any consent required by the Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any regulation relevant to this Agreement which affects the Borrower or any Security Party has been complied with.

7.6 Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the consent of the Lender and the amount specified in the prepayment notice shall become due and payable by the Borrower on the date for prepayment specified in the prepayment notice.

7.7 Mandatory prepayment. Without prejudice to the provisions of Clause 14, the Borrower shall be obliged to prepay the whole of the Loan if the Ship is sold or becomes a Total Loss:

(a) in the case of a sale, on or before the date on which the sale is completed; or

(b) in the case of Total Loss, on the earlier of the date falling 150 days after the Total Loss Date and the date of receipt by the Lender of the proceeds of insurance relating to such Total Loss.

7.8 Shareholding and senior executive management of Borrower. If at any time Mr. John Pittas and members of the Pittas family (either directly and/or through companies beneficially owned by the Pittas family and/or trusts or foundations of which the Pittas family are beneficiaries) (i) do not own the necessary shareholding to exercise executive power of the Corporate Guarantor or (ii) are not represented in the senior executive management of the Corporate Guarantor, the Borrower shall promptly advise the Lender of the occurrence of the circumstances referred to in this Clause 7.8. If the Lender does not approve (in its sole and absolute discretion) the change in circumstances which has occurred, the Loan shall be prepaid in full subject to the Lender giving the Borrower and the Corporate Guarantor 60 days prior written notice.

7.9 Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 20 below or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period together with any sums payable under Clause 20.1(b) but without premium or penalty.

7.10 Application of partial prepayment. Each partial prepayment shall be applied in reducing pro rata each of the repayment instalments specified in Clause 7.1 and the Balloon.

7.11 No reborrowing. No amount prepaid may be reborrowed.

8 CONDITIONS PRECEDENT

8.1 Documents, fees and no default. The Lender's obligation to advance the Loan is subject to the following conditions precedent:

(a) that, on or before the service of the Drawdown Notice, the Lender receives the documents described in Part A of Schedule 2 in form and substance satisfactory to it and its lawyers;

(b) that, on the Drawdown Date but prior to the advancing of the Loan, the Lender receives the documents described in Part B of Schedule 2 in form and substance satisfactory to it and its lawyers;

(c) that the Lender has received the management fee referred to in Clause 19.1 and has received payment of the expenses referred to in Clause 19.2;

(d) that both at the date of the Drawdown Notice and at the Drawdown Date:

(i) no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the Loan;

(ii) the representations and warranties in Clause 9.1 and those of the Borrower or any Security Party which are set out in the other Finance Documents would be true and not misleading if repeated on each of those dates with reference to the circumstances then existing; and

(iii) none of the circumstances contemplated by Clause 4.4 has occurred and is continuing;

(e) that, if the ratio set out in Clause 14.1 were applied immediately following the advancing of the Loan, the Lender would not be entitled to oblige the Borrower to provide additional security or prepay part of the Loan under that Clause; and

(f) that the Lender has received, and found to be acceptable to it, any further opinions, consents, agreements and documents in connection with the Finance Documents which the Lender may reasonably request by notice to the Borrower prior to the Drawdown Date.

8.2 Waivers of conditions precedent. If the Lender, at its discretion, permits the Loan to be borrowed before certain of the conditions referred to in Clause 8.1 are satisfied, the Borrower shall ensure that those conditions are satisfied within 5 Business Days after the Drawdown Date (or such longer period as the Lender may specify).

9 REPRESENTATIONS AND WARRANTIES

9.1 General. The Borrower represents and warrants to the Lender as follows.

9.2 Status. The Borrower is duly incorporated and validly existing and in good standing under the laws of the Republic of the Marshall Islands.

9.3 Share capital and ownership. The Borrower has an authorised share capital of 500 bearer and/or registered shares of no par value each, all of which shares have been issued in bearer form, and the legal title and beneficial ownership of all the shares of the Borrower is held, free of any Security Interest or other claim, by the Corporate Guarantor.

9.4 Corporate power. The Borrower has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a) to execute the MOA, to purchase and pay for the Ship under the MOA and register the Ship in its name under Marshall Islands flag;

(b) to execute the Finance Documents to which it is a party; and

(c) to borrow under this Agreement and to make all the payments contemplated by, and to comply with, this Agreement and the other Finance Documents to which it is a party. 9.5 Consents in force. All the consents referred to in Clause 9.4 remain in force and nothing has occurred which makes any of them liable to revocation.

9.6 Legal validity; effective Security Interests. The Finance Documents to which the Borrower is a party do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a) constitute the Borrower's legal, valid and binding obligations enforceable against the Borrower in accordance with their respective terms; and

(b) create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors' rights generally.

9.7 No third party Security Interests. Without limiting the generality of Clause 9.6, at the time of the execution and delivery of each Finance Document:

(a) the Borrower will have the right to create all the Security Interests which that Finance Document purports to create; and

(b) no third party will have any Security Interest or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

9.8 No conflicts. The execution by the Borrower of the Finance Documents and the borrowing of the Loan, and its compliance with each Finance Document will not involve or lead to a contravention of:

(a) any law or regulation; or

(b) the constitutional documents of the Borrower; or

(c) any contractual or other obligation or restriction which is binding on the Borrower or any of its assets.

9.9 No withholding taxes. All payments which the Borrower is liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction.

9.10 No default. No Event of Default or Potential Event of Default has occurred and is continuing.

9.11 Information. All information which has been provided in writing by or on behalf of the Borrower or any Security Party to the Lender in connection with any Finance Document satisfied the requirements of Clause 10.5; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 10.7; and there has been no material adverse change in the financial position or state of affairs of the Borrower from that disclosed in the latest of those accounts.

9.12 No litigation. No legal or administrative action involving the Borrower (including action relating to any alleged or actual breach of the ISM Code and the ISPS Code) has been commenced or taken or, to the Borrower's knowledge, is likely to be commenced or taken which, in either case, would be likely to have a material adverse effect on the Borrower's financial position or profitability.

9.13 No rebates etc. There is no agreement or understanding to allow or pay any rebate, premium, commission, discount or other benefit or payment (howsoever described to the Borrower, the Seller or a third party in connection with the purchase by the Borrower of the Ship other than as disclosed to the Lender in writing on or prior to the date of this Agreement.

9.14 Validity and completeness of the MOA.

(a) the copy of the MOA delivered to the Lender before the date of this Agreement is a true and complete copy thereof;

(b) the MOA constitutes valid, binding and enforceable obligations of the parties thereto in accordance with its terms; and

(c) no amendments or additions to the MOA have been agreed nor has any party thereto waived any of its respective rights thereunder.

9.15 Compliance with certain undertakings. At the date of this Agreement, the Borrower is in compliance with Clauses 10.2, 10.4, 10.9 and 10.12.

9.16 Taxes paid. The Borrower has paid all taxes applicable to, or imposed on or in relation to itself, its business or the Ship.

9.17 ISM Code and ISPS Code compliance. All requirements of the ISM Code and the ISPS Code as they relate to the Borrower, the Approved Manager and the Ship will on or prior to the date on which the Ship is delivered to the Borrower pursuant to the MOA be complied with.

10 GENERAL UNDERTAKINGS

10.1 General. The Borrower undertakes with the Lender to comply with the following provisions of this Clause 10 at all times during the Security Period, except as the Lender may otherwise permit.

10.2 Title; negative pledge. The Borrower will:

(a) hold the legal title to, and own the entire beneficial interest in the Ship, its Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents; and

(b) not create or permit to arise any Security Interest over any other asset, present or future.

10.3 No disposal of assets. The Borrower will not transfer, lease or otherwise dispose of:

(a) all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b) any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

10.4 No other liabilities or obligations to be incurred. The Borrower will not incur any liability or obligation except liabilities and obligations under the MOA and the Finance Documents and liabilities or obligations reasonably incurred in the ordinary course of operating and chartering the Ship.

10.5 Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of the Borrower under or in connection with any Finance Document will be true and not, misleading and will not omit any material fact or consideration.

10.6 Provision of financial statements. The Borrower will send to the Lender:

(a) as soon as possible, but in no event later than 90 days after the end of each Financial Year of the Borrower, the audited Accounting Information of the Borrower;

(b) as soon as possible, but in no event later than 90 days after the end of each Financial Year of the Corporate Guarantor, the audited Accounting Information of the Group;

(c) as soon as possible, but in no event later than 50 days after the ed of each financial quarter in each Financial Year of each of the Borrower and the Corporate Guarantor:

(i) the unaudited Accounting Information of the Borrower; and

(ii) the unaudited Accounting Information of the Group, in each case, certified as to its correctness by the chief financial officer of the Corporate Guarantor; and

(d) promptly, when requested, such other financial information and accounts relating to the business, undertaking, assets, liabilities, revenues, financial condition or affairs of any Security Party and such other further general information relating to any Security Party as the Lender from time to time may reasonably require including (without limitation) in relation to the Ship, its Earnings, the Approved Manager and the Corporate Guarantor. .

10.7 Form of financial statements. All Accounting Information delivered under Clause 10.6 will:

(a) be prepared in accordance with all applicable laws and US GAAP consistently applied and, in the case of audited financial statements, certified as to its correctness by auditors acceptable to the Lender;

(b) give a true and fair view of the state of affairs of the Borrower or the Group (as the case may be) at the date of that Accounting Information and of the profit of the Borrower or, as the case may be, the Group for the period to which that Accounting Information relates; and

(c) fully disclose or provide for all significant liabilities of the Borrower or, as the case may be, of the Group.

10.8 Creditor notices. The Borrower will send the Lender, at the same time as they are despatched, copies of all communications which are despatched to all the Borrower's creditors or any class of them.

10.9 Consents. The Borrower will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Lender of, all consents required:

(a) to perform its obligations under any Finance Document;

(b) for the validity or enforceability of any Finance Document to which it is a party;

(c) for the Borrower to continue to own and operate the Ship,

and the Borrower will comply with the terms of all such consents.

10.10 Maintenance of Security Interests. The Borrower will:

(a) at its own cost, do all that it reasonably can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b) without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document, give any notice or take any other step which may be or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

10.11 Notification of litigation. The Borrower will provide the Lender with details of any legal or administrative action involving the Borrower, any Security Party, either Approved Manager, the Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to the Borrower that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

10.12 No amendment to MOA. The Borrower will not agree to any amendment or supplement to, or waive or fail to enforce the MOA or any of its provisions without the prior written consent of the Lender.

10.13 Principal place of business. The Borrower will maintain its place of business, and keep its corporate documents and records, at the address
[referred to in Clause 27.2(a)]; and will not establish, or do anything as a result of which it would be deemed to have, a place of business in the United Kingdom or the United States of America.

10.14 Confirmation of no default. The Borrower will, within 2 Business Days after service by the Lender of a written request, serve on the Lender a notice which is signed by 2 directors of the Borrower and which:

(a) states that no Event of Default or Potential Event of Default has occurred; or

(b) states that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

10.15 Notification of default. The Borrower will notify the Lender as soon as the Borrower becomes aware of:

(a) the occurrence of an Event of Default or a Potential Event of Default; or

(b) any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will thereafter keep the Lender fully up-to-date with all developments.

10.16 Provision of further information. The Borrower will, as soon as practicable after receiving the request, provide the Lender with any additional financial or other information relating:

(a) to the Borrower, the Ship, the Approved Manager, the Corporate Guarantor, the Insurances, the Earnings; or

(b) to any other matter relevant to, or to any provision of, a Finance Document,

which may be reasonably requested by the Lender at any time.

10.17 Minimum liquidity. At all times during the Security Period, the Borrower will ensure that an amount of not less than $300,000 is standing to the credit of the Operating Account.

11 CORPORATE UNDERTAKINGS

11.1 General. The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Lender may otherwise permit.

11.2 Maintenance of status. The Borrower will maintain its separate corporate existence and remain in good standing under the laws of the Republic of Marshall Islands.

11.3 Negative undertakings. The Borrower will not:

(a) carry on any business other than the ownership, chartering and operation of the Ship; or

(b) pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital Provided that (i) the Borrower may pay in any Financial Year (no more frequently than on a quarterly basis during that Financial Year) dividends in an aggregate amount not exceeding 60 per cent. of the Net Income in that Financial Year if at the relevant time no Event of Default has occurred or is continuing or would result from the payment of such dividend and (ii) with the prior written consent of the Lender ( to be given or withheld in its sole and absolute discretion), the Borrower may pay dividends in any Financial Year in excess of the amount referred to in sub-paragraph (i);

(c) repay any shareholder loans or any other loans advanced to it by any person (or, in either case, any interest thereon), nor make nay loans or advances to any person; or

(d) provide any form of credit or financial assistance to:

(i) a person who is directly or indirectly interested in the Borrower's share or loan capital; or

(ii) any company in or with which such a person is directly or indirectly interested or connected,

or enter into any transaction with or involving such a person or company on terms which are, in any respect, less favourable to the Borrower than those which it could obtain in a bargain made at arms' length; or

(e) open or maintain any account with any bank or financial institution except the Operating Account and the Retention Account and any other account opened or to be opened with the Lender for the purposes of the Finance Documents; or

(f) issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital; or

(g) acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative; or

(h) enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation.

12 INSURANCE

12.1 General. The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Lender may otherwise permit.

12.2 Maintenance of obligatory insurances. The Borrower shall keep the Ship insured at the expense of the Borrower against:

(a) fire and usual marine risks (including hull and machinery and excess risks);

(b) war risks;

(c) protection and indemnity risks (all classes); and

(d) any other risks against which the Lender considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Lender be reasonable for the Borrower to insure and which are specified by the Lender by notice to the Borrower.

12.3 Terms of obligatory insurances. The Borrower shall effect such insurances:

(a) in Dollars;

(b) in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greater of (i) the Market Value of the Ship and (ii) 125 per cent. of the aggregate of the Loan and the Swap Exposure and upon such terms as shall from time to time be approved in writing by the Lender;

(c) in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry and the international marine insurance market for vessels of the same type and age as the Ship;

(d) in relation to protection and indemnity risks, in respect of the full tonnage of the Ship;

(e) on approved terms; and

(f) through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

12.4 Further protections for the Lender. In addition to the terms set out in Clause 12.3, the Borrower shall procure that the obligatory insurances shall:

(a) whenever the Lender requires name (or be amended to name) the Lender as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Lender, but without the Lender thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b) name the Lender as sole loss payee with such directions for payment as the Lender may specify;

(c) provide that all payments by or on behalf of the insurers under the obligatory insurances to the Lender shall be made without set-off, counterclaim or deductions or condition whatsoever;

(d) provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Lender in respect of any rights or interests (secured or not) held by or available to the Lender in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph
(d) from making personal claims against persons (other than the Lender, the Borrower or any other Security Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e) provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Lender;

(f) provide that the Lender may make proof of loss if the Borrower fail to do so; and

(g) provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Lender, or if any obligatory insurance is allowed to lapse for non-payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Lender for 30 days (or 7 days in the case of war risks) after receipt by the Lender of prior written notice from the insurers of such cancellation, change or lapse.

12.5 Renewal of obligatory insurances. The Borrower shall:

(a) at least 14 days before the expiry of any obligatory insurance effected by it:

(i) notify the Lender of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Borrower proposes to renew that insurance and of the proposed terms of renewal; and

(ii) obtain the Lender's approval to the matters referred to in paragraph (i) above;

(b) at least 7days before the expiry of any obligatory insurance effected by it, renew the insurance in accordance with the Lender's approval pursuant to paragraph (a) above; and

(c) procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Lender in writing of the terms and conditions of the renewal.

12.6 Copies of policies; letters of undertaking. The Borrower shall ensure that all approved brokers provide the Lender with pro forma copies of all policies relating to the obligatory insurances which they are to effect or renew and of a letter or letters of undertaking in a form required by the Lender and including undertakings by the approved brokers that:

(a) they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 12.4;

(b) they will hold such policies, and the benefit of such insurances, to the order of the Lender in accordance with the said loss payable clause;

(c) they will advise the Lender immediately of any material change to the terms of the obligatory insurances;

(d) they will notify the Lender, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Lender of the terms of the instructions; and

(e) they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any other person whether in respect of the Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Lender.

12.7 Copies of certificates of entry. The Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship is entered provides the Lender with:

(a) a certified copy of the certificate of entry for the Ship;

(b) a letter or letters of undertaking in such form as may be required by the Lender; and

(c) where required to be issued under the terms of insurance/indemnity provided by the Borrower's protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by the Borrower in relation to the Ship in accordance with the requirements of such protection and indemnity association; and

(d) a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

12.8 Deposit of original policies. The Borrower shall ensure that all policies relating to obligatory insurances effected by it are deposited with the approved brokers through which the insurances are effected or renewed.

12.9 Payment of premiums. The Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances effected by it and produce all relevant receipts when so required by the Lender.

12.10 Guarantees. The Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

12.11 Restrictions on employment. The Borrower shall not employ the Ship, nor permit the Ship to be employed, outside the cover provided by any obligatory insurances.

12.12 Compliance with terms of insurances. The Borrower shall not do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

(a) the Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 12.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Lender has not given its prior approval;

(b) the Borrower shall not make any changes relating to the classification or classification society or manager or operator of the Ship unless approved by the underwriters of the obligatory insurances;

(c) the Borrower shall make (and promptly supply copies to the Lender of) all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d) the Borrower shall not employ the Ship, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

12.13 Alteration to terms of insurances. The Borrower shall neither make or agree to any alteration to theterms of any obligatory insurance nor waive any right relating to any obligatory insurance.

12.14 Settlement of claims. The Borrower shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Lender to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

12.15 Provision of copies of communications. The Borrower shall provide the Lender, at the time of each such communication, copies of all major written communications between itself and:

(a) the approved brokers; and

(b) the approved protection and indemnity and/or war risks associations; and

(c) the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i) the Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii) any credit arrangements made between the Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

12.16 Provision of information. In addition, the Borrower shall promptly provide the Lender (or any persons which it may designate) with any information which the Lender (or any such designated person) requests for the purpose of:

(a) obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b) effecting, maintaining or renewing any such insurances as are referred to in Clause 12.17 below or dealing with or considering any matters relating to any such insurances,

and the Borrower shall, forthwith upon demand, indemnify the Lender in respect of all fees and other expenses incurred by or for the account of the Lender in connection with any such report as is referred to in paragraph (a) above.

12.17 Mortgagee's interest and additional perils insurances. The Lender shall be entitled from time to time to effect, maintain and renew a mortgagee's interest insurance policy and, at the discretion of the Lender,a mortgagee's interest additional perils policy in respect of the Ship, each in such amount and otherwise on such terms, through such insurers and generally in such manner as the Lender may from time to time consider appropriate and the Borrower shall upon demand fully indemnify the Lender in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing such insurance or dealing with, or considering, any matter arising out of such insurance.

12.18 Review of insurance requirements. The Lender shall be entitled to review the requirements of this Clause 12 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Lender, significant and capable of affecting the Borrower or the Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrower may be subject.) and may appoint insurance consultants in relation to this review at the cost of the Borrower.

12.19 Modification of insurance requirements. The Lender shall notify the Borrower of any proposed modification under Clause 12.18 to the requirements of this Clause 12 which the Lender considers appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrower as an amendment to this Clause 12 and shall bind the Borrower accordingly.

12.20 Compliance with mortgagee's instructions. The Lender shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require the Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Lender until the Borrower implements any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 12.19.

13 SHIP COVENANTS

13.1 General. The Borrower also undertakes with the Lender to comply with the following provisions of this Clause 13 at all times during the Security Period except as the Lender may otherwise permit.

13.2 Ship's name and registration. The Borrower shall keep the Ship registered in its name as a Marshall Islands flag ship at the port of Majuro; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship.

13.3 Repair and classification. The Borrower shall keep the Ship in a good and safe condition and state of repair:

(a) consistent with first-class ship ownership and management practice;

(b) so as to maintain the Ship's present class (namely, the highest class available for vessels of the same type, age and specification as the Ship with Bureau Veritas) (or the equivalent with another classification society which is a member of the International Association of Classification Societies acceptable to the Lender) free of all overdue recommendations and conditions affecting the Ship's class; and

(c) so as to comply with all laws and regulations applicable to vessels registered at ports in the Marshall Islands or to vessels trading to any jurisdiction to which the Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code.

13.4 Modification. The Borrower shall not make any modification or repairs to, or replacement of, the Ship or equipment installed on the Ship which would or might materially alter its structure, type or performance characteristics or materially reduce the Ship's value.

13.5 Removal of parts. The Borrower shall not remove any material part of the Ship, or any item of equipment installed on it, unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Lender and becomes on installation on the Ship the property of the Borrower and subject to the security constituted by the Mortgage Provided that the Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship.

13.6 Surveys. The Borrower shall submit the Ship regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Lender provide the Lender, with copies of all survey reports.

13.7 Inspection. The Borrower shall permit the Lender (by surveyors or other persons appointed by it for that purpose at the Borrower's expense) to board the Ship at all reasonable times to inspect its condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections.

13.8 Prevention of and release from arrest. The Borrower shall promptly discharge:

(a) all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship, the Earnings or the Insurances;

(b) all taxes, dues and other amounts charged in respect of the Ship, the Earnings or the Insurances; and

(c) all other outgoings whatsoever in respect of the Ship, the Earnings or the Insurances,

and, forthwith upon receiving notice of the arrest of the Ship, or of its detention in exercise or purported exercise of any lien or claim, the Borrower shall procure the Ship's release by providing bail or otherwise as the circumstances may require.

13.9 Compliance with laws etc. The Borrower shall:

(a) comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship, its ownership, operation and management or to the business of the Borrower;

(b) not employ the Ship nor allow its employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(c) in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship's war risks insurers unless the prior written consent of the Lender has been given and the Borrower has (at its expense) effected any special, additional or modified insurance cover which the Lender may require.

13.10 Provision of information. The Borrower shall promptly provide the Lender with any information which it requests regarding:

(a) the Ship, its employment, position and engagements;

(b) the Earnings and payments and amounts due to the master and crew of the Ship;

(c) any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship and any payments made in respect of the Ship;

(d) any towages and salvages;

(e) its compliance, the Approved Manager's compliance or the compliance of the Ship with the ISM Code and the ISPS Code,

and, upon the Lender's request, provide copies of any current charter relating to the Ship, of any current charter guarantee and of the ISM Code Documentation and the ISPS Code Documentation in relation to the Ship.

13.11 Notification of certain events. The Borrower shall immediately notify the Lender by fax, confirmed forthwith by letter of:

(a) any casualty which is or is likely to be or to become a Major Casualty;

(b) any occurrence as a result of which the Ship has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c) any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d) any arrest or detention of the Ship, any exercise or purported exercise of any lien on the Ship or its Earnings or any requisition of the Ship for hire;

(e) any intended dry docking of the Ship;

(f) any Environmental Claim made against the Borrower or in connection with the Ship, or any Environmental Incident;

(g) any claim for breach of the ISM Code or the ISPS Code being made against the Borrower, either of the Approved Managers or otherwise in connection with the Ship; or

(h) any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code or the ISPS Code not being complied with,

and the Borrower shall keep the Lender advised in writing on a regular basis and in such detail as the Lender shall require of the Borrower's and the Approved Managers' or any other person's response to any of those events or matters.

13.12 Restrictions on chartering, appointment of managers etc. The Borrower shall not:

(a) let the Ship on demise charter for any period;

(b) enter into any time or consecutive voyage charter in respect of the Ship for a term which exceeds, or which by virtue of any optional extensions may exceed, 13 months;

(c) enter into any charter in relation to the Ship under which more than 2 months' hire (or the equivalent) is payable in advance;

(d) charter the Ship otherwise than on bona fide arm's length terms at the time when the Ship is fixed;

(e) appoint a manager of the Ship other than the Approved Manager's or agree to any alteration to the terms of each of the Approved Managers' respective appointments;

(f) de-activate or lay up that Ship; or

(g) put the Ship into the possession of any person for the purpose of work being done upon the Ship in an amount exceeding or likely to exceed $350,000 (or the equivalent in any other currency) unless that person has first given to the Lender and in terms satisfactory to it a written undertaking not to exercise any lien on the Ship or its Earnings for the cost of such work or any other reason.

13.13 Notice of Mortgage. The Borrower shall keep the Mortgage registered against the Ship as a valid first priority mortgage, carry on board the Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that the Ship is mortgaged by the Borrower to the Lender.

13.14 Time Charter Assignment. If the Borrower enters into any Charter (subject to (if applicable) obtaining the consent of the Lender in accordance with Clause 13.12(b)), the Borrower shall, at the request of the Lender, execute in favour of the Lender a Charter Assignment in relation to such Charter, and shall deliver to the Lender such other documents equivalent to those referred to at paragraphs 3, 4 and 5 of Part A of Schedule 2 as the Lender may require.

14 SECURITY COVER

14.1 Minimum required security cover. Clause 14.2 applies if the Lender notifies the Borrower that:

(a) the Market Value of the Ship; plus

(b) the net realisable value of any additional security previously provided under this Clause 14,

is below 125 per cent. of the aggregate of the Loan and the Swap Exposure less any monies at any relevant time standing to the credit of the Retention Account which have been transferred to that account pursuant to Clause 17.2(a).

14.2 Provision of additional security cover; prepayment of Loan. The Borrower undertakes with the Lender that, if the Lender notifies the Borrower that the aggregate of:

(a) the Market Value; plus

(b) the net realisable value of any additional security previously provided under this Clause 14,

is below 125 per cent. of the aggregate of the Loan and the Swap Exposure less any monies at any relevant time standing to the credit of the Retention Account which have been transferred to that account pursuant to Clause 17.2(a), the Borrower will, within 1 month after the date on which the Lender's notice is served, either:

(i) provide, or ensure that a third party provides, additional security which, in the opinion of the Lender, has a net realisable value at least equal to the shortfall and which, if it consists of or includes a Security Interest, covers such asset or assets and is documented in such terms as the Lender may approve or require; or

(ii) prepay in accordance with Clause 7 such part (at least) of the Loan as will eliminate the shortfall.

14.3 Meaning of additional security. In Clause 14.2 "security" means a Security Interest over an asset or assets (whether securing the Borrower's liabilities under the Finance Documents or a guarantee in respect of those liabilities), or a guarantee, letter of credit or other security in respect of the Borrower's liabilities under the Finance Documents.

14.4 Requirement for additional documents. The Borrower shall not be deemed to have complied with sub-paragraph (i) of Clause 14.2 above until the Lender has received in connection with the additional security certified copies of documents of the kinds referred to in paragraphs 3, 4 and 5 of Schedule 2, Part A below and such legal opinions in terms acceptable to the Lender from such lawyers as it may select.

14.5 Valuation of Ship. The Market Value of the Ship at any date is that shown by the valuation prepared:

(a) as at a date not more than 14 days previously;

(b) by one independent sale and purchase shipbroker which the Lender has approved or appointed for the purpose;

(c) with or without physical inspection of the Ship (as the Lender may require);

(d) on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer (after taking account of any charter or any other contract of employment in respect of the Ship the unexpired term of which is longer than 6 months); and

(e) after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale.

14.6 Valuation of additional security. The net realisable value of any additional security which is provided under Clause 14.2 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 14.5.

14.7 Valuations binding. Any valuation under Clause 14.2, 14.5 or 14.6 shall be binding and conclusive as regards the Borrower, as shall be any valuation which the Lender makes of a security which does not consist of or include a Security Interest.

14.8 Provision of information. The Borrower shall promptly provide the Lender and any shipbroker or expert acting under Clause 14.5 or 14.6 with any information which the Lender or the shipbroker or expert may request for the purposes of the valuation; and, if the Borrower fails to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the shipbroker or the Lender (or the expert appointed by it) consider prudent.

14.9 Payment of valuation expenses. Without prejudice to the generality of the Borrower's obligations under Clauses 19.3 and 20.3, the Borrower shall, on demand, pay the Lender the amount of the fees and expenses of any shipbroker or expert instructed by the Lender under this Clause and all legal and other expenses incurred by the Lender in connection with any matter arising out of this Clause.

14.10 Application of prepayment. Clause 7 shall apply in relation to any prepayment pursuant to Clause 14.2(b).

15 PAYMENTS AND CALCULATIONS

15.1 Currency and method of payments. All payments to be made by the Borrower to the Lender under a Finance Document shall be made to the Lender:

(a) by not later than 11.00 a.m. (London time) on the due date;

(b) in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Lender shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(c) to the account of the Lender at Calyon Americas New York, Building 130, Avenue of the Americas, NY 1019, New York (Account No 0100383000100; Swift Code CRLYUS33) or to such other account with such other bank as the Lender may from time to time notify to the Borrower.

15.2 Payment on non-Business Day. If any payment by the Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a) the due date shall be extended to the next succeeding Business Day; or

(b) if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

15.3 Basis for calculation of periodic payments. All interest and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

15.4 Lender accounts. The Lender shall maintain an account showing the amounts advanced by the Lender and all other sums owing to the Lender from the Borrower and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrower and any Security Party.

15.5 Accounts prima facie evidence. If the account maintained under Clauses 15.4 shows an amount to be owing by the Borrower or a Security Party to the Lender, that account shall be prima facie evidence that that amount is owing to the Lender.

16 APPLICATION OF RECEIPTS

16.1 Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by the Lender under or by virtue of any Finance Document shall be applied:

FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents (or any of them) in the following order of application and/or proportions:

(a) first, in or towards satisfaction pro rata of all amounts then due and payable to the Lender under the Finance Documents other than those amounts referred to at (b) and (c) below (including, but without limitation, all amounts payable by the Borrower under Clause 19, 20 and 21 of this Agreement or by the Borrower or any other Security Party under any corresponding or similar provision in any other Finance Document);

(b) secondly, in or towards satisfaction pro rata of any and all amounts of interest or default interest payable to the Lender under the Finance Documents; and

(c) thirdly, in or towards satisfaction of the Loan;

SECONDLY: (if at the relevant time an Event of Default or Potential Event of Default has occurred) in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Lender, by notice to the Borrower and the Security Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause; and

THIRDLY: any surplus shall be paid to the Borrower or to any other person appearing to be entitled to it.

16.2 Variation of order of application. The Lender may, by notice to the Borrower and the Security Parties, provide for a different manner of application from that set out in Clause 16.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

16.3 Notice of variation of order of application. The Lender may give notices under Clause 16.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

16.4 Appropriation rights overridden. This Clause 16 and any notice which the Lender gives under Clause 16.2 shall override any right of appropriation possessed, and any appropriation made, by the Borrower or any Security Party.

17 APPLICATION OF EARNINGS

17.1 Payment of Earnings. The Borrower undertakes with the Lender to ensure that, throughout the Security Period (subject only to the provisions of this Agreement and the General Assignment) all the Earnings of the Ship are paid to the Operating Account.

17.2 Monthly retentions. The Borrower undertakes with the Lender to ensure that, in each calendar month of the Security Period after the Drawdown Notice is served, on such dates as the Lender may from time to time specify, there is transferred to the Retention Account out of the Earnings received in the Operating Account during the preceding calendar month:

(a) one-sixth of the amount of the repayment instalment falling due under Clause 7 on the next Repayment Date; and

(b) the relevant fraction of the aggregate amount of interest on the Loan which is payable on the next due date for payment of interest under this Agreement.

The "relevant fraction" is a fraction of which the numerator is one and the denominator the number of months comprised in the then current Interest Period (or, if the current Interest Period ends after the next date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period and the last due date for payment of interest to the next date for payment of interest under this Agreement).

17.3 Shortfall in Earnings. If the aggregate Earnings received in the Operating Account are insufficient in any month for the required amount to be transferred to the Retention Account under Clause 17.2, the Borrower shall make up the amount of the insufficiency on demand from the Lender; but, without thereby prejudicing the Lender's right to make such demand at any time, the Lender may permit the Borrower to make up all or part of the insufficiency by increasing the amount of any transfer under Clause 17.2 from the Earnings received in the next or subsequent months.

17.4 Application of retentions. Until an Event of Default or a Potential Event of Default occurs, the Lender shall on each Repayment Date and on each due date for the payment of interest under this Agreement apply in accordance with Clause 15.1 so much of the balance on the Retention Account as equals:

(a) the repayment instalment due on that Repayment Date; or

(b) the amount of interest payable on that interest payment date,

in discharge of the Borrower's liability for that repayment instalment or that interest.

17.5 Interest accrued on the Operating Account and the Retention Account. Any credit balance on both the Operating Account and the Retention Account shall bear interest at the rate from time to time offered by the Lender to its customers for Dollar deposits of similar amounts and for periods similar to those for which such balances appear to the Lender likely to remain on the Operating Account and the Retention Account.

17.6 Release of accrued interest. Interest accruing under Clause 17.5 shall be released to the Borrower on each Repayment Date unless an Event of Default or a Potential Event of Default has occurred or the then credit balance on the Retention Account is less than what would have been the balance had the full amount required by Clause 17.2 (and Clause 17.3, if applicable) been transferred in that and each previous month.

17.7 Location of accounts. The Borrower shall promptly:

(a) comply with any requirement of the Lender as to the location or re-location of the Operating Account and the Retention Account (or either of them); and

(b) execute any documents which the Lender specifies to create or maintain in favour of the Lender a Security Interest over (and/or rights of set-off, consolidation or other rights in relation to) the Operating Account and the Retention Account.

17.8 Debits for expenses etc. The Lender shall be entitled (but not obliged) from time to time to debit the Operating Account without prior notice in order to discharge any amount due and payable to it under Clause 19 or 20 or payment of which it has become entitled to demand under Clause 19 or 20.

17.9 Borrower's obligations unaffected. The provisions of this Clause 17 (as distinct from a distribution effected under Clause 17.4) do not affect:

(a) the liability of the Borrower to make payments of principal and interest on the due dates; or

(b) any other liability or obligation of the Borrower or any Security Party under any Finance Document.

18 EVENTS OF DEFAULT

18.1 Events of Default. An Event of Default occurs if:

(a) the Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b) any breach occurs of Clause 8.2, 10.2, 10.3, 10.16, 11.2, 11.3 or 14.1; or

(c) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraph (a) or
(b) above) if, in the opinion of the Lender, such default is capable of remedy and such default continues unremedied 10 days after written notice from the Lender requesting action to remedy the same; or

(d) (subject to any applicable grace period specified in any Finance Document) any breach by the Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach caused by paragraph
(a), (b) or (c) above); or

(e) any representation, warranty or statement made by, or by an officer of, the Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(f) any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i) any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii) any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii) a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv) any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v) any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(g) any of the following occurs in relation to a Relevant Person:

(i) a Relevant Person becomes, in the opinion of the Lender, unable to pay its debts as they fall due; or

(ii) any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $500,000 or more or the equivalent in another currency; or

(iii) any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv) a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person other than the Borrower which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Lender and effected not later than 3 months after the commencement of the winding up; or

(v) a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi) a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii) any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs
(iii), (iv), (v) or (vi) above; or

(viii) in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Lender, is similar to any of the foregoing; or

(h) the Borrower ceases or suspends carrying on its business or a part of its business which, in the opinion of the Lender, is material in the context of this Agreement; or

(i) it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i) for the Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Lender considers material under a Finance Document; or

(ii) for the Lender to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(j) any consent necessary to enable the Borrower to own, operate or charter the Ship or to enable the Borrower or any Security Party to comply with any provision which the Lender considers material of a Finance Document or the MOA is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(k) it appears to the Lender that, without its prior consent, a change has occurred or probably has occurred after the date of this Agreement in the ultimate beneficial ownership of any of the shares in the Borrower or the Approved Manager or in the ultimate control of the voting rights attaching to any of those shares; or

(l) any provision which the Lender considers material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(m) the security constituted by a Finance Document is in any way imperilled or in jeopardy; or

(n) the Ship ceases to be managed by the Approved Manager on the terms of the Management Agreement, unless prior to such cessation, the Borrower has appointed a substitute manager or managers acceptable to the Lender in all respects; or

(o) an Event of Default (as defined in Section 14 of the Master Agreement) occurs;

(p) the Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the consent of the Lender; or

(q) any other event occurs or any other circumstances arise or develop including, without limitation:

(i) a change in the financial position, state of affairs or prospects of the Borrower, the Approved Manager or the Corporate Guarantor; or

(ii) any accident or other event involving the Ship or another vessel owned, chartered or operated by a Relevant Person,

in the light of which the Lender reasonably considers that there is a significant risk that any of the Borrower, the Approved Manager or the Corporate Guarantor is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due.

18.2 Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default the Lender may:

(a) serve on the Borrower a notice stating that all obligations of the Lender to the Borrower under this Agreement are terminated; and/or

(b) serve on the Borrower a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(c) take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Lender is entitled to take under any Finance Document or any applicable law.

18.3 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 18.2; and those rights shall be without prejudice and in addition to any other right or remedy to which the Lender is entitled (whether under the general law or any document).

18.4 Termination of Loan. On the service of a notice under paragraph (a) of Clause 18.2 all other obligations of the Lender to the Borrower under this Agreement, shall terminate.

18.5 Acceleration of Loan. On the service of a notice under paragraph (b) of Clause 18.2, the Loan, all accrued interest and all other amounts accrued or owing from the Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

18.6 Multiple notices; action without notice. The Lender may serve notices under paragraphs (a) and (b) of Clause 18.2 simultaneously or on different dates and it may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

18.7 Exclusion of Lender liability. Neither the Lender nor any receiver or manager appointed by the Lender, shall have any liability to the Borrower or a Security Party:

(a) for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b) as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt the Lender or a receiver or manager from liability for losses shown to have been by the gross negligence or the wilful misconduct of the Lender's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.

18.8 Relevant Persons. In this Clause 18 "a Relevant Person" means the Borrower and the Corporate Guarantor.

18.9 Interpretation. In Clause 18.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 18.1(g) "petition" includes an application.

19 FEES AND EXPENSES

19.1 Management fee. The Borrower shall pay to the Lender a non-refundable management fee of $60,000 on the earlier of (i) the Drawdown Date and
(ii) the last day of the Availability Period.

19.2 Costs of negotiation, preparation etc. The Borrower shall pay to the Lender on its demand the amount of all expenses incurred by the Lender in connection with the negotiation, preparation, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document.

19.3 Costs of variations, amendments, enforcement etc. The Borrower shall pay to the Lender, on the Lender's demand, the amount of all expenses incurred by the Lender in connection with:

(a) any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b) any consent or waiver by the Lender concerned under or in connection with a Finance Document, or any request for such a consent or waiver;

(c) the valuation of any security provided or offered under Clause 14 or any other matter relating to such security; or

(d) any step taken by the Lender with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

19.4 Documentary taxes. The Borrower shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Lender's demand, fully indemnify the Lender against any liabilities and expenses resulting from any failure or delay by the Borrower to pay such a tax.

19.5 Certification of amounts. A notice which is signed by two officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 19 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

20 INDEMNITIES

20.1 Indemnities regarding borrowing and repayment of Loan. The Borrower shall fully indemnify the Lender on its demand in respect of all expenses, liabilities and losses which are incurred by the Lender, or which the Lender reasonably and with due diligence estimates that it will incur, as a result of or in connection with:

(a) the Loan not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;

(b) the receipt or recovery of all or any part of the Loan or an overdue sum otherwise than on the last day of an Interest Period or other relevant period;

(c) any failure (for whatever reason) by the Borrower to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving credit for any default interest paid by the Borrower on the amount concerned under Clause 6);

(d) the occurrence and/or continuance of an Event of Default or a Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 18,

and in respect of any tax (other than tax on its overall net income) for which the Lender is liable in connection with any amount paid or payable to the Lender (whether for its own account or otherwise) under any Finance Document.

20.2 Breakage costs. Without limiting its generality, Clause 20.1 covers any liability, expense or loss, incurred by the Lender:

(a) in liquidating or employing deposits from third parties acquired or arranged to fund or maintain all or any part of the Loan and/or any overdue amount (or an aggregate amount which includes the Loan or any overdue amount); and

(b) in terminating, or otherwise in connection with, any interest and/or currency swap or any other transaction entered into (whether with another legal entity or with another office or department of the Lender) to hedge any exposure arising under this Agreement or a number of transactions of which this Agreement is one.

20.3 Miscellaneous indemnities. The Borrower shall fully indemnify the Lender on its demand in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind ("liability items") which may be made or brought against, or incurred by, the Lender, in any country, in relation to:

(a) any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Lender or by any receiver appointed under a Finance Document; and

(b) any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document,

other than liability items which are shown to have been caused by the gross and culpable negligence or the wilful misconduct of the Lender's own officers or employees.

20.4 Environmental indemnity. Without prejudice to its generality, Clause 20.3 covers any liability items which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code or any Environmental Law.

20.5 Currency indemnity. If any sum due from the Borrower or any Security Party to the Lender under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the "Contractual Currency") into another currency (the "Payment Currency") for the purpose of:

(a) making or lodging any claim or proof against the Borrower or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b) obtaining an order or judgment from any court or other tribunal; or

(c) enforcing any such order or judgment,

the Borrower shall indemnify the Lender against the loss arising when the amount of the payment actually received by the Lender is converted at the available rate of exchange into the Contractual Currency.

In this Clause 20.5, the "available rate of exchange" means the rate at which the Lender is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 20.5 creates a separate liability of the Borrower which is distinct from their other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

20.6 Certification of amounts. A notice which is signed by 2 officers of the Lender, which states that a specified amount, or aggregate amount, is due to the Lender under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall be prima facie evidence that the amount, or aggregate amount, is due.

21 NO SET-OFF OR TAX DEDUCTION

21.1 No deductions. All amounts due from the Borrower under a Finance Document shall be paid:

(a) without any form of set-off, cross-claim or condition; and

(b) free and clear of any tax deduction except a tax deduction which the Borrower is required by law to make.

21.2 Grossing-up for taxes. If the Borrower is required by law to make a tax deduction from any payment:

(a) the Borrower shall notify the Lender as soon as it becomes aware of the requirement;

(b) the Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises; and

(c) the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Lender receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

21.3 Evidence of payment of taxes. Within one month after making any tax deduction, the Borrower shall deliver to the Lender documentary evidence satisfactory to the Lender that the tax had been paid to the appropriate taxation authority.

21.4 Exclusion of tax on overall net income. In this Clause 21 "tax deduction" means any deduction or withholding for or on account of any present or future tax except tax on the Lender's overall net income.

22 ILLEGALITY, ETC

22.1 Illegality. This Clause 22 applies if the Lender notifies the Borrower that it has become, or will with effect from a specified date, become:

(a) unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b) contrary to, or inconsistent with, any regulation,

for the Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

22.2 Notification and effect of illegality. On the Lender notifying the Borrower under Clause 22.1, the Lender's obligation to make the Loan available shall terminate; and thereupon or, if later, on the date specified in the Lender's notice under Clause 22.1 as the date on which the notified event would become effective the Borrower shall prepay the Loan in full in accordance with Clause 7.

22.3 Mitigation. If circumstances arise which would result in a notification under Clause 22.1 then, without in any way limiting the rights of the Lender under Clause 22.3, the Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a) have an adverse effect on its business, operations or financial condition; or

(b) involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c) involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

23 INCREASED COSTS

23.1 Increased costs. This Clause 23 applies if the Lender notifies the Borrower that it considers that as a result of:

(a) the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or

(b) complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

is that the Lender (or a parent company of it) has incurred or will incur an "increased cost", that is to say:

(i) an additional or increased cost incurred as a result of, or in connection with, the Lender having entered into, or being a party to, this Agreement or having taken an assignment of rights under this Agreement, of funding or maintaining the Loan or performing its obligations under this Agreement, or of having outstanding all or any part of the Loan or other unpaid sums; or

(ii) a reduction in the amount of any payment to the Lender under this Agreement or in the effective return which such a payment represents to the Lender or on its capital; or

(iii) an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Loan or (as the case may require) the proportion of that cost attributable to the Loan; or

(iv) a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Lender under this Agreement,

but not an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or an item covered by the indemnity for tax in Clause 20.1 or by Clause 21.

For the purposes of this Clause 23.1 the Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

23.2 Payment of increased costs. The Borrower shall pay to the Lender, on its demand, the amounts which the Lender from time to time notifies the Borrower that it has specified to be necessary to compensate it for the increased cost.

23.3 Notice of prepayment. If the Borrower is not willing to continue to compensate the Lender for the increased cost under Clause 23.2, the Borrower may give the Lender not less than 14 days' notice of their intention to prepay the Loan at the end of an Interest Period.

23.4 Prepayment. A notice under Clause 23.3 shall be irrevocable; and on the date specified in the Borrower's notice of intended prepayment, the Loan shall terminate and the Borrower shall prepay (without premium or penalty) the Loan, together with accrued interest thereon at the applicable rate plus the Margin.

23.5 Application of prepayment. Clause 7 shall apply in relation to the prepayment.

24 SET-OFF

24.1 Application of credit balances. The Lender may without prior notice:

(a) apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of the Borrower at any office in any country of the Lender in or towards satisfaction of any sum then due from the Borrower to the Lender under any of the Finance Documents; and

(b) for that purpose:

(i) break, or alter the maturity of, all or any part of a deposit of the Borrower;

(ii) convert or translate all or any part of a deposit or other credit balance into Dollars; and

(iii) enter into any other transaction or make any entry with regard to the credit balance which the Lender considers appropriate.

24.2 Existing rights unaffected. The Lender shall not be obliged to exercise any of its rights under Clause 24.1; and those rights shall be without prejudice and in addition to any right of set-off, combination of accounts, charge, lien or other right or remedy to which the Lender is entitled (whether under the general law or any document).

24.3 No Security Interest. This Clause 24 give the Lender a contractual right of set-off only, and does not create any equitable charge or other Security Interest over any credit balance of the Borrower.

25 TRANSFERS AND CHANGES IN LENDING OFFICE

25.1 Transfer by Borrower. The Borrower may not, without the consent of the Lender:

(a) transfer any of its rights or obligations under any Finance Document; or

(b) enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

25.2 Assignment by Lender. The Lender may assign all or any of the rights and interests which it has under or by virtue of the Finance Documents without the consent of the Borrower.

25.3 Rights of assignee. In respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document, or any misrepresentation made in or in connection with a Finance Document, a direct or indirect assignee of any of the Lender's rights or interests under or by virtue of the Finance Documents shall be entitled to recover damages by reference to the loss incurred by that assignee as a result of the breach or misrepresentation irrespective of whether the Lender would have incurred a loss of that kind or amount.

25.4 Sub-participation; subrogation assignment. The Lender may sub-participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrower; and the Lender may assign, in any manner and terms agreed by it, all or any part of those rights to an insurer or surety who has become subrogated to them.

25.5 Disclosure of information. The Lender may disclose to a potential assignee or sub-participant any information which the Lender has received in relation to the Borrower, any Security Party or their affairs under or in connection with any Finance Document, unless the information is clearly of a confidential nature.

25.6 Change of lending office. The Lender may change its lending office by giving notice to the Borrower and the change shall become effective on the later of:

(a) the date on which the Borrower receives the notice; and

(b) the date, if any, specified in the notice as the date on which the change will come into effect.

26 VARIATIONS AND WAIVERS

26.1 Variations, waivers etc. by Lender. A document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or the Lender's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax by the Borrower and the Lender and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

26.2 Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clause 26.1, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Lender (or any person acting on its behalf) shall result in the Lender (or any person acting on its behalf) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a) a provision of this Agreement or another Finance Document; or

(b) an Event of Default; or

(c) a breach by the Borrower or a Security Party of an obligation under a Finance Document or the general law; or

(d) any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

27 NOTICES

27.1 General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

27.2 Addresses for communications. A notice shall be sent:

(a) to the Borrower: Eurobulk S.A.

Aethrion Center
40, Ag. Konstantinou Street
Maroussi
Athens 151 24
Greece

Fax No: +30 210 610 5111

(b) to the Lender: 9 Quai du President Paul Doumer 92400 Courbevoie La Defense, Paris France

Fax No: +331 4189 2987 Attn: Shipping Department

or to such other address as the relevant party may notify the other.

27.3 Effective date of notices. Subject to Clauses 27.4 and 27.5:

(a) a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b) a notice which is sent by fax shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

27.4 Service outside business hours. However, if under Clause 27.3 a notice would be deemed to be served:

(a) on a day which is not a business day in the place of receipt; or

(b) on such a business day, but after 5 p.m. local time,

the notice shall (subject to Clause 27.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

27.5 Illegible notices. Clauses 27.3 and 27.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

27.6 English language. Any notice under or in connection with a Finance Document shall be in English.

27.7 Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if:

(a) the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(b) in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

27.8 Meaning of "notice". In this Clause "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

28 SUPPLEMENTAL

28.1 Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to the Lender are:

(a) cumulative;

(b) may be exercised as often as appears expedient; and

(c) shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

28.2 Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

28.3 Counterparts. A Finance Document may be executed in any number of counterparts.

28.4 Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

29 LAW AND JURISDICTION

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

29.2 Exclusive English jurisdiction. Subject to Clause 29.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement.

29.3 Choice of forum for the exclusive benefit of the Lender. Clause 29.2 is for the exclusive benefit of the Lender, which reserves the rights:

(a) to commence proceedings in relation to any matter which arises out of or in connection with this Agreement in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b) to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England. The Borrower shall not commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

29.4 Process agent. The Borrower irrevocably appoints HTD Services Limited at their office for the time being, presently at Irongate House, Duke's Place, London EC3A 7LP, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

29.5 Lender's rights unaffected. Nothing in this Clause 29 shall exclude or limit any right which the Lender may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

29.6 Meaning of "proceedings". In this Clause 29, "proceedings" means proceedings of any kind, including an application for a provisional or protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

SCHEDULE 1

DRAWDOWN NOTICE

To: Calyon
9 Quai du President Paul Doumer
92400 Courbevoie
La Defense
Paris
France

Attention: Shipping Department August 2006

DRAWDOWN NOTICE

1 We refer to the loan agreement (the "Loan Agreement") dated August 2006 and made between us, as Borrower, and you, as Lender, in connection with a facility of up to US$15,500,000. Terms defined in the Loan Agreement have their defined meanings when used in this Drawdown Notice.

2 We request to borrow as follows:

(a) Amount: US$[o];

(b) Drawdown Date: [ ] August 2006;

(c) Duration of the first Interest Period shall be [ ] months;

(d) Payment instructions : account in our name and numbered [ ] with [ ] of
[ ].

3 We represent and warrant that:

(a) the representations and warranties in Clause 9 of the Loan Agreement would remain true and not misleading if repeated on the date of this notice with reference to the circumstances now existing;

(b) no Event of Default or Potential Event of Default has occurred or will result from the borrowing of the Loan.

4 This notice cannot be revoked without the prior consent of the Lender.

.....................................

Director for and on behalf of
PROSPERO MARITIME INC.

SCHEDULE 2

CONDITION PRECEDENT DOCUMENTS

Part A

The following are the documents referred to in Clause 8.1(a).

1 A duly executed original of each Finance Document (and of each document required to be delivered by each Finance Document) other than those referred to in Part B.

2 Copies of the certificate of incorporation and constitutional documents of each of the Borrower and the Corporate Guarantor.

3 Copies of resolutions of the shareholders and directors of the Borrower and the Corporate Guarantor authorising the execution of each of the Finance Documents to which the Borrower or the Corporate Guarantor is a party and, in the case of the Borrower, authorising named officers or attorneys-in-fact to give the Drawdown Notice and other notices under this Agreement and ratifying the execution of the MOA.

4 The original of any power of attorney under which any Finance Document is executed on behalf of the Borrower or the Corporate Guarantor.

5 Copies of all consents which the Borrower or any Security Party requires to enter into, or make any payment under, any Finance Document and the MOA.

6 The originals of any mandates or other documents required in connection with the opening or operation of the Operating Account and the Retention Account.

7 A valuation of the Ship, addressed to the Lender, stated to be for the purposes of this Agreement and dated not earlier than 30 days before the Drawdown Date, from an independent London sale and purchase shipbroker selected by the Lender.

8 A copy of the MOA (and any addenda thereto) duly signed by the parties thereto in such form satisfactory to the Lender.

9 Such documentation evidence as the Lender and its legal advisers may require in relation to the due authorisation and execution by the Seller of the MOA and all the documents to be delivered by the Seller pursuant to the MOA.

10 Documentary evidence that the agent for service of process named in Clause 29 has accepted its appointment.

11 Favourable legal opinions from lawyers appointed by the Lender on such matters concerning the laws of the Republic of Marshall Islands and such other relevant jurisdictions as the Lender may require.

12 If the Lender so requires, in respect of any of the documents referred to above, a certified English translation prepared by a translator approved by the Lender.

PART B

The following are the documents referred to in Clause 8.1(b).

1 A duly executed original of the Mortgage, the General Assignment and the Charter Assignment in respect of the Charter (and of each document required to be delivered under each such Finance Document).

2 Documentary evidence that:

(a) the Ship has been unconditionally delivered by the Seller to, and accepted by, the Borrower under the MOA, and the full purchase price payable under the MOA (in addition to the part to be financed by the Loan) has been duly paid;

(b) the Ship is definitively and permanently registered in the name of the Borrower under Marshall Islands flag;

(c) the Ship is in the absolute and unencumbered ownership of the Borrower save as contemplated by the Finance Documents;

(d) the Ship maintains the highest classification available for vessels of the same age, type and specification as the Ship with [o] free of all recommendations and conditions of such classification society affecting class;

(e) the Mortgage has been duly registered against the Ship as a valid first preferred Marshall Islands ship mortgage in accordance with the laws of the Republic of the Marshall Islands; and

(f) the Ship is insured in accordance with the provisions of this Agreement and all requirements therein in respect of insurances have been complied with.

3 Documents establishing that the Ship will, as from the Drawdown Date, be managed by the Approved Manager on terms acceptable to the Lender, together with:

(a) the Manager's Undertaking;

(b) a copy of the Management Agreement;

(c) copies of the Approved Manager's Document of Compliance and the Safety Management Certificate for the Ship; and

(d) copies of the ISPS Code Documentation in respect of the Ship.

4 A favourable opinion from an independent insurance consultant acceptable to the Lender on such matters relating to the insurances for the Ship as the Lender may require.

Each copy document delivered under this Schedule shall be certified as a true and up to date copy by a director or the secretary (or equivalent officer) of the Borrower and the Approved Managers where relevant.

SIGNED by                                 )
                                          )
for and on behalf of                      )
PROSPERO MARITIME INC.                    )
in the presence of:                       )

SIGNED by                                 )
                                          )
attorney-in-fact                          )
for and on behalf of                      )
CALYON                                    )
in the presence of:                       )

SK 02558 0002 700665