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<SEC-DOCUMENT>0000919574-06-002839.txt : 20060630
<SEC-HEADER>0000919574-06-002839.hdr.sgml : 20060630
<ACCEPTANCE-DATETIME>20060630112322
ACCESSION NUMBER:		0000919574-06-002839
CONFORMED SUBMISSION TYPE:	20-F
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20051231
FILED AS OF DATE:		20060630
DATE AS OF CHANGE:		20060630

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NORDIC AMERICAN TANKER SHIPPING LTD
		CENTRAL INDEX KEY:			0001000177
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER TRANSPORTATION [4400]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		20-F
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13944
		FILM NUMBER:		06936038

	BUSINESS ADDRESS:	
		STREET 1:		REID HOUSE
		STREET 2:		31 CHURCH STREET
		CITY:			HAMILTON HM FX
		STATE:			D0
		ZIP:			00000
		BUSINESS PHONE:		(441) 292-7202

	MAIL ADDRESS:	
		STREET 1:		REID HOUSE
		STREET 2:		31 CHURCH STREET
		CITY:			HAMILTON HM FX
		STATE:			D0
		ZIP:			00000
</SEC-HEADER>
<DOCUMENT>
<TYPE>20-F
<SEQUENCE>1
<FILENAME>d682099_20-f.txt
<TEXT>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 20-F
(Mark One)
[_]          REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

[X]              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2005

                                       OR

[_]             TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

                         Commission file number 1-13944

[_]        SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report.     None

                     NORDIC AMERICAN TANKER SHIPPING LIMITED
- -------------------------------------------------------------------------------

             (Exact name of Registrant as specified in its charter)

                               ISLANDS OF BERMUDA
 ------------------------------------------------------------------------------

                 (Jurisdiction of incorporation or organization)

                                  Thistle House
                                4 Burnaby Street
                                 Hamilton, HM11
                                     Bermuda

                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                                NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                    ON WHICH REGISTERED

             Common Shares                     New York Stock Exchange
       -------------------------              -------------------------

Securities  registered or to be registered pursuant to Section 12(g) of the Act:
     None

Securities for which there is a reporting  obligation  pursuant to Section 15(d)
of the Act:     None

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report.

Common Shares, par value $0.01                                        21,046,400

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act.

                                 [_] Yes   [X] No

If this report is an annual or transition report,  indicate by check mark if the
registrant  is not required to file  reports  pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.

                                 [_] Yes   [X] No

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 [X] Yes   [_] No

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer.  See definition of accelerated
filer and large  accelerated  filer in Rule 12b-2 of the  Exchange  Act.  (Check
one):

Large accelerated filer [X]   Accelerated filer [_]   Non-Accelerated filer [_]


Indicate by check mark which financial statement item the Registrant has elected
to follow.

                             Item 17 [_]   Item 18 [X]

If this is an annual report,  indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

                                 [_] Yes   [X] No

<PAGE>

                                TABLE OF CONTENTS

Item 1.        Identity of Directors, Senior Management and Advisers...........6
Item 2.        Offer Statistics And Expected Timetable.........................6
Item 3.        Key Information.................................................6
      A.       Selected Financial Data.........................................6
      B.       Capitalization And Indebtedness.................................8
      C.       Reasons For The Offer And Use Of Proceeds.......................8
      D.       Risk Factors....................................................8
Item 4.        Information On The Company.....................................15
      A.       History And Development Of The Company.........................15
      B.       Business Overview..............................................16
      C.       Organizational Structure.......................................28
      D.       Property, Plant And Equipment..................................28
Item 5.        Operating And Financial Review And Prospects...................29
      A.       Operating Results..............................................33
      B.       Liquidity and Capital Resources................................30
      C.       RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC............32
      D.       Trend Information..............................................32
      E.       Off Balance Sheet Arrangements.................................32
      F.       Disclosure Of Contractual Obligations..........................32
Item 6.        Directors, Senior Management And Employees.....................33
      A.       Directors And Senior Management................................33
      B.       Compensation...................................................36
      C.       Board Practices................................................37
      D.       Employees......................................................37
      E.       Share Ownership................................................37
Item 7.        Major Shareholders And Related Party Transactions..............38
      A.       Major Shareholders.............................................38
      B.       Related Party Transactions.....................................38
      C.       Interests Of Experts And Counsel...............................38
Item 8.        Financial Information..........................................38
      A.       Consolidated Statements And Other Financial Information........38
      B.       Significant Changes............................................39
Item 9.        The Offer And Listing..........................................39
Item 10.       Additional Information.........................................40
      A.       Share Capital..................................................40
      B.       Memorandum And Articles Of Association.........................40
      C.       Material Contracts.............................................42
      D.       Exchange Controls..............................................42
      E.       Taxation.......................................................43
      F.       Dividends And Paying Agents....................................43
      G.       Statement By Experts...........................................43
      H.       Documents On Display...........................................43
      I.       Subsidiary Information.........................................44
Item 11.       Quantitative And Qualitative Disclosures About Market Risk.....44
Item 12.       Description Of Securities Other Than Equity Securities.........44
Item 13.       Defaults, Dividend Arrearages And Delinquencies................44
Item 14.       Material Modifications To The Rights Of Security Holders
                   And Use Of Proceeds........................................44
Item 15.       Controls And Procedures........................................44
Item 16.       Reserved.......................................................45
    ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT...............................45
    ITEM 16B.  CODE OF ETHICS.................................................45
    ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.........................45
    ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.....46
    ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER
                   AND AFFILIATED PERSONS.....................................46
Item 17.       Financial Statements...........................................46
Item 18.       Financial Statements...........................................46

<PAGE>

            CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed herein may constitute forward-looking  statements. The
Private   Securities   Litigation  Reform  Act  of  1995  provides  safe  harbor
protections for  forward-looking  statements in order to encourage  companies to
provide prospective information about their business. Forward-looking statements
include  statements  concerning plans,  objectives,  goals,  strategies,  future
events or performance,  and underlying  assumptions and other statements,  which
are other than statements of historical facts.

The  Company  desires to take  advantage  of the safe harbor  provisions  of the
Private  Securities  Litigation  Reform  Act  of  1995  and  is  including  this
cautionary statement in connection with this safe harbor legislation.  The words
"believe,"  "anticipate,"  "intend," "estimate,"  "forecast," "project," "plan,"
"potential,"   "will,"  "may,"   "should,"   "expect,"   "pending"  and  similar
expressions identify forward-looking statements.

The forward-looking statements are based upon various assumptions, many of which
are based, in turn, upon further assumptions,  including without limitation, our
management's  examination of historical  operating trends, data contained in our
records and other data available  from third  parties.  Although we believe that
these  assumptions  were  reasonable  when made,  because these  assumptions are
inherently  subject to significant  uncertainties  and  contingencies  which are
difficult or impossible to predict and are beyond our control,  we cannot assure
you  that  we  will  achieve  or  accomplish  these  expectations,   beliefs  or
projections. We undertake no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.

Important  factors  that,  in our view,  could  cause  actual  results to differ
materially from those discussed in the  forward-looking  statements  include the
strength of world economies and currencies, general market conditions, including
fluctuations in charter rates and vessel values, changes in demand in the tanker
market,  as a result of changes in OPEC's petroleum  production levels and world
wide oil consumption and storage,  changes in our operating expenses,  including
bunker  prices,  drydocking  and  insurance  costs,  the market for our vessels,
availability of financing and  refinancing,  changes in  governmental  rules and
regulations or actions taken by regulatory authorities, potential liability from
pending or future  litigation,  general  domestic  and  international  political
conditions,  potential  disruption  of  shipping  routes  due  to  accidents  or
political  events,  vessels  breakdowns  and  instances of  off-hires  and other
important  factors  described  from  time to time in the  reports  filed  by the
Company with the Securities and Exchange Commission.

Please note in this annual report,  "we", "us",  "our",  and "The Company",  all
refer to Nordic American Tanker Shipping Limited and its subsidiaries.

<PAGE>

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

            Not Applicable

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

            Not Applicable

ITEM 3.     KEY INFORMATION

     A.     SELECTED FINANCIAL DATA

The following  historical  financial  information  should be read in conjunction
with our audited  consolidated  financial  statements  and related  notes all of
which are included  elsewhere  in this  document and  "Operating  and  Financial
Review and  Prospects."  The statement of operations  data for each of the three
years ended December 31, 2003, 2004, and 2005 and selected balance sheet data as
of December 31, 2004 and 2005 are derived from our audited financial  statements
included  elsewhere in this document.  The statements of operations data for the
years ended  December  31, 2001 and 2002 and selected  balance  sheet data as of
December  31,  2001,  2002 and  2003 are  derived  from  our  audited  financial
statements not included in this document.

<PAGE>
<TABLE>

SELECTED FINANCIAL DATA
<CAPTION>

                                                                       December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
All figures in USD                                         2005            2004            2003            2002            2001
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>             <C>             <C>             <C>             <C>
Voyage revenue                                         117,110,178      67,451,598      37,370,756      18,057,989      28,359,568
Voyage expenses                                        (30,980,916)     (4,925,353)       (184,781)       (184,781)       (184,781)
Vessel operating expense                               (11,220,770)     (1,976,766)              -               -               -
excl. depreciation expense presented below
Administrative expenses                                 (8,492,164)    (10,851,688)       (468,087)       (427,048)       (353,739)
Depreciation                                           (17,529,000)     (6,918,164)     (6,831,040)     (6,831,040)     (6,831,040)
- ------------------------------------------------------------------------------------------------------------------------------------
Net operating income                                    48,887,328      42,779,627      29,886,848      10,615,120      20,990,008
- ------------------------------------------------------------------------------------------------------------------------------------
Interest income                                            850,803         143,230          26,462          21,409         189,244
Interest expense                                        (3,453,963)     (1,971,304)     (1,797,981)     (1,764,424)     (1,769,000)
Other financial Income (Charges)                            33,574        (135,621)        (15,040)        (24,837)        (24,776)
- ------------------------------------------------------------------------------------------------------------------------------------
Net financial items                                     (2,569,586)     (1,963,695)     (1,786,559)     (1,767,852)     (1,604,532)
- ------------------------------------------------------------------------------------------------------------------------------------
Net profit                                              46,317,742      40,815,932      28,100,289       8,847,268      19,385,476
====================================================================================================================================
Basic and diluted earnings per share                          3.03            4.05            2.89            0.91            2.00
Cash dividends declared per share                             4.21            4.84            3.05            1.35            3.87
Weighted average shares outstanding basic and diluted   15,263,622      10,078,391       9,706,606       9,706,606       9,706,606

Other financial data:
Net cash from operating activities                      51,055,588      62,817,261      29,893,551      12,750,908      36,272,601
Dividend paid                                           64,279,487      47,195,842      29,605,410      13,103,993      37,564,658

Selected Balance Sheet Data (at period end):
Cash and cash equivalents                               14,240,482      30,732,516         565,924         277,783         630,868
Total assets                                           505,844,453     224,203,411     136,896,298     138,579,559     142,658,488
Total debt                                             130,000,000               0      30,000,000      30,000,000      30,000,000
Shareholders' equity                                   370,872,171     221,868,393     105,707,976     106,347,097     111,841,822

</TABLE>
<PAGE>

     B.     CAPITALIZATION AND INDEBTEDNESS
            Not Applicable

     C.     REASONS FOR THE OFFER AND USE OF PROCEEDS

            Not Applicable

     D.     RISK FACTORS

Some of the  following  risks  relate  principally  to the  industry in which we
operate and our  business in general.  Other  risks  relate  principally  to the
securities  market and ownership of our common stock.  The  occurrence of any of
the events described in this section could  significantly  and negatively affect
our  business,  financial  condition,  operating  results or cash  available for
dividends or the trading price of our common stock.

                         Industry Specific Risk Factors

The  cyclical  nature of the tanker  industry  may lead to  volatile  changes in
charter rates and vessel values which may adversely affect our earnings.

If the tanker market,  which has been cyclical,  is depressed in the future, our
earnings and  available  cash flow may  decrease.  Our ability to recharter  our
vessels or to sell them on the  expiration or  termination of their charters and
the charter rates payable under our two spot market related time  charters,  our
spot charters, or any renewal or replacement  charters,  will depend upon, among
other things, economic conditions in the tanker market.  Fluctuations in charter
rates and tanker  values result from changes in the supply and demand for tanker
capacity and changes in the supply and demand for oil and oil products.

The  factors  affecting  the supply and demand for  tankers  are  outside of our
control, and the nature, timing and degree of changes in industry conditions are
unpredictable.

        The factors that influence demand for tanker capacity include:

        o       demand for oil and oil products,

        o       supply of oil and oil products,

        o       regional availability of refining capacity,

        o       global and regional economic conditions,

        o       the distance oil and oil products are to be moved by sea, and

        o       changes in seaborne and other transportation patterns.

        The factors that influence the supply of tanker capacity include:

        o       the number of newbuilding deliveries,

        o       the scrapping rate of older vessels,

        o       conversion of tankers to other uses,

        o       the number of vessels that are out of service, and

        o       environmental concerns and regulations.

Historically,  the tanker  markets  have been  volatile  as a result of the many
conditions  and factors that can affect the price,  supply and demand for tanker
capacity.  Changes in demand for transportation of oil over longer distances and
supply  of  tankers  to  carry  that oil may  materially  affect  our  revenues,
profitability and cash flows.  Eight of our nine vessels are currently  operated
in the spot market or on spot market related time charters. We cannot assure you
that we will receive any minimum level of charterhire  for the vessels  operated
in the spot market or on spot market related time charters.

We will be dependent on spot  charters and any decrease in spot charter rates in
the future may adversely affect our earnings and our ability to pay dividends.

We currently operate a fleet of nine vessels,  including the vessel delivered to
us in April  2006.  Of those  nine  vessels,  one is on a long  term  fixed-rate
charter,  while  the  other  eight are  employed  in the spot  market or on time
charters with spot market  related  rates.  We are  currently  also pursuing the
acquisition  of a tenth vessel which we would also intend to spot charter in the
near term. Therefore we are highly dependent on spot market charter rates.

We may enter into spot charters for any  additional  vessels that we may acquire
in the future.  Although spot chartering is common in the tanker  industry,  the
spot charter market may fluctuate significantly based upon tanker and oil supply
and demand.  The successful  operation of our vessels in the spot charter market
depends  upon,  among other  things,  obtaining  profitable  spot  charters  and
minimizing,  to the extent  possible,  time spent  waiting for charters and time
spent traveling unladen to pick up cargo. The spot market is very volatile, and,
in the past,  there have been  periods when spot rates have  declined  below the
operating  cost of vessels.  We cannot assure you that future spot charters will
be  available  at rates  sufficient  to enable our  vessels  trading in the spot
market to operate profitably and to pay dividends.

Normally,  tanker markets are stronger in the fall and winter months (the fourth
and first  quarters of the  calendar  year) in  anticipation  of  increased  oil
consumption in the northern  hemisphere during the winter months.  Unpredictable
weather  patterns and  variations  in oil reserves  disrupt  tanker  scheduling.
Seasonal  variations  in tanker  demand and, as a result,  in charter rates will
affect any spot market related rates that we may receive.

Compliance  with  safety,   environmental  and  other   governmental  and  other
requirements may adversely affect our business.

The  shipping  industry  is  affected  by  numerous  regulations  in the form of
international  conventions,  national,  state and local  laws and  national  and
international  regulations in force in the  jurisdictions  in which such tankers
operate,  as well as in the  country  or  countries  in which such  tankers  are
registered.  These  regulations  include the U.S. Oil  Pollution Act of 1990, or
OPA, the International Convention on Civil Liability for Oil Pollution Damage of
1969, the  International  Convention for the Prevention of Pollution from Ships,
the IMO  International  Convention  for the  Safety  of Life at Sea of 1974,  or
SOLAS,  the  International  Convention on Load Lines of 1966 and the U.S. Marine
Transportation  Security  Act of  2002,  each of  which  imposes  environmental,
technical,  safety,  operational or financial  requirements  on us. In addition,
vessel  classification  societies  also  impose  significant  safety  and  other
requirements on our vessels. Regulation of vessels, particularly in the areas of
safety  and  environmental  impact  may  change in the  future and may limit our
ability to operate our business or require significant  capital  expenditures be
incurred on our vessels to keep them in compliance.

The value of our vessels may  fluctuate and could result in a lower price of our
common shares.

Tanker values have generally experienced high volatility.  You should expect the
market value of our oil tankers to fluctuate,  depending on general economic and
market  conditions  affecting  the tanker  industry and  competition  from other
shipping   companies,   types  and  sizes  of   vessels,   and  other  modes  of
transportation.  In addition,  as vessels grow older,  they generally decline in
value.  These  factors  will affect the value of our vessels.  Declining  tanker
values  could  affect  our  ability  to raise cash by  limiting  our  ability to
refinance our vessels, thereby adversely impacting our liquidity, or result in a
breach of our loan  covenants,  which could  result in  defaults  under our $300
million revolving credit facility,  or the New Credit facility.  If we determine
at any time that a vessel's  future limited useful life and earnings  require us
to impair its value on our financial  statements,  that could result in a charge
against our earnings and the reduction of our shareholders'  equity.  Due to the
cyclical  nature of the tanker  market,  if for any reason we sell  vessels at a
time when tanker  prices have fallen,  the sale may be at less than the vessel's
carrying amount on our financial statements,  with the result that we would also
incur a loss and a reduction in earnings.  Any such reduction  could result in a
lower share price.

Shipping is an inherently  risky business  involving  global  operations and our
vessels  are  exposed to  international  risks  which  could  reduce  revenue or
increase expenses.

Shipping companies conduct global operations.  Our vessels are at risk of damage
or loss because of events such as mechanical  failure,  collision,  human error,
war,  terrorism,  piracy,  cargo loss and bad  weather.  In  addition,  changing
economic,  regulatory  and  political  conditions in some  countries,  including
political and military conflicts,  have from time to time resulted in attacks on
vessels,  mining of waterways,  piracy,  terrorism,  labor strikes and boycotts.
These sorts of events could  interfere with shipping routes and result in market
disruptions.

Terrorist  attacks,  such as the attacks on the United  States on September  11,
2001, and other acts of violence or war may affect the financial markets and our
business, results of operations and financial condition.

Terrorist attacks such as the attacks on the United States on September 11, 2001
and the United  States'  continuing  response to these  attacks,  as well as the
threat of future terrorist  attacks,  continue to cause uncertainty in the world
financial markets, including the energy markets. The continuing conflict in Iraq
may lead to additional acts of terrorism,  armed conflict and civil  disturbance
around the world, which may contribute to further  instability  including in the
oil markets.  Terrorist attacks, such as the attack on the M.T. Limburg in Yemen
in  October  2002,  may also  negatively  affect  our  trade  patterns  or other
operations and directly  impact our vessels or our customers.  Future  terrorist
attacks could result in increased  volatility  of the  financial  markets in the
United  States and  globally  and could  result in an economic  recession in the
United  States or the  world.  Any of these  occurrences  could  have a material
adverse impact on our operating results, revenue and costs.

Arrests of our vessels by maritime  claimants could cause a significant  loss of
earnings for the related off-hire period.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and
other  parties  may  be  entitled  to a  maritime  lien  against  a  vessel  for
unsatisfied  debts,  claims  or  damages.  In  many  jurisdictions,  a  maritime
lienholder  may enforce its lien by  "arresting" or "attaching" a vessel through
foreclosure proceedings.  The arrest or attachment of one or more of our vessels
could result in a significant  loss of earnings for the related off-hire period.
In  addition,  in  jurisdictions  where the "sister  ship"  theory of  liability
applies,  a claimant  may arrest the vessel  which is subject to the  claimant's
maritime  lien  and any  "associated"  vessel,  which  is any  vessel  owned  or
controlled by the same owner.  In countries with "sister ship"  liability  laws,
claims  might be asserted  against us or any of our vessels for  liabilities  of
other vessels that we own.

Governments  could  requisition our vessels during a period of war or emergency,
resulting in a loss of earnings.

A government could  requisition for title or seize our vessels.  Requisition for
title occurs when a government  takes control of a vessel and becomes its owner.
Also, a government could requisition our vessels for hire.  Requisition for hire
occurs when a government  takes control of a vessel and effectively  becomes its
charterer  at  dictated  charter  rates.  Although  we, as the  owner,  would be
entitled to compensation in the event of a requisition, the amount and timing of
payment would be uncertain.

                          Company Specific Risk Factors

We cannot guarantee that we will continue to make cash distributions.

We have made  distributions  quarterly since September 1997. It is possible that
our revenues  could be reduced as a result of decreases in charter rates or that
we could incur other  expenses or  contingent  liabilities  that would reduce or
eliminate the cash available for distribution as dividends.  The Credit Facility
prohibits  the  declaration  and payment of dividends if we are in default under
it. We refer you to Item 4--Information on the  Company--Business  Overview--Our
Credit  Facility for more details.  In addition,  the declaration and payment of
dividends  is subject at all times to the  discretion  of our Board of Directors
and  compliance  with Bermuda law, and may be dependent upon the adoption at the
annual meeting of shareholders  of a resolution  effectuating a reduction in our
share premium in an amount equal to the estimated amount of dividends to be paid
in  the   next   succeeding   year.   We   refer   you  to   Item   8--Financial
Information--Dividend Policy for more details. We cannot assure you that we will
pay dividends at rates previously paid or at all.

We may not be able to grow or to effectively manage our growth.

One of our  principal  strategies  is to  continue  to  grow  by  expanding  our
operations and adding to our fleet.  Our future growth will depend upon a number
of factors,  some of which may not be within our control.  These factors include
our ability to:

        o       identify   suitable   tankers  and/or  shipping   companies  for
                acquisitions,

        o       identify  businesses  engaged in  managing,  operating or owning
                tankers for acquisitions or joint ventures,

        o       integrate any acquired tankers or businesses  successfully  with
                our existing operations,

        o       hire,  train and retain  qualified  personnel and crew to manage
                and operate our growing business and fleet,

        o       identify additional new markets,

        o       improve our  operating,  financial  and  accounting  systems and
                controls, and

        o       obtain required financing for our existing and new operations.

Our failure to effectively identify, purchase, develop and integrate any tankers
or  businesses  could  adversely  affect our business,  financial  condition and
results of operations.  In addition,  in November 2004, we  transitioned  from a
bareboat  charter company to an operating  company.  We may incur  unanticipated
expenses as an operating  company.  The number of employees of Scandic  American
Shipping  Ltd.,  or the Manager,  that  perform  services for us and our current
operating and financial  systems may not be adequate as we implement our plan to
expand the size of our fleet,  and we may not be able to require  the Manager to
hire more employees or adequately  improve those systems.  In addition,  we have
incurred and will continue to incur expenses associated with compliance with the
Sarbanes-Oxley  Act of 2002.  Section 404 of that Act requires public  companies
include in annual  reports a report  containing  management's  assessment of the
effectiveness of the Company's  internal control over financial  reporting and a
related attestation of the Company's independent auditors. This requirement will
first apply to us with respect to the fiscal year ending  December 31, 2006.  We
have begun a comprehensive effort in preparation for compliance with Section 404
including the  documentation,  testing and review of our internal controls under
the direction of our management.  We cannot be certain at this time that all our
controls will be considered effective. Therefore, we can give no assurances that
our internal  control over  financial  reporting will satisfy the new regulatory
requirements  when they become  applicable to us. If our independent  auditor is
unable to provide us with an unqualified attestation report on a timely basis as
required by Section 404,  investors  could lose confidence in the reliability of
our financial  statements,  which could result in a decrease in the value of our
common stock.  Finally,  acquisitions may require additional equity issuances or
debt issuances (with amortization payments), each of which could lower dividends
per share.  If we are unable to execute the points  noted above,  our  financial
condition and dividend rates may be adversely affected.

We are  dependent on the Manager and there may be conflicts of interest  arising
from the relationship between our Chairman and the Manager.

Our success  depends to a  significant  extent upon the abilities and efforts of
the Manager and our  management  team.  Our success will depend upon our and the
Manager's  ability to hire and retain key members of our  management  team.  The
loss of any of these individuals  could adversely affect our business  prospects
and financial  condition.  Difficulty in hiring and  retaining  personnel  could
adversely  affect our results of  operations.  We do not maintain "key man" life
insurance on any of our officers.

Herbjorn Hansson,  our Chairman,  President and Chief Executive Officer, is also
an owner of the Manager.  In addition,  one of our directors is also an owner of
the  Manager.  The  Manager may engage in  business  activities  other than with
respect to the Company.  The fiduciary duty of a director may compete with or be
different from the interests of the Manager and may create conflicts of interest
in relation to that director's duties to the Company.

An  increase  in  operating  costs  could  adversely  affect  our cash  flow and
financial condition.

Under the original bareboat charters to BP Shipping, BP Shipping was responsible
for our vessels' operating and voyage costs. Under the time and spot charters of
eight of our nine vessels, we are responsible for many of such costs. Our vessel
operating expenses include the costs of crew, fuel (for spot chartered vessels),
provisions, deck and engine stores, insurance and maintenance and repairs, which
depend on a variety of factors,  many of which are beyond our  control.  Some of
these costs,  primarily  relating to insurance  and enhanced  security  measures
implemented  after September 11, 2001 and fuel, have been increasing.  The price
of fuel is near  historical  high levels and may increase in the future.  If our
vessels  suffer damage,  they may need to be repaired at a drydocking  facility.
The costs of drydock repairs are unpredictable and can be substantial. Increases
in any of these costs would decrease earnings and dividends per share.

Our vessels operate in the highly competitive international tanker market.

The  operation  of tanker  vessels  and  transportation  of crude and  petroleum
products is  extremely  competitive.  Competition  arises  primarily  from other
tanker  owners,  including  major oil  companies as well as  independent  tanker
companies,  some of whom have substantially  greater resources.  Competition for
the  transportation of oil and oil products can be intense and depends on price,
location,  size,  age,  condition  and the  acceptability  of the tanker and its
operators to the  charterers.  We will have to compete with other tanker owners,
including major oil companies as well as independent tanker companies.

Our  market  share may  decrease  in the  future.  We may not be able to compete
profitably as we expand our business into new geographic  regions or provide new
services. New markets may require different skills, knowledge or strategies than
we use in our current markets, and the competitors in those new markets may have
greater financial strength and capital resources than we do.

Purchasing and operating  secondhand  vessels may result in increased  operating
costs which could adversely affect our earnings and as our fleet ages, the risks
associated with older vessels could adversely affect our operations.

Our current business strategy includes additional growth through the acquisition
of new and  secondhand  vessels.  The ninth  vessel that we took  delivery of in
early April 2006 is secondhand.  Further,  we are pursuing the  acquisition of a
tenth secondhand modern double-hull  Suezmax tanker.  While we typically inspect
secondhand  vessels  prior to  purchase,  this does not provide us with the same
knowledge about their condition that we would have had if these vessels had been
built for and  operated  exclusively  by us.  Generally,  we do not  receive the
benefit of  warranties  from the  builders  for the  secondhand  vessels that we
acquire.

In general,  the costs to maintain a vessel in good operating condition increase
with the age of the vessel. Older vessels are typically less fuel-efficient than
more recently  constructed  vessels due to  improvements  in engine  technology.
Cargo  insurance  rates increase with the age of a vessel,  making older vessels
less desirable to charterers.

Governmental regulations, safety or other equipment standards related to the age
of vessels may require  expenditures  for  alterations,  or the  addition of new
equipment,  to our vessels and may restrict the type of  activities in which the
vessels  may  engage.  We  cannot  assure  you that as our  vessels  age  market
conditions  will justify those  expenditures or enable us to operate our vessels
profitably during the remainder of their useful lives.

Servicing debt which we may incur in the future would limit funds  available for
other purposes and if we cannot service our debt, we may lose our vessels.

Borrowing  under the New Credit  Facility  requires us to dedicate a part of our
cash flow from operations to paying interest on our indebtedness. These payments
limit  funds  available  for working  capital,  capital  expenditures  and other
purposes,  including making  distributions to shareholders and further equity or
debt financing in the future.  Amounts  borrowed  under the New Credit  Facility
bear interest at variable  rates.  Increases in prevailing  rates could increase
the  amounts  that  we  would  have  to pay  to our  lenders,  even  though  the
outstanding principal amount remains the same, and our net income and cash flows
would  decrease.  We expect our earnings and cash flow to vary from year to year
due to the cyclical  nature of the tanker  industry.  In  addition,  our current
policy is not to accumulate cash, but rather to distribute our available cash to
shareholders.  If we do not generate or reserve enough cash flow from operations
to satisfy our debt obligations,  we may have to undertake alternative financing
plans, such as:

        o       seeking to raise additional capital,

        o       refinancing or restructuring our debt,

        o       selling tankers or other assets, or

        o       reducing or delaying capital investments.

However, these alternative financing plans, if necessary,  may not be sufficient
to  allow us to meet our debt  obligations.  If we are  unable  to meet our debt
obligations  or if some other  default  occurs  under the Credit  Facility,  the
lenders  could elect to declare that debt,  together  with accrued  interest and
fees,  to be  immediately  due and payable and  proceed  against the  collateral
securing that debt, which  constitutes our entire fleet and substantially all of
our assets.

Our New  Credit  Facility  contains  restrictive  covenants  which may limit our
liquidity and corporate activities.

The New Credit  Facility  imposes  operating and financial  restrictions  on us.
These restrictions may limit our ability to:

        o       pay dividends and make capital  expenditures  if we do not repay
                amounts  drawn  under  the New  Credit  Facility  or if there is
                another default under the New Credit Facility,

        o       incur  additional   indebtedness,   including  the  issuance  of
                guarantees,

        o       create liens on our assets,

        o       change the flag, class or management of our vessels or terminate
                or materially  amend the management  agreement  relating to each
                vessel,

        o       sell our vessels,

        o       merge or consolidate  with, or transfer all or substantially all
                our assets to, another person, or

        o       enter into a new line of business.

Therefore, we may need to seek permission from our lenders in order to engage in
some corporate actions. Our lenders' interests may be different from ours and we
cannot  guarantee  that we will be able to obtain our lenders'  permission  when
needed.  This may limit our ability to pay dividends to you,  finance our future
operations  or  capital  requirements,  make  acquisitions  or  pursue  business
opportunities.

Shipping is an inherently  risky  business and our insurance may not be adequate
to cover all our losses.

There  are a  number  of risks  associated  with the  operation  of  ocean-going
vessels,  including mechanical failure,  collision, human error, war, terrorism,
property loss,  cargo loss or damage and business  interruption due to political
circumstances in foreign countries,  hostilities and labor strikes. Any of these
events may result in loss of revenues, increased costs and decreased cash flows.
In addition,  the operation of any vessel is subject to the inherent possibility
of marine disaster,  including oil spills and other environmental  mishaps,  and
the  liabilities  arising  from owning and  operating  vessels in  international
trade. We cannot assure investors that our insurance will protect us against all
risks. We may not be able to maintain adequate  insurance coverage at reasonable
rates  for our  fleet in the  future  and the  insurers  may not pay  particular
claims.  For example,  a catastrophic  spill could exceed our insurance coverage
and have a material adverse effect on our financial condition.  In the past, new
and stricter  environmental  regulations  have led to higher costs for insurance
covering  environmental  damage or pollution,  and new regulations could lead to
similar increases or even make this type of insurance unavailable.  Furthermore,
even if insurance  coverage is adequate to cover our losses,  we may not be able
to  timely  obtain a  replacement  ship in the  event of a loss.  We may also be
subject  to  calls,  or  premiums,  in  amounts  based not only on our own claim
records but also the claim  records of all other members of the  protection  and
indemnity associations through which we receive indemnity insurance coverage for
tort liability.  Our payment of these calls could result in significant expenses
to us which could reduce our cash flows and place  strains on our  liquidity and
capital resources.

Because some of our expenses are incurred in foreign currencies,  we are exposed
to exchange rate risks.

The charterers of our vessels pay us in U.S. dollars. While we incur most of our
expenses  in U.S.  dollars,  we have in the  past  incurred  expenses  in  other
currencies, most notably the Norwegian Kroner. Declines in the value of the U.S.
dollar  relative to the Norwegian  Kroner,  or the other  currencies in which we
incur expenses, would increase the U.S. dollar cost of paying these expenses and
thus would adversely affect our results of operations.

We may have to pay tax on United  States source  income,  which would reduce our
earnings.

Under the United States  Internal  Revenue Code of 1986, or the Code, 50% of the
gross  shipping  income of a vessel  owning or chartering  corporation,  such as
ourselves, attributable to transportation that begins or ends, but that does not
both begin and end, in the U.S. will be  characterized  as U.S.  source shipping
income and such income will be subject to a 4% United States  federal income tax
unless that  corporation  is entitled to a special tax exemption  under the Code
which applies to the international shipping income derived by certain non-United
States corporations. We believe that we currently qualify for this statutory tax
exemption and we will take this position for U.S. tax return reporting purposes.
However, there are several risks that could cause us to become taxed on our U.S.
source shipping income. Due to the factual nature of the issues involved, we can
give no assurances on our tax-exempt status.

If we are not entitled to this  statutory tax exemption for any taxable year, we
would be subject for any such year to a 4% United States  federal  income tax on
our U.S.  source  shipping  income.  The  imposition  of this tax  could  have a
negative effect on our business and would result in decreased earnings available
for distribution to our shareholders.

If U.S.  tax  authorities  were to treat  us as a  "passive  foreign  investment
company," that could have adverse consequences on U.S.
holders.

A foreign  corporation will be treated as a "passive foreign investment company"
for U.S.  Federal  income tax  purposes  if either (1) at least 75% of its gross
income for any taxable year  consists of certain  types of "passive  income," or
(2) at least 50% of the average value of the  corporation's  assets produce,  or
are held for the production of, such types of "passive  income." For purposes of
these tests, "passive income" includes dividends,  interest,  and gains from the
sale or exchange of investment property and rents and royalties other than rents
and royalties  which are received from unrelated  parties in connection with the
active conduct of trade or business. For purposes of these tests, income derived
from the  performance  of services does not constitute  "passive  income." Those
holders of stock in a passive  foreign  investment  company who are  citizens or
residents  of the United  States or domestic  entities  would  alternatively  be
subject to a special adverse U.S.  Federal income tax regime with respect to the
income derived by the passive foreign investment company, the distributions they
receive from the passive foreign  investment  company and the gain, if any, they
derive from the sale or other disposition of their shares in the passive foreign
investment company. In particular,  dividends paid by us would not be treated as
"qualified  dividend income" eligible for preferential tax rates in the hands of
noncorporate U.S. shareholders.

Based on our current and expected future  operations,  we believe that we are no
longer a passive  foreign  investment  company  with respect to the taxable year
2005 and  thereafter.  As a result,  noncorporate  U.S.  shareholders  should be
eligible to treat  dividends  paid by us in 2006 and  thereafter  as  "qualified
dividend  income" which is subject to  preferential  tax rates  (through  2010).
Since we expect to derive  more than 25% of our  income  each year from our time
chartering and voyage chartering activities, we believe that such income will be
treated for relevant U.S. Federal income tax purposes as services income, rather
than rental income. Correspondingly,  such income should not constitute "passive
income,"  and  the  assets  that we own  and  operate  in  connection  with  the
production of that income (which should  constitute  more than 50% of our assets
each year), in particular our vessels,  should not constitute passive assets for
purposes of determining  whether we are a passive foreign  investment company in
any taxable year.  However,  no assurance can be given that the Internal Revenue
Service  will accept this  position  or that we would not  constitute  a passive
foreign  investment  company  for any  future  taxable  year if there were to be
changes in the nature and extent of our operations.

                      Risks Relating to Our Common Shares

Our common  share price may be highly  volatile  and future  sales of our common
shares could cause the market price of our common shares to decline.

The market price of our common shares has  historically  fluctuated  over a wide
range and may continue to fluctuate  significantly  in response to many factors,
such as actual or anticipated  fluctuations in our operating results, changes in
financial  estimates by securities  analysts,  economic and  regulatory  trends,
general market  conditions,  rumors and other factors,  many of which are beyond
our  control.  Investors  in our common  shares may not be able to resell  their
shares at or above their purchase price due to those factors,  which include the
risks and uncertainties set forth in this annual report.

Because we are a foreign  corporation,  you may not have the same  rights that a
shareholder in a U.S. corporation may have.

We are a Bermuda  exempted  company.  Our memorandum of association and bye-laws
and The  Companies  Act,  1981 of  Bermuda,  or the  Companies  Act,  govern our
affairs.  The  Companies Act does not as clearly  establish  your rights and the
fiduciary  responsibilities  of  our  directors  as  do  statutes  and  judicial
precedent in some U.S. jurisdictions. Therefore, you may have more difficulty in
protecting  your  interests  as a  shareholder  in the  face of  actions  by the
management,  directors or controlling  shareholders than would shareholders of a
corporation  incorporated in a United States jurisdiction.  There is a statutory
remedy under Section 111 of the Companies Act which  provides that a shareholder
may seek redress in the courts as long as such  shareholder  can establish  that
our affairs are being conducted,  or have been conducted, in a manner oppressive
or prejudicial to the interests of some part of the shareholders, including such
shareholder.  However,  the principles  governing Section 111 have not been well
developed.

It may not be possible for our investors to enforce U.S. judgments against us.

We are incorporated in the Islands of Bermuda.  Substantially  all of our assets
and those of our  subsidiaries  are  located  outside  the United  States.  As a
result,  it may be difficult or impossible  for U.S.  investors to serve process
within  the  United  States  upon us or to  enforce  judgment  upon us for civil
liabilities in U.S.  courts.  In addition,  you should not assume that courts in
the countries in which we are  incorporated  or where our assets are located (1)
would enforce  judgments of U.S.  courts  obtained in actions against based upon
the civil liability  provisions of applicable U.S.  federal and state securities
laws or (2) would enforce,  in original  actions,  liabilities  against us based
upon these laws.

ITEM 4.     INFORMATION ON THE COMPANY

     A.     HISTORY AND DEVELOPMENT OF THE COMPANY

Nordic American Tanker Shipping Limited, or the Company, was founded on June 12,
1995 under the laws of the  Islands of Bermuda  and we  maintain  our  principal
offices at  Thistle  House,  4 Burnaby  Street,  Hamilton  HM 11,  Bermuda.  Our
telephone number at such address is (441) 292-7202.

The Company was formed for the purpose of acquiring and chartering three Suezmax
tankers that were built in 1997. These three vessels were bareboat  chartered to
BP Shipping  Ltd.,  or BP  Shipping,  for a period of seven  years.  BP Shipping
redelivered  these  three  vessels to us in  September  2004,  October  2004 and
November 2004,  respectively.  We have  continued  contracts with BP Shipping by
time  chartering to it two of our original  vessels at spot market related rates
for  three-year  terms up to the autumn of 2007. We have bareboat  chartered the
third of our  original  three  vessels to Gulf  Navigation  Company LLC, or Gulf
Navigation,  of  Dubai,  U.A.E.  for a term of  five  years  at a fixed  rate of
charterhire,  subject to two one-year extensions at Gulf Navigation's option. We
acquired  our fourth  vessel in November  2004,  our fifth and sixth  vessels in
March 2005,  our seventh  vessel in August 2005,  our eighth  vessel in November
2005 and our ninth vessel in April 2006.  We currently  operate eight vessels in
the spot market or on spot market related time charters.

     B.     BUSINESS OVERVIEW

Our Fleet

Our fleet,  including  the  additional  vessel we have  acquired  in April 2006,
consists  of nine  modern  double-hull  Suezmax  tankers.  The  following  chart
provides information regarding each vessel, including its employment status.

<TABLE>
                                 Year                Employment Status
Vessel               Yard        Built     Dwt       (Expiration Date)       Flag
- ----------------------------------------------------------------------------------------
<S>                 <C>          <C>     <C>        <C>                       <C>
Gulf Scandic        Samsung      1997    151,459    Bareboat   (Nov. 2009)    Isle of Man
Nordic Hawk         Samsung      1997    151,459    TC/Spot(1) (Oct. 2007)    Bahamas
Nordic Hunter       Samsung      1997    151,459    TC/Spot(1) (Sep. 2007)    Bahamas
Nordic Voyager      Dalian New   1997    149,591    Spot                      Norway
Nordic Freedom      Daewoo       2005    159,500    Spot       (Mar. 2007)    Bahamas
Nordic Fighter      Hyundai      1998    153,181    Spot                      Norway
Nordic Discovery    Hyundai      1998    153,181    Spot                      Norway
Nordic Saturn       Daewoo       1998    157,332    Spot                      Marshall Islands
Nordic Jupiter(2)   Daewoo       1998    157,332    Spot                      Marshall Islands

        (1) TC/Spot = Time Charter on spot market related terms.
        (2) The vessel was delivered to us on April 10, 2006.
</TABLE>

Our Charters

We operate our  vessels on  bareboat  charters,  time  charters  and in the spot
market. Our goal is to take advantage of potentially higher market rates through
time charters with spot market related rates and voyage charters.  Including our
recent  acquisition,  we plan to operate  eight of our nine  vessels in the spot
market  or on spot  market  related  time  charters,  although  we may  consider
charters at fixed rates depending on market conditions.

Bareboat Charters

We have chartered one of our vessels (the Gulf Scandic) under a bareboat charter
to Gulf  Navigation,  for a period  of five  years,  terminating  in the  fourth
quarter of 2009, subject to two one-year extensions at Gulf Navigation's option.
Under the terms of the bareboat  charter,  Gulf Navigation is obligated to pay a
fixed  charterhire  of  $17,325  per day  for the  entire  charter  period.  The
charterhire  is payable to us monthly in advance.  Under certain  circumstances,
including in the event the vessel is lost,  the bareboat  charter will be deemed
terminated and Gulf Navigation will not be obligated to pay the charterhire.

During the charter  period,  Gulf  Navigation  will generally be responsible for
operating and  maintaining  the vessel and will bear all costs and expenses with
respect  to the  vessel.  During  the  bareboat  charter  period,  we  have  the
responsibility  to insure the vessel at our expense  against hull and  machinery
and war risks. However, Gulf Navigation is required to insure against protection
and  indemnity  risks.  Upon  the  expiration  of  the  bareboat  charter,  Gulf
Navigation is required to redeliver the vessel in the same or as good structure,
state, condition and class as that in which the vessel was delivered,  fair wear
and tear not affecting class excepted.

Under the terms of the bareboat charter, Gulf Navigation has agreed to indemnify
us  against  any loss,  damage or  expense  incurred  by us  arising  out of the
operation of the vessel by Gulf  Navigation  and against any lien arising out of
an event occurring during the charter period.

Time Charters

We have  chartered  two of our vessels  (the Nordic Hawk and the Nordic  Hunter)
under spot market  related  time  charters to BP Shipping  for a period of three
years each,  terminating between September 1 and October 31, 2007. The amount of
charterhire  payable  under the  charters  to BP  Shipping is based on a formula
designed to generate  earnings  to us as if we had  operated  the vessels in the
spot  market  on two  routes  used  for the  calculation,  less  5%.  Since  the
charterhire paid to us will be based on this formula,  at times, the charterhire
payable may be higher or lower than rates achieved by other tanker  operators in
the spot market  operating on these or other routes.  The charterhire is payable
to us monthly.

Under the time charters,  BP Shipping is generally  responsible for, among other
things,  the  cost of all  fuels  with  respect  to the  vessels  (with  certain
exceptions,  including during off-hire periods), port charges, and costs related
to towage,  pilotage,  mooring loading and discharging  facilities and services.
Under time charters, we are generally required,  among other things, to keep the
related  vessel  seaworthy,  to crew and  maintain the vessel and to comply with
applicable  regulations.  We are also  required  to insure  the  related  vessel
against  protection and indemnity  risks,  hull and machinery and war risks, and
provide  standard oil pollution  insurance cover. If any off-hire period exceeds
thirty  consecutive  days,  BP Shipping  will have the option to  terminate  the
charter.

Spot Charters

We currently  operate one vessel (the Nordic  Freedom) in the spot market (other
than in a pool).  Tankers  operating in the spot market  typically are chartered
for a single voyage which may last up to several weeks. Tankers operating in the
spot market may generate increased profit margins during  improvements in tanker
rates,  while tankers operating  fixed-rate time charters generally provide more
predictable cash flows.

Under a typical  voyage  charter in the spot market,  we will be paid freight on
the basis of moving  cargo from a loading port to a discharge  port.  We will be
responsible  for paying both operating  costs and voyage costs and the charterer
will be  responsible  for any delay at the loading or discharging  ports.  Under
voyage  charters,  we are generally  required,  among other things,  to keep the
related  vessel  seaworthy,  to crew and  maintain the vessel and to comply with
applicable regulations.

Pooling Arrangements

We currently operate five of our vessels (the Nordic Voyager,  Nordic Discovery,
Nordic  Fighter,  Nordic  Saturn and Nordic  Jupiter) in spot market  pools with
other  vessels  that are not owned by us. The pools are  managed by third  party
pool administrators.  The pool administrator of each pool has the responsibility
for the  commercial  management  of the  participating  vessels,  including  the
marketing,  chartering, operation and bunker (fuel oil) purchase of the vessels.
The pool  participants  remain  responsible  for all other costs  including  the
financing,  insurance,  manning and technical  management of their vessels.  The
earnings of all of the vessels are aggregated,  or pooled, and divided according
to the relative  performance  capabilities  of the vessel and the actual earning
days each vessel is available.

The Management Agreement

Under the Management  Agreement by and between the Company and Scandic  American
Shipping Ltd., or the Manager,  the Manager  assumes  commercial and operational
responsibility of our vessels and is required to manage our day-to-day  business
subject, always, to our objectives and policies as established from time to time
by the Board of Directors.  The Manager sub-contracts certain of these duties to
Teekay  Marine  Services AS  (formerly  IUM  Shipmanagement  AS), a  third-party
technical manager affiliated with Teekay Shipping Corporation, a publicly traded
shipping company. All decisions of a material nature concerning our business are
reserved to our Board of Directors.  The  Management  will terminate on June 30,
2019,  unless earlier  terminated  pursuant to its terms, as discussed below, or
extended by the parties following mutual agreement.

For its  services  under the  Management  Agreement,  the Manager is entitled to
cover its costs incurred plus a management fee equal to $100,000 per annum.  The
management  fee is payable to the Manager  quarterly in advance.  The Management
Agreement  formerly  provided  that the Manager would receive 1.25% of any gross
charterhire  paid to us. In order to further align the Manager's  interests with
those  of the  Company,  the  Manager  agreed  with us to amend  the  Management
Agreement to eliminate  this  payment,  and we issued to the Manager  restricted
common shares equal to 2% of our outstanding  common shares. Any time additional
common shares are issued, the Manager will receive additional  restricted common
shares to maintain  the number of common  shares  issued to the Manager at 2% of
our total outstanding common shares. These restricted shares are nontransferable
for three years from issuance.

Under the Management  Agreement,  the Manager pays,  and receives  reimbursement
from us, for our administrative expenses including such items as:

        o       all  costs  and  expenses  incurred  on  our  behalf,  including
                operating   expenses  and  other  costs  for  vessels  that  are
                chartered  out on time charters or traded in the spot market and
                for  monitoring  the  condition  of our vessel that is operating
                under bareboat charter,

        o       executive officer and staff salaries,

        o       administrative  expenses,  including,  among  others,  for third
                party   public   relations,   insurance,   franchise   fees  and
                registrars' fees,

        o       all premiums for insurance of any nature,  including  directors'
                and  officers'   liability   insurance  and  general   liability
                insurance,

        o       brokerage  commissions  payable by us on the gross  charter hire
                received in connection with the charters,

        o       directors' fees and meeting expenses,

        o       audit fees,

        o       other expenses approved by the Board of the Directors and

        o       attorneys'  fees  and  expenses,   incurred  on  our  behalf  in
                connection with (A) any litigation commenced by or against us or
                (B) any claim or investigation by any  governmental,  regulatory
                or self-regulatory authority involving us.

We have agreed to defend,  indemnify  and save the  Manager  and its  affiliates
(other than us and our subsidiaries),  officers, directors, employees and agents
harmless from and against any and all loss, claim,  damage,  liability,  cost or
expense,  including  reasonable  attorneys' fees, incurred by the Manager or any
such affiliates  based upon a claim by or liability to a third party arising out
of  the  operation  of  our  business,  unless  due to  the  Manager's  or  such
affiliates' negligence or willful misconduct.

        We may terminate the Management Agreement in the event that:

        o       the  Manager  commits  any  material  breach or  omission of its
                material  obligations  or  undertakings  thereunder  that is not
                remedied within thirty days of our notice to the Manager of such
                breach or omission,

        o       the Manager fails to maintain adequate  authorization to perform
                its duties thereunder that is not remedied within thirty days,

        o       certain events of the Manager's bankruptcy occur, or

        o       it becomes  unlawful for the Manager to perform its duties under
                the Management Agreement.

Commercial and Technical Management Agreements

We have entered into a commercial  management  agreement with Teekay  Chartering
Limited,  or Teekay, an affiliate of Teekay Shipping  Corporation for the Nordic
Freedom.  Under the supervision of the Manager,  Teekay's duties include seeking
and negotiating charters for this vessel.

We have entered into a commercial  management  agreement  with the Swedish based
Stena Bulk AS, or Stena,  for the Nordic  Voyager,  which is  operated in a pool
with  other  Stena-controlled  Suezmax  tankers.  Under the  supervision  of the
Manager, Stena's duties in the pool include seeking and negotiating charters for
this vessel.

We have entered into a commercial management agreement with Frontline Management
ASA, or Frontline,  for the Nordic Fighter and the Nordic  Discovery,  which are
operated in a pool with other Frontline  controlled  Suezmax tankers.  Under the
supervision of the Manager,  Frontline's  duties in the pool include seeking and
negotiating charters for these vessels.

We have entered into a commercial  management  agreement with the U.S. based OMI
Corporation,  or OMI,  for the  Nordic  Saturn  and  Nordic  Jupiter,  which are
operated  in a  pool  with  other  OMI-controlled  Suezmax  tankers.  Under  the
supervision  of the  Manager,  OMI's  duties  in the pool  include  seeking  and
negotiating  charters  for  these  vessels.  We have  entered  into a  technical
management  agreement  for Nordic  Jupiter  with OMI Marine  Services  under the
supervision of the Manager.

We have  entered  into a technical  management  agreement  for the Nordic  Hawk,
Nordic  Hunter,  Nordic  Voyager,  Nordic  Freedom and Nordic Saturn with Teekay
Marine Services AS (formerly IUM Shipmanagement AS) under the supervision of the
Manager.

We have entered into a technical management agreement for the Nordic Fighter and
the Nordic  Discovery  with V.Ships  Norway AS, or V.Ships.  V.Ships is a marine
service group that provides ship  management  and related  services to a managed
fleet of approximately 650 vessels worldwide.

Compensation  under the  commercial  and technical  management  agreements is in
accordance with industry standards.

Our Credit Facility

In September 2005, we entered into a new $300 million revolving credit facility,
which we refer to as the New Credit  Facility.  The New Credit  Facility  became
effective as of October 2005 and replaced  our  previous  credit  facility  from
October  2004,  a portion  of which was set to mature in October  2005.  The New
Credit Facility will mature in September 2010.

The New Credit  Facility  provides  funding for future vessel  acquisitions  and
general  corporate  purposes.  The New Credit  Facility cannot be reduced by the
lender and there is no repayment  obligation  of the  principal  during the five
year term.  Amounts  borrowed  under the New Credit  Facility bear interest at a
rate equal to LIBOR plus a margin  between 0.7% and 1.2%  (depending on the loan
to vessel value ratio).  We must pay a commitment  fee of 30% of the  applicable
margin on any undrawn amounts.

In September  2005, we borrowed $60.0 million under our previous credit facility
to finance part of the purchase  price of our seventh vessel that we acquired in
August 2005, and $7.0 million to finance the down payment for the acquisition of
our eighth vessel.

In October  2005,  we  refinanced  the  borrowings  of $67.0  million  under our
previous  credit  facility  by drawing on our New Credit  Facility.  In November
2005, we borrowed $63.0 million under our New Credit Facility to finance part of
the purchase price or our eighth vessel that we acquired in September  2005. Our
aggregate  borrowings  under our New Credit  Facility  are $130.0  million as of
December 31, 2005.

Borrowings  under the New Credit  Facility  are  secured by  mortgages  over our
existing  and new  vessels  and  assignments  of earnings  and  insurances,  and
drawings  will be  available  subject  to loan to vessel  value  ratios.  We are
subject to mandatory prepayment upon the occurrence of certain events. The terms
and  conditions  of the New Credit  Facility  require  compliance  with  certain
restrictive  covenants,  which  we feel  are  consistent  with  loan  facilities
incurred by other shipping  companies.  Under the New Credit  Facility,  we are,
among other things, required to:

        o       maintain certain loan to vessel value ratios,

        o       maintain a book equity of no less than $150.0 million,

        o       remain listed on a recognized stock exchange, and

        o       obtain the consent of the lenders prior to creating  liens on or
                disposing of our vessels.

The New Credit Facility provides that we may not pay dividends if following such
payment we would not be in compliance with certain financial  covenants or there
is a default under the New Credit Facility.

The International Tanker Market

International  seaborne oil and petroleum products  transportation  services are
mainly  provided by two types of  operators:  major oil company  captive  fleets
(both private and state-owned) and independent  shipowner fleets.  Both types of
operators  transport oil under  short-term  contracts  (including  single-voyage
"spot  charters") and long-term  time charters with oil companies,  oil traders,
large oil consumers,  petroleum product producers and government  agencies.  The
oil companies own, or control through long-term time charters, approximately one
third of the current world tanker capacity,  while independent  companies own or
control the balance of the fleet. The oil companies use their fleets not only to
transport their own oil, but also to transport oil for third-party charterers in
direct  competition with independent  owners and operators in the tanker charter
market.

The oil  transportation  industry has historically been subject to regulation by
national authorities and through international  conventions.  Over recent years,
however, an environmental  protection regime has evolved which has a significant
impact  on the  operations  of  participants  in the  industry  in the  form  of
increasingly  more  stringent  inspection  requirements,  closer  monitoring  of
pollution-related  events, and generally higher costs and potential  liabilities
for the owners and operators of tankers.

In order to benefit from economies of scale,  tanker  charterers  will typically
charter the largest  possible  vessel to transport  oil or products,  consistent
with port and canal  dimensional  restrictions  and optimal  cargo lot sizes.  A
tanker's  carrying capacity is measured in deadweight tons, or dwt, which is the
amount of crude oil  measured  in metric  tons  that the  vessel is  capable  of
loading. The oil tanker fleet is generally divided into the following five major
types of  vessels,  based on vessel  carrying  capacity:  (i) Ultra  Large Crude
Carrier (ULCC) - with a size range of approximately 320,000 to 450,000 dwt; (ii)
Very Large Crude Carrier  (VLCC) with a size range of  approximately  200,000 to
320,000 dwt; (iii) Suezmax-size  range of approximately  120,000 to 200,000 dwt;
(iv) Aframax-size range of approximately 80,000 to 120,000 dwt; (v) Panamax-size
range of approximately  60,000 to 70,000 dwt; and (v) small tankers of less than
approximately  60,000  dwt.  ULCCs and VLCCs  typically  transport  crude oil in
long-haul  trades,  such as from the Arabian Gulf to  Rotterdam  via the Cape of
Good Hope.  Suezmax tankers also engage in long-haul crude oil trades as well as
in medium-haul  crude oil trades,  such as from West Africa to the East Coast of
the United States.  Aframax-size  vessels  generally  engage in both  medium-and
short-haul  trades of less than  1,500  miles and carry  crude oil or  petroleum
products.  Smaller tankers mostly transport  petroleum products in short-haul to
medium-haul trades.

The Tanker Market 2005

For the third year in a row the tanker  market  was very  profitable  for tanker
owners.  Even though 2005 was not as robust as 2004 for crude  carriers,  it was
the second best year since the 1970s. In the single voyage market, VLCCs reached
an average of $55,000 per day, down from the  extraordinary  high of $89,000 the
year  before.  Suezmaxes  achieved  $48,000  per day,  versus  $65,000  in 2004.
Corresponding rates for Aframaxes were $40,000 compared with $47,000 in 2004.

Estimates  indicate an increase in seaborne  oil trade of 3.5% from 2004 to 2005
and a slight reduction in average transport distance. Based on industry reports,
there was an increase in waiting  time in ports and  straits  compared  with the
year  before,  leading  to a  decline  in the  productivity  of the  fleet.  Our
preliminary  estimates  show an  overall  growth of 3% to 4% in  tanker  tonnage
demand from 2004 to 2005.

The tanker fleet,  excluding chemical tankers,  rose at the highest rate in many
years on a dwt basis,  with  deliveries of 28 million dwt,  while  scrapping and
other  removals  amounted to no more than 5 million dwt.  Fleet growth by dwt in
2005 was as high as 7%, resulting in a drop in the fleet's utilization rate from
91.5% in 2004 to 88.5% in 2005.

The most important  trend in the global oil market in 2005 was the stagnation in
oil production  outside OPEC.  Hurricane-related  supply disruptions in the U.S.
Gulf,  higher than  anticipated  North Sea  depletion  rates and a more moderate
growth in Russian oil output were the main  elements  behind the  stagnation  of
non-OPEC production.

The  consequence of less oil from non-OPEC  sources was an increased  demand for
OPEC oil. Since OPEC was already producing at almost full capacity,  most of the
extra demand  resulted in higher prices.  Lack of spare oil production  capacity
drove crude oil prices to, at its peak,  above $70 per barrel and  dampened  the
extremely  strong growth in oil  consumption of close to 4% in 2004 to only 1.3%
in 2005, according to the most recent estimates.

The sale and purchase market for tankers was strong in 2005, especially for very
modern   tankers.   Values  for  double  hull   tankers   increased  on  average
approximately  7.5%,  whereas  values for single  hull  tankers on average  fell
approximately 10%.

According to the January 2005 Oil and Gas Journal,  the Middle East has 57.1% of
the world's  proven oil  reserves,  which will continue to drive long and medium
haul seaborne transportation.  World oil production reached 84.6 million barrels
per day in January  2006.  OPEC  countries  located in the Middle East  supplied
approximately  a  quarter  of this  volume.  Given  the  dominance  of world oil
reserves located in this region,  this share is expected to grow in coming years
as oil fields in other parts of the world  gradually  reach maturity and begin a
process of natural decline.  The length of transportation  distances between the
Middle East and  consuming  areas means that such a trend would boost  ton-miles
(the product of volumes and transport  distances)  and could be  beneficial  for
tanker demand.

A significant  and ongoing shift toward  quality in vessels and  operations  has
taken place during the last decade as  charterers  and  regulators  increasingly
focus on safety and protection of the environment. Since 1990, there has been an
increasing   emphasis  on  environmental   protection  through  legislation  and
regulations such as the U.S. Oil Pollution Act of 1990,  International  Maritime
Organization protocols and classification  society procedures,  demanding higher
quality tanker construction,  maintenance, repair and operations. Operators that
have proven an ability to seamlessly integrate these required safety regulations
into their operations are being rewarded.  For example, the emergence of vessels
equipped with double hulls represented a  differentiation  in vessel quality and
enabled such vessels to command  improved  earnings in the spot charter markets.
The effect has been a shift in major charterers'  preference towards greater use
of double hulls and,  therefore,  more  difficult  trading  conditions for older
single-hull  vessels.  These  changes were  reflected  in the sharp  increase in
scrapping of older vessels during periods of weaker market  conditions in recent
years.  As a result,  the net  increase in  transportation  capacity for Suezmax
tankers has been  relatively  low during this period,  or 7.0% from 1993 through
2003  according  to R.S.  Platou  Economic  Research  a.s.  However,  due to the
increase  in oil  demand,  deliveries  have  increased  and net  Suezmax  tanker
capacity  has grown 13.5% since the  beginning  of 2003.  We believe  charterers
generally prefer more modern,  double-hull vessels resulting in a portion of the
older vessels achieving lower levels of employment. Two major oil companies have
announced they will no longer charter single-hull tonnage.

Environmental and Other Regulation

Government  regulation  significantly affects the ownership and operation of our
tankers.  They are subject to  international  conventions,  national,  state and
local laws and  regulations  in force in the  countries in which our vessels may
operate or are registered.

A variety of  governmental  and  private  entities  subject  our vessels to both
scheduled and  unscheduled  inspections.  These entities  include the local port
authorities  (U.S.  Coast Guard,  harbor master or  equivalent),  classification
societies,  flag state  administration  (country of  registry)  and  charterers,
particularly  terminal  operators and oil  companies.  Certain of these entities
require us to obtain permits, licenses and certificates for the operation of our
tankers.  Failure to maintain necessary permits or approvals could require us to
incur substantial  costs or temporarily  suspend operation of one or more of our
vessels.

We believe that the heightened level of environmental and quality concerns among
insurance  underwriters,   regulators  and  charterers  is  leading  to  greater
inspection  and  safety  requirements  on all  vessels  and may  accelerate  the
scrapping of older vessels  throughout  the industry.  Increasing  environmental
concerns  have  created  a demand  for  vessels  that  conform  to the  stricter
environmental standards. We are required to maintain operating standards for all
of our vessels that will  emphasize  operational  safety,  quality  maintenance,
continuous  training of our  officers  and crews and  compliance  with U.S.  and
international  regulations.  We believe that the  operation of our vessels is in
substantial  compliance  with  applicable  environmental  laws and  regulations;
however, because such laws and regulations are frequently changed and may impose
increasingly  stricter  requirements,  such  future  requirements  may limit our
ability to do business, increase our operating costs, force the early retirement
of our vessels,  and/or  affect their  resale  value,  all of which could have a
material adverse effect on our financial condition and results of operations.

Environmental Regulation--IMO

In 1992, the  International  Maritime  Organization,  or IMO (the United Nations
agency for maritime  safety and the  prevention  of marine  pollution by ships),
adopted regulations that set forth pollution prevention  requirements applicable
to tankers. These regulations, which have been adopted by more than 150 nations,
including many of the  jurisdictions in which our tankers operate,  provide,  in
part, that:

        o       tankers  between  25 and 30  years  old  must be of  double-hull
                construction   or  of  a  mid-deck   design  with  double  sided
                construction,  unless (1) they have wing tanks or  double-bottom
                spaces not used for the  carriage  of oil,  which cover at least
                30% of the  length  of the  cargo  tank  section  of the hull or
                bottom;  or (2) they are  capable  of  hydrostatically  balanced
                loading  (loading  less cargo into a tanker so that in the event
                of a breach of the hull, water flows into the tanker, displacing
                oil upwards instead of into the sea);

        o       tankers   30  years  old  or  older   must  be  of   double-hull
                construction or mid-deck design with double sided  construction;
                and

        o       all tankers are subject to enhanced inspections.

Also, under IMO regulations,  a tanker must be of double-hull  construction or a
mid-deck design with double sided  construction or be of another approved design
ensuring the same level of protection against oil pollution if the tanker:

        o       is the subject of a contract for a major  conversion or original
                construction on or after July 6, 1993;

        o       commences  a major  conversion  or has its keel laid on or after
                January 6, 1994; or

        o       completes a major conversion or is a newbuilding delivered on or
                after July 6, 1996.

Effective  September 2002, the IMO  accelerated  its existing  timetable for the
phase-out of single-hull oil tankers. These regulations require the phase-out of
most  single-hull  oil tankers by 2015 or earlier,  depending  on the age of the
tanker and whether it has  segregated  ballast  tanks.  After 2007,  the maximum
permissible  age for single-hull  tankers will be 26 years.  Compliance with the
new regulations regarding inspections of all tankers,  however,  could adversely
affect our operations.  Under current  regulations,  retrofitting  will enable a
tanker to operate until the earlier of 25 years of age and the anniversary  date
of its delivery in 2017.  However, as a result of the oil spill in November 2002
relating  to the loss of the M/T  Prestige,  which was  owned by a  company  not
affiliated  with us,  in  December  2003  the  Marine  Environmental  Protection
Committee  of  the  IMO  adopted  a  proposed  amendment  to  the  International
Convention  for the  Prevention of Pollution  from Ships to accelerate the phase
out of single-hull  tankers from 2015 to 2010 unless the relevant flag state, in
a particular case,  extends the date to 2015. This amendment came into effect in
April 2005.

The IMO has also negotiated international  conventions that impose liability for
oil pollution in international  waters and a signatory's  territorial waters. In
September 1997, the IMO adopted Annex VI to the International Convention for the
Prevention of Pollution from Ships to address air pollution from ships. Annex VI
was ratified in May 2004 and became  effective in May 2005. Annex VI sets limits
on sulfur oxide and nitrogen  oxide  emissions  from ship  exhausts and prohibit
deliberate emissions of ozone depleting substances, such as chlorofluorocarbons.
Annex VI also includes a global cap on the sulfur content of fuel oil and allows
for  special  areas to be  established  with more  stringent  controls on sulfur
emissions. We believe that compliance with the Annex VI regulations will have no
material  effect on our results of  operations.  Additional or new  conventions,
laws and regulations  may be adopted that could adversely  affect our ability to
manage our ships.

Under the International Safety Management Code, or ISM Code,  promulgated by the
IMO,  the party with  operational  control of a vessel is required to develop an
extensive  safety  management  system that  includes,  among other  things,  the
adoption  of  a  safety  and  environmental   protection  policy  setting  forth
instructions  and  procedures  for operating its vessels  safely and  describing
procedures  for  responding  to  emergencies.  We  will  rely  upon  the  safety
management system that we and our third party technical managers have developed.

The  ISM  Code  requires  that  vessel  operators  obtain  a  safety  management
certificate for each vessel they operate.  This certificate evidences compliance
by a vessel's  management with code requirements for a safety management system.
No vessel  can  obtain a  certificate  unless  its  manager  has been  awarded a
document of compliance,  issued by each flag state,  under the ISM Code. We have
the  requisite  documents of  compliance  for our offices and safety  management
certificates  for all of our tankers for which the  certificates are required by
the IMO. We are  required  to renew these  documents  of  compliance  and safety
management certificates annually.

Noncompliance  with the ISM Code and  other  IMO  regulations  may  subject  the
shipowner or bareboat charterer to increased liability, may lead to decreases in
available  insurance  coverage for affected vessels and may result in the denial
of access to, or detention in, some ports. For example, the U.S. Coast Guard and
European Union  authorities  have indicated that vessels not in compliance  with
the ISM Code will be prohibited from trading in U.S. and European Union ports.

Although the United States is not a party to these  conventions,  many countries
have  ratified and follow the  liability  plan adopted by the IMO and set out in
the  International  Convention on Civil  Liability  for Oil Pollution  Damage of
1969.  Under this  convention,  if the country in which the damage  results is a
party to the 1992 Protocol to the  International  Convention on Civil  Liability
for Oil Pollution  Damage,  a vessel's  registered  owner is strictly liable for
pollution  damage caused in the  territorial  waters of a  contracting  state by
discharge of persistent  oil,  subject to certain  complete  defenses.  Under an
amendment to the Protocol that became effective on November 1, 2003, for vessels
of 5,000 to 140,000  gross tons (a unit of  measurement  for the total  enclosed
spaces within a vessel), liability is limited to approximately $6.7 million plus
$942 for each additional gross ton over 5,000. For vessels of over 140,000 gross
tons,  liability is limited to  approximately  $134 million.  As the  convention
calculates liability in terms of a basket of currencies, these figures are based
on currency  exchange  rates on June 6, 2006.  The right to limit  liability  is
forfeited  under  the  International  Convention  on  Civil  Liability  for  Oil
Pollution Damage where the spill is caused by the owner's actual fault and under
the 1992  Protocol  where  the spill is caused  by the  owner's  intentional  or
reckless  conduct.   Vessels  trading  to  states  that  are  parties  to  these
conventions  must provide  evidence of insurance  covering the  liability of the
owner. In jurisdictions  where the  International  Convention on Civil Liability
for Oil Pollution Damage has not been adopted,  various  legislative  schemes or
common law govern, and liability is imposed either on the basis of fault or in a
manner similar to that convention.  We believe that our P&I insurance will cover
the liability under the plan adopted by the IMO.

U.S.  Oil  Pollution  Act of  1990  and  Comprehensive  Environmental  Response,
Compensation and Liability Act

The United States regulates the tanker industry with an extensive regulatory and
liability  regime  for  environmental  protection  and  cleanup  of oil  spills,
consisting  primarily of the U.S.  Oil  Pollution  Act of 1990,  or OPA, and the
Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA.
OPA affects all owners and operators  whose vessels trade with the United States
or its territories or possessions, or whose vessels operate in the waters of the
United States,  which include the U.S. territorial sea and the 200 nautical mile
exclusive  economic  zone  around  the  United  States.  CERCLA  applies  to the
discharge  of hazardous  substances  (other than oil) whether on land or at sea.
Both OPA and CERCLA impact our operations.

Under OPA,  vessel owners,  operators and bareboat  charterers are  "responsible
parties"  who are  jointly,  severally  and  strictly  liable  (unless the spill
results  solely from the act or omission of a third  party,  an act of God or an
act of war) for all  containment  and clean-up  costs and other damages  arising
from oil spills from their vessels.  These other damages are defined  broadly to
include:

        o       natural resource damages and related assessment costs;

        o       real and personal property damages;

        o       net  loss  of  taxes,  royalties,  rents,  profits  or  earnings
                capacity;

        o       net cost of public  services  necessitated  by a spill response,
                such as protection from fire, safety or health hazards; and

        o       loss of subsistence use of natural resources.

OPA limits the liability of responsible parties to the greater of $600 per gross
ton or $0.5  million  per tanker  that is over  3,000  gross  tons  (subject  to
possible  adjustment for inflation).  The act  specifically  permits  individual
states to impose  their  own  liability  regimes  with  regard to oil  pollution
incidents  occurring  within  their  boundaries,  and some states  have  enacted
legislation providing for unlimited liability for discharge of pollutants within
their waters.  In some cases,  states that have enacted this type of legislation
have  not  yet  issued   implementing   regulations   defining   tanker  owners'
responsibilities under these laws. CERCLA, which applies to owners and operators
of tankers,  contains a similar  liability  regime and  provides for cleanup and
removal of hazardous  substances  and for natural  resource  damages.  Liability
under CERCLA is limited to the greater of $300 per gross ton or $5 million.

These limits of liability do not apply, however, where the incident is caused by
violation  of  applicable  U.S.   federal  safety,   construction  or  operating
regulations,   or  by  the  responsible  party's  gross  negligence  or  willful
misconduct.  These limits do not apply if the responsible party fails or refuses
to report  the  incident  or to  cooperate  and  assist in  connection  with the
substance removal activities.  OPA and CERCLA each preserve the right to recover
damages under existing law, including maritime tort law.

OPA also requires owners and operators of vessels to establish and maintain with
the U.S. Coast Guard evidence of financial responsibility sufficient to meet the
limit of their  potential  strict  liability under the act. The U.S. Coast Guard
has enacted  regulations  requiring evidence of financial  responsibility in the
amount of $1,500  per gross ton for  tankers,  coupling  the OPA  limitation  on
liability  of $1,200 per gross ton with the CERCLA  liability  limit of $300 per
gross ton. Under these regulations, an owner or operator of more than one tanker
is required to obtain a  certificate  of  responsibility  for each vessel in the
fleet in an amount equal only to the financial responsibility requirement of the
tanker having the greatest  maximum strict  liability  under OPA and CERCLA.  We
have  provided  evidence of financial  responsibility  in the form of guarantees
issued by a guarantor approved by the U.S. Coast Guard and received certificates
of financial  responsibility  from the U.S.  Coast Guard for each of our vessels
that calls in U.S. waters.

We insure each of our vessels with pollution  liability insurance in the maximum
commercially  available  amount of $1.0  billion  per  incident  per  vessel.  A
catastrophic spill could exceed the insurance coverage available, in which event
there could be a material adverse effect on our business.

OPA also amended the Federal Water  Pollution  Control Act to require  owners or
operators of tankers operating in the waters of the United States to file vessel
response  plans with the U.S.  Coast  Guard,  and their  tankers are required to
operate in compliance with their U.S. Coast Guard approved plans. These response
plans must, among other things:

        o       address a "worst case" scenario and identify and ensure, through
                contract or other approved means,  the availability of necessary
                private   response   resources  to  respond  to  a  "worst  case
                discharge";

        o       describe crew training and drills; and

        o       identify a qualified individual with full authority to implement
                removal actions.

Vessel  response  plans for our  tankers  operating  in the waters of the United
States have been approved by the U.S. Coast Guard.  In addition,  the U.S. Coast
Guard has announced it intends to propose similar regulations  requiring certain
vessels to prepare  response plans for the release of hazardous  substances.  We
are responsible for ensuring our vessels comply with any additional regulations.

OPA does not prevent individual states from imposing their own liability regimes
with respect to oil pollution  incidents  occurring within their boundaries.  In
fact,  most  U.S.   states  that  border  a  navigable   waterway  have  enacted
environmental  pollution  laws that  impose  strict  liability  on a person  for
removal  costs and damages  resulting  from a discharge of oil or a release of a
hazardous substance. These laws may be more stringent than U.S. federal law.

European Union Tanker Restrictions

In July 2003, the European  Union adopted  regulations  that  accelerate the IMO
single hull tanker  phase-out  timetable.  Under the regulation no oil tanker is
allowed  to  operate  under  the flag of a EU  member  state,  nor shall any oil
tanker,  irrespective  of its flag,  be allowed to enter into ports or  offshore
terminals  under the  jurisdiction of a EU member state after the anniversary of
the date of delivery of the ship in the year  specified in the following  table,
unless such tanker is a double hull oil tanker:

- --------------------------------------------------------------------------------
Category of Oil Tankers                         Date or Year
- --------------------------------------------------------------------------------
Category 1 oil tankers of 20,000 dwt and
above carrying crude oil, fuel oil, heavy       2003 for ships delivered in
diesel oil or lubricating oil as cargo,         1980 or earlier
and of 30,000 dwt and above carrying            2004 for ships delivered in 1981
other oils, which do not comply with            2005 for ships delivered in
the requirements for protectively located       1982 or later
segregated ballast tanks
- --------------------------------------------------------------------------------
Category 2 - oil tankers of 20,000 dwt
and above carrying crude oil, fuel oil,         2003 for ships delivered in
heavy diesel oil or lubricating oil as or       1975 or earlier
cargo, and of 30,000 dwt and above carrying     2004 for ships delivered in 1976
other oils, which do comply with the            2005 for ships delivered in 1977
protectivel located segregated ballast          2006 for ships delivered in 1978
tank requirements                               and 1979
                                                2007 for ships delivered in 1980
and                                             and 1981
                                                2008 for ships delivered in 1982
Category 3 - oil tankers of 5,000 dwt and       2009 for ships delivered in 1983
above but less than the tonnage specified       2010 for ships delivered in
for Category 1 and 2 tankers.                   1984 or later
- --------------------------------------------------------------------------------

Furthermore,  under the  regulation,  all oil  tankers of 5,000 dwt or less must
comply with the double hull  requirements no later than the anniversary  date of
delivery of the ship in the year 2008. The  regulation,  however,  provides that
oil tankers operated  exclusively in ports and inland navigation may be exempted
from the double hull  requirement  provided that they are duly  certified  under
inland water  legislation.  The European  Union,  following  the lead of certain
European  Union nations such as Italy and Spain,  as of October  2003,  has also
banned all single-  hull tankers of 600 dwt and above  carrying  high grade oil,
regardless of flag, from entering or leaving its ports or offshore  terminals or
anchoring in areas under its jurisdiction.  Commencing in 2005,  certain single-
hull  tankers  above 15 years of age will also be  restricted  from  entering or
leaving European Union ports or offshore  terminals and anchoring in areas under
European Union jurisdiction.

The  European  Union has also  adopted  legislation  that:  (1) bans  manifestly
sub-standard vessels (defined as those over 15 years old that have been detained
by port  authorities at least twice in a six -month period) from European waters
and creates an obligation of port states to inspect  vessels  posing a high risk
to maritime  safety or the marine  environment;  and (2)  provides  the European
Union  with  greater  authority  and  control  over  classification   societies,
including  the ability to seek to suspend or revoke the  authority  of negligent
societies.   It  is  impossible  to  predict  what   legislation  or  additional
regulations,  if any,  may be  promulgated  by the  European  Union or any other
country or authority.

Vessel Security Regulations

Since the terrorist  attacks of September 11, 2001,  there has been a variety of
initiatives  intended to enhance  vessel  security.  On November 25,  2002,  the
Maritime  Transportation  Security  Act of 2002  (MTSA)  came  into  effect.  To
implement  certain  portions  of the MTSA,  in July 2003,  the U.S.  Coast Guard
issued regulations requiring the implementation of certain security requirements
aboard  vessels  operating in waters subject to the  jurisdiction  of the United
States.  Similarly, in December 2002, amendments to the International Convention
for the Safety of Life at Sea (SOLAS)  created a new  chapter of the  convention
dealing specifically with maritime security. The new chapter went into effect in
July 2004 and imposes various detailed security  obligations on vessels and port
authorities, most of which are contained in the newly created International Ship
and Port  Facilities  Security  (ISPS) Code. We are in compliance  with the ISPS
Code. Among the various requirements are:

        o       on-board  installation of automatic information systems, or AIS,
                to enhance vessel-to-vessel and vessel-to-shore communications;

        o       on-board installation of ship security alert systems;

        o       the development of vessel security plans; and

        o       compliance with flag state security certification requirements.

The U.S. Coast Guard regulations,  intended to align with international maritime
security standards,  exempt non-U.S.  tankers from MTSA vessel security measures
provided such vessels have on board, by July 1, 2004, a valid International Ship
Security  Certificate (ISSC) that attests to the vessel's  compliance with SOLAS
security  requirements  and the  ISPS  Code.  We have  implemented  the  various
security measures addressed by the MTSA, SOLAS and the ISPS Code ensure that our
tankers attain compliance with all applicable  security  requirements within the
prescribed time periods.  We do not believe these additional  requirements  will
have a material financial impact on our operations.

Inspection by Classification Societies

Every  seagoing  vessel  must be  "classed"  by a  classification  society.  The
classification  society certifies that the vessel is "in class," signifying that
the vessel has been built and  maintained  in  accordance  with the rules of the
classification society and complies with applicable rules and regulations of the
vessel's  country of registry and the  international  conventions  of which that
country is a member.  In addition,  where surveys are required by  international
conventions  and  corresponding  laws  and  ordinances  of  a  flag  state,  the
classification  society will undertake them on application or by official order,
acting on behalf of the authorities concerned.

The  classification  society also undertakes on request other surveys and checks
that are  required by  regulations  and  requirements  of the flag state.  These
surveys are subject to  agreements  made in each  individual  case and/or to the
regulations of the country concerned.

For  maintenance  of the  class,  regular  and  extraordinary  surveys  of hull,
machinery, including the electrical plant, and any special equipment classed are
required to be performed as follows:

Annual Surveys:  For seagoing  ships,  annual surveys are conducted for the hull
and the machinery,  including the  electrical  plant,  and where  applicable for
special  equipment  classed,  at  intervals  of  12  months  from  the  date  of
commencement of the class period indicated in the certificate.

Intermediate  Surveys:  Extended  annual surveys are referred to as intermediate
surveys and typically are conducted two and one-half  years after  commissioning
and each class renewal.  Intermediate surveys may be carried out on the occasion
of the second or third annual survey.

Class Renewal Surveys: Class renewal surveys, also known as special surveys, are
carried out for the ship's hull, machinery,  including the electrical plant, and
for any special equipment classed,  at the intervals  indicated by the character
of classification  for the hull. At the special survey, the vessel is thoroughly
examined,  including  audio-gauging  to  determine  the  thickness  of the steel
structures.  Should the  thickness be found to be less than class  requirements,
the  classification  society would prescribe steel renewals.  The classification
society may grant a one-year grace period for completion of the special  survey.
Substantial  amounts of money may have to be spent for steel  renewals to pass a
special survey if the vessel experiences excessive wear and tear. In lieu of the
special survey every four or five years, depending on whether a grace period was
granted, a shipowner has the option of arranging with the classification society
for the vessel's hull or machinery to be on a continuous  survey cycle, in which
every part of the vessel would be surveyed within a five-year cycle.

At an owner's  application,  the surveys required for class renewal may be split
according to an agreed schedule to extend over the entire period of class.  This
process is referred to as continuous class renewal.

All areas  subject  to survey  as  defined  by the  classification  society  are
required to be surveyed at least once per class period, unless shorter intervals
between  surveys are  prescribed  elsewhere.  The period  between two subsequent
surveys of each area must not exceed five years.

Most vessels are also  dry-docked  every 30 to 36 months for  inspection  of the
underwater  parts and for  repairs  related to  inspections.  If any defects are
found, the classification  surveyor will issue a "recommendation"  which must be
rectified by the ship owner within prescribed time limits.

Most insurance  underwriters  make it a condition for insurance  coverage that a
vessel be certified as "in class" by a classification  society which is a member
of the International  Association of Classification  Societies.  All our vessels
are  certified as being "in class" by Lloyd's  Register of Shipping (one vessel)
and Det norske Veritas (eight vessels).  All new and secondhand  vessels that we
purchase must be certified prior to their delivery under our standard contracts.

Risk of Loss and Liability Insurance

The operation of any cargo vessel  includes  risks such as  mechanical  failure,
collision,  property loss, cargo loss or damage and business interruption due to
political circumstances in foreign countries,  hostilities and labor strikes. In
addition, there is always an inherent possibility of marine disaster,  including
oil spills and other  environmental  mishaps,  and the liabilities  arising from
owning  and  operating  vessels  in  international  trade.  OPA,  which  imposes
virtually  unlimited  liability upon owners,  operators and demise charterers of
any vessel trading in the United States exclusive  economic zone for certain oil
pollution  accidents in the United  States,  has made  liability  insurance more
expensive  for ship owners and operators  trading in the United  States  market.
While we carry loss of hire insurance to cover 100% of our fleet,  we may not be
able to maintain this level of coverage.  Furthermore, while we believe that our
present insurance coverage is adequate,  not all risks can be insured, and there
can be no guarantee that any specific claim will be paid, or that we will always
be able to obtain adequate insurance coverage at reasonable rates.

Hull and Machinery Insurance

We have  obtained  marine  hull  and  machinery  and war risk  insurance,  which
includes the risk of actual or  constructive  total loss, for all of the vessels
in our  fleet.  The  vessels  in our fleet are each  covered up to at least fair
market value,  with  deductibles  of $350,000 per vessel per  incident.  We also
arranged  increased  value coverage for each vessel.  Under this increased value
coverage,  in the event of total loss of a vessel,  we will be able  recover for
amounts not  recoverable  under the hull and  machinery  policy by reason of any
under-insurance.

Protection and Indemnity Insurance

Protection  and  indemnity  insurance  is  provided  by  mutual  protection  and
indemnity  associations,  or P&I  Associations,  which  covers  our third  party
liabilities  in connection  with our shipping  activities.  This includes  third
party  liability  and  other  related  expenses  of  injury  or  death  of crew,
passengers and other third parties, loss or damage to cargo, claims arising from
collisions with other vessels,  damage to other third party property,  pollution
arising  from oil or other  substances,  and salvage,  towing and other  related
costs, including wreck removal.  Protection and indemnity insurance is a form of
mutual  indemnity  insurance,   extended  by  protection  and  indemnity  mutual
associations, or "clubs." Our coverage, except for pollution, is unlimited.

Our current  protection  and  indemnity  insurance  coverage for pollution is $1
billion per vessel per incident. The fourteen P&I Associations that comprise the
International  Group insure  approximately 90% of the world's commercial tonnage
and have  entered  into a  pooling  agreement  to  reinsure  each  association's
liabilities.  Each P&I  Association  has capped  its  exposure  to this  pooling
agreement at $4.25 billion. As a member of a P&I Association,  which is a member
of the International  Group, we are subject to calls payable to the associations
based on its claim  records as well as the claim records of all other members of
the  individual  associations,  and  members  of the  pool  of P&I  Associations
comprising the International Group.

Competition

We operate in markets that are highly  competitive and based primarily on supply
and demand.  We compete for  charters  on the basis of price,  vessel  location,
size,  age and  condition  of the  vessel,  as well as on our  reputation  as an
operator.  We arrange our time  charters and voyage  charters in the spot market
through the use of brokers,  who  negotiate  the terms of the charters  based on
market  conditions.  We compete  primarily with owners of tankers in the Suezmax
and class size.  Ownership of tankers is highly  fragmented and is divided among
major oil companies and independent vessel owners.

Permits and Authorizations

We are  required  by various  governmental  and  quasi-governmental  agencies to
obtain certain permits,  licenses and certificates  with respect to our vessels.
The kinds of permits,  licenses and  certificates  required  depend upon several
factors,  including  the commodity  transported,  the waters in which the vessel
operates,  the nationality of the vessel's crew and the age of a vessel. We have
been able to obtain all permits, licenses and certificates currently required to
permit our vessels to operate. Additional laws and regulations, environmental or
otherwise,  may be adopted  which  could  limit our  ability to do  business  or
increase the cost of us doing business.

     C.     ORGANIZATIONAL STRUCTURE

Prior to September 30, 1997, the Company was a wholly owned subsidiary of Ugland
Nordic  Shipping  ASA, or UNS, a Norwegian  shipping  company  whose shares were
listed on the Oslo Stock Exchange.  On September 30, 1997,  11,731,613  warrants
for the  purchase of the  Company's  common  shares,  which had been sold to the
public in 1995,  were  exercised.  Until May 30, 2003, UNS acted as the Manager,
and provided  managerial,  administrative  and advisory  services to the Company
pursuant to the  Management  Agreement.  Since May 30,  2003,  Scandic  American
Shipping  Ltd. has acted as the  Company's  Manager,  and provides such services
pursuant to the Management  Agreement.  The Management  Agreement was amended on
October  12, 2004 to further  align the  Manager's  interests  with those of the
Company as a shareholder of the Company.  See Item 4--Information on the Company
- -- Business Overview --The Management Agreement.

     D.     PROPERTY, PLANT AND EQUIPMENT

See Items 4 - Information on the Company - Business  Overview - Our Fleet, for a
description  of our  vessels.  The vessels are  mortgaged  for  securing the new
credit facility.

ITEM 4A.    UNRESOLVED STAFF COMMENTS

            Not applicable.

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

     A.     OPERATING RESULTS

We present our income statement using voyage revenues and voyage  expenses.  The
Company's  vessels are  operated  under  bareboat  charters,  spot  related time
charters  and  spot  charters.  Under a  bareboat  charter  the  charterer  pays
substantially all of the vessel voyage and operating costs. Under a spot related
time charter,  the charterer pays  substantially all of the vessel voyage costs.
Under a spot charter,  the vessel owner pays all such costs. Vessel voyage costs
consist primarily of fuel, port charges and commissions.

Since the amount of voyage  expenses that we incur for a charter  depends on the
type of the charter,  we use net voyage revenues to provide  comparability among
the  different  types of  charters.  Net voyage  revenue,  a non-GAAP  financial
measure,  provides more  meaningful  disclosure than voyage  revenues,  the most
directly  comparable  financial  measure under accounting  principles  generally
accepted  in the United  States . Net voyage  revenues  divided by the number of
days on the  charter  provides  the Time  Charter  Equivalent  (TCE)  Rate.  For
bareboat charters operating costs must be added in order to calculate TCE rates.
Net voyage  revenues and TCE rates are widely used by investors  and analysts in
the  tanker  shipping  industry  for  comparing  the  financial  performance  of
companies and for preparing  industry  averages.  The following table reconciles
our net voyage revenues to voyage revenues. In 2004, our calculation methodology
for net voyage  revenues was adjusted to better  reflect the various  commission
schemes  under which we operate.  Prior period TCE amounts have been adjusted to
conform to the 2004 reconciliation.

                           Year Ended          Year Ended         Year Ended
                        December 31, 2005   December 31, 2004  December 31, 2003
- -------------------------------------------------------------------------------
Voyage Revenue            117,110,178         67,451,598           37,370,756
Voyage Expenses           (30,980,916)        (4,925,353)            (184,781)
- -------------------------------------------------------------------------------
Net Voyage Revenue         86,129,262         62,526,245           37,185,975
- -------------------------------------------------------------------------------

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

Voyage revenues  increased by 73.6% to $117,110,178 in 2005 from  $67,451,598 in
2004.  Net  voyage  revenues  increased  by 37.7% to  $86,129,262  in 2005  from
$62,526,245 in 2004.  Voyage  expenses  increased by 529% to $30,980,916 in 2005
from $4,925,353 in 2004. The increase in voyage revenues and net voyage revenues
is primarily due to the growth of the Company.  The Company  increased its fleet
from 4 vessels as at December 31, 2004 or 1,133 ship days, meaning the number of
days the Company's vessels were generating revenue,  during 2004 to 8 vessels as
at December 31, 2005 or 2,193 ship days during 2005. This represents an increase
in cargo capacity of 93.5%.

Vessel  operating  expenses were $11,220,770 for 2005 compared to $1,976,766 for
2004.  The  increase  is due to the change in the  Company's  current  operating
structure  as of October 2004 from a passive  leasing  company into an operating
company.  Prior to October  2004 the  original  three  vessels  were on bareboat
charter to BP Shipping.  Under bareboat charter  agreements all vessel operating
expenses are paid by the charterer.

Administrative  expenses were  $8,492,164 for 2005 compared to  $10,851,688  for
2004. The decrease was due to the non-cash charge of $9,252,365 in 2004 compared
to $3,582,995 in 2005 that is linked to a change in the compensation  scheme for
our  Manager.  This  decrease  was  off-set  by  a  full  year  of  general  and
administrative expenses reflecting the new operating structure of the Company as
described above. The original incentive plan for the Manager was a revenue based
cash commission structure.  The Manager agreed to eliminate the commission.  The
cash commission was replaced by restricted  share issuances to the Manager of 2%
of the Company's  outstanding  common shares from time to time in order to align
the  interests  of the  Manager and the  Company.  These  restricted  shares are
non-transferable  for  three  years  from  issuance.   In  connection  with  the
transition to an operating  company,  the Company  introduced a stock  incentive
plan with 400,000  shares  reserved for issuance of which  320,000 stock options
were granted at December 31, 2005. The initial strike price for options  granted
in 2005 was  equal to  $38.75,  which  was the  offering  price per share of our
common  shares in our  follow-on  offering  in  November  2004.  The Company has
recorded a compensation  cost of $1,415,000  associated  with the employee stock
option  awards.  For  further  information,  see  Item  6 --  Directors,  Senior
Management and Employees -- 2004 Stock Incentive Plan.

Net operating income for 2005 increased 14.3% from the comparable period in 2004
from  $42,779,627  to  $48,887,328  primarily  due to increased  revenue  offset
partially by increased costs as described above.

Depreciation,  which  includes  depreciation  of  vessels  and  amortization  of
drydockings,  increased from  $6,918,164  for 2004 to $17,529,000  for 2005. The
increase  is due to the  increase  in book value of our fleet as a result of our
acquisitions  of four vessels  during 2005 compared to acquisition of one vessel
during 2004.

Interest expense  increased from $1,971,304 for 2004 to $3,453,963 for 2005. The
increase is primarily due to the decision of the Board to keep non-retiring debt
on the balance sheet in the region of $15 million per vessel which we believe is
an appropriate debt to equity ratio for the Company.

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

Voyage revenues  increased by 80.5% to $67,451,598 in 2004, from  $37,370,756 in
2003.  Net voyage  revenues  increased  by 68.1% to  $62,526,245  in 2004,  from
$37,185,975 in 2003. The increase in voyage revenues and net voyage revenues was
due to higher  tanker spot market  rates in the twelve  month period in 2004 and
the addition of one vessel on November  23,  2004.  The tanker spot market rates
are determined by the demand for the carriage of oil and the distance the oil is
to be carried,  measured in tonne miles,  and the supply of vessels to transport
that oil. As a result of the strong spot market rates during 2004, our TCE rates
increased 46.6% to $62,231 for 2004, from $42,460 for 2003.

Vessel  operating  expenses were  $1,976,766  for 2004.  There are no comparable
figures for 2003.  The Company did not have vessel  operating  expenses  for the
comparable  period of 2003 since all the vessels  were  chartered to BP Shipping
under bareboat charter agreements. Under bareboat charter agreements all vessels
operating expenses are paid by the charterer.

Administrative  expenses  increased  by  2,218%  to  $10,851,688  in 2004,  from
$468,087  in 2003.  The  increase is  primarily  due to  share-based  expense of
$9,252,365,  which  results  from a change in the  compensation  scheme  for our
Manager,  Scandic American Shipping Ltd. The Management Agreement was amended in
2004 from a cash commission  structure based on charter revenue to a share-based
structure that provides 2% of the Company's  outstanding  shares to the Manager.
Other  administrative  costs have  increased as a result of the transition to an
operating  company.  In 2004,  the  Company  engaged  the  Manager to assume the
commercial  and  operational  responsibility  of our  vessels  and to manage our
day-to-day  business.  This agreement is based on cost incurred plus a fixed fee
of $100,000 per annum. Until June 30, 2004, the Company paid an annual fixed fee
of  $250,000  for  these  services.  Furthermore,  the  Company  hired our Chief
Executive Officer, Herbjorn Hansson, in 2004.

Net operating income for 2004 increased 43.1% from the comparable period in 2003
from  $29,886,849 to $42,779,627  primarily due to increased  revenue  partially
offset by increased costs as described above.

     B.     LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED DECEMBER 31, 2005 COMPARED TO YEAR ENDED DECEMBER 31, 2004

Cash  flows  provided  by  operating  activities  decreased  by 18.7% in 2005 to
$51,055,588 compared to $62,817,261 in 2004 primarily derived from the growth of
the Company as described above.

Cash flow provided from financing  activities was $226,613,441 for 2005 compared
to $33,486,608 for the same period in 2004. The increase was due to (i) increase
in proceeds from 2004 to 2005 of $49.8 million from a follow-on  offering,  (ii)
increase  from 2004 to 2005 in net  proceeds  from the  drawdown  of the  credit
facility of $160.0 million,  offset by (iii) increased  dividends paid from 2004
to 2005 of $17.1  million and (iv) decrease from 2004 to 2005 in payment of loan
facility  costs of $0.4  million  in  respect  of our $300  million  New  Credit
Facility.

Cash  flow  used  in  investing  activities  increased  by  344.7%  in  2005  to
$294,161,063  compared to  $66,137,277  in 2004.  The  increase  represents  the
acquisition costs of the four vessels acquired during 2005.

In February  2006,  the Company  agreed to acquire a double hull Suezmax  tanker
from an unrelated third party for a purchase price of $69.0 million.  The vessel
was delivered to us on April 10, 2006.

In March 2006, the Company sold 4,297,500 shares (including the  over-allotment)
in a public  offering in the U.S. to repay  outstanding  debt.  The offering was
priced at $28.50 per share, and net proceeds to the Company were $115.2 million.

In April 2006, the Company  borrowed $69.0 million under the New Credit Facility
to finance the ninth vessel delivered to the Company on April 10, 2006

The Company believes that its borrowing  capacity under the New Credit Facility,
together with its working capital, are sufficient to fund its ongoing operations
and commitment for capital expenditures.


YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

Cash flows provided by operating  activities  increased to $62,817,261  for 2004
from  $29,893,551  for 2003. The majority of the increases  resulted from higher
cash flows related to net voyage  revenues.  The cash flows from  customers less
payments for voyage expenses were  $67,415,268 and $32,320,191 in 2004 and 2003,
respectively. The increase in cash flows were offset by an increase in cash paid
for vessel operations of $1,925,508 in 2004.

Cash flows provided by financing activities for 2004 was $33,486,608 compared to
cash flows provided by financing  activities of $29,605,410  for the same period
in 2003.  The  increase  was due to (i)  proceeds  from a follow-on  offering of
$112.1  million  offset by (ii)  increased  dividends  paid from 2003 to 2004 of
$17.6 million,  (iii)  repayment of $30 million in bank debt and (iv) payment of
loan  facility  costs of $1.5  million  in respect  of our $300  million  credit
facility.

Cash flow used by investing  activities  was  $66,137,277  which  represents the
acquisition  cost  of the  vessel  acquired  in  November  2004.  There  were no
investing activities for the comparable period of 2003.

In March 2005, the Company sold 3,500,000  shares in a public offering in the US
to fund  the  $149.2  million  acquisition  costs  of two  vessels  and to repay
outstanding  debt under our credit  facility.  The offering was priced at $49.50
per share,  and net proceeds  (after  offering  costs of $ 11.1  million) to the
Company were $162.1 million.

In June 2005,  the Company  agreed to acquire a double hull suezmax tanker built
in 1998 for $71.4  million.  The vessel is  expected  to be  delivered  from the
seller to the Company no later than end August  2005.  The Company has an unused
credit facility of $300 million at June 30, 2005.

The Company  believes that its  borrowing  capacity  under the credit  facility,
together with its working  capital is sufficient to fund its ongoing  operations
and commitment for capital expenditures.

     C.     RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

            Not applicable

     D.     TREND INFORMATION

The oil tanker  industry has been highly  cyclical,  experiencing  volatility in
charterhire  rates and vessel values resulting from changes in the supply of and
demand for crude oil and tanker capacity. See Item 4. Information on the Company
- - Business Overview - The Tanker Market 2005.

     E.     OFF BALANCE SHEET ARRANGEMENTS

            Not applicable

     F.     DISCLOSURE OF CONTRACTUAL OBLIGATIONS

As of December 31, 2005  significant  contractual  obligations  consisted of our
obligations as borrower under our New Credit Facility and our obligations  under
the Management Agreement with Scandic American Shipping Ltd.

The  following  table  sets  out  long-term   financial  and  other   commercial
obligations outstanding as of December 31, 2005 (all figures in USD `000)

Payment Due by Period:
- -------------------------------------------------------------------------------
                                                    2007       2010       2013
Contractual Obligations       Total      2006      -2009      -2012      -2019
- -------------------------------------------------------------------------------
Credit Facility (1)          130,000        0    130,000          0          0
Interest Payments (2)         24,383    6,578     17,805          0          0
Committment Fees (3)           1,342      362        980          0          0
Management Fees (4)            1,400      100        300        300        700
- -------------------------------------------------------------------------------
Total                        157,125    7,040    149,085        300        700
- -------------------------------------------------------------------------------

Notes:
     (1) Refers to our obligation to repay indebtedness outstanding as of
         December 31, 2005
     (2) Refers to estimated interest payments over the term of the indebtedness
         outstanding as of December 31, 2005 assuming a weighted
         average interest rate of  4.99% per annum.
     (3) Refers to estimated committment fees over the term of the indebtedness
         outstanding as of December 31, 2005
     (4) Refers to the management fees payable to Scandic American Shipping Ltd.
         under the Management Agreement with the Manager.

CRITICAL ACCOUNTING POLICIES

We prepare our financial  statements in accordance  with  accounting  principles
generally  accepted in the United  States of America (US GAAP).  Following  is a
discussion of the accounting policies that involve a high degree of judgment and
the methods of their  application.  For a further  description  of our  material
accounting  policies,  please  read Item 18 -  Financial  Statements--  Note 1 -
Summary of Significant Accounting Policies.

Revenue recognition

We generate a majority of our revenues from vessels  operating in pools and from
spot charters. Within the shipping industry, the two methods used to account for
voyage  revenues and expenses are the percentage of completion and the completed
voyage methods.  Most shipping  companies,  including our pool managers and spot
charter managers are using the percentage of completion  method. In applying the
percentage   of   completion   method,   we  believe  that  in  most  cases  the
discharge-to-discharge  basis of calculating  voyages more  accurately  reflects
voyage results than the load-to-load  basis. At the time of cargo discharge,  we
generally have information about the next load port and expected discharge port,
whereas at the time of loading we are  normally  less certain what the next load
port will be.

Long-lived assets

A significant  part of the Company's total assets  consists of our vessels.  The
oil tanker  market is highly  cyclical  and the useful  lives of our vessels are
dependent  on a number of  factors,  such as future  market  demand  for oil and
future market supply of tanker capacity.

Depreciable lives

Management uses considerable judgment when establishing the depreciable lives of
our vessels.  In order to estimate useful lives of our vessels,  Management must
make assumptions  about future market  conditions in the oil tanker market.  The
Company  considers  the  establishment  of  depreciable  lives to be a  critical
accounting estimate.

Drydocking

Generally,  we  drydock  each  vessel  every  two and a half to five  years.  We
capitalize a  substantial  portion of the costs we incur during  drydocking  and
amortize  those  costs  on  a  straight-line  basis  from  the  completion  of a
drydocking to the estimated completion of the next drydocking.  We expense costs
related to routine  repairs and maintenance  incurred during  drydocking that do
not improve or extend the useful lives of the assets.

Impairment

Our vessels are  evaluated  for  impairment  whenever  indicators  of impairment
exist.  When an  impairment  indicator  is present,  the Company  must  evaluate
whether the carrying  amounts of the vessels are  recoverable.  If an impairment
test is warranted,  we assess whether the undiscounted cash flows expected to be
generated  by our  long-lived  assets  exceed  their  carrying  value.  If  this
assessment  indicates  that the long-lived  assets are impaired,  the assets are
written down to their fair value.  These  assessments are based on our judgment,
which includes the estimate of future cash flows from long-lived assets.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 153,  Exchanges of Non-monetary  Assets, an amendment of APB Opinion No. 29.
The adoption of this statement,  effective June 2005, did not have any impact on
the Company's results of operations, financial position or cash flows.

In May 2005,  the FASB issued  Statement  SFAS No. 154,  Accounting  Changes and
Error  Corrections,  effective for accounting  changes and corrections of errors
made in fiscal  years  beginning  after  December  15,  2005.  SFAS 154 requires
voluntary  changes  in  accounting  principle  be  retrospectively   applied  to
financial   statements  from  previous   periods  unless  such   application  is
impracticable.   Under  the  newly  issued  standard  changes  in  depreciation,
amortization,  or  depletion  for  long-lived,  non-financial  assets  should be
accounted for as a change in accounting estimate that is affected by a change in
accounting  principle.  The Company  believes that the adoption of this standard
will  not  have a  material  impact  on the  Company's  results  of  operations,
financial position or cash flow.

ITEM 6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     A.     DIRECTORS AND SENIOR MANAGEMENT

Directors and Senior Management of the Company and the Manager

Pursuant to the Management Agreement with Scandic American Shipping Ltd., or the
Manager, the Manager provides  management,  administrative and advisory services
to us. The Manager is owned by Herbjorn Hansson,  our Chairman,  and Andreas Ove
Ugland, one of our directors,  and may engage in business  activities other than
with respect to the Company.

Set forth below are the names and  positions of the directors of the Company and
executive officers of the Company and the Manager.  The directors of the Company
are elected  annually,  and each director elected holds office until a successor
is elected.  Officers of both the Company and the Manager are elected  from time
to time by vote of the  respective  board of  directors  and hold office until a
successor is elected.

                                  The Company

Name                    Age     Position
- -------------------------------------------------------------------------------
Herbjorn Hansson        58      Chairman, Chief Executive Officer, President and
                                Director
Turid M. Sorensen       46      Chief Financial Officer
Rolf Amundsen           61      Chief Investor Relations Officer
Hon. Sir David Gibbons  78      Director
George C. Lodge         78      Director
Andreas Ove Ugland      51      Director
Torbjorn Gladso         59      Director
Andrew W. March         50      Director
Paul J. Hopkins         58      Director

                                   The Manager

Name                    Age    Position
- -------------------------------------------------------------------------------

Herbjorn Hansson        58      Director, President and Chief Executive Officer
Turid M. Sorensen       46      Chief Financial Officer
Rolf Amundsen           61      Chief Investor Relations Officer
Frithjof Bettum         44      Vice President Technical Operations & Chartering
Jan Erik Langangen      56      Executive Vice President--Business Development
                                and Legal

Certain  biographical  information  with respect to each  director and executive
officer of the Company and the Manager listed above is set forth below.

Herbjorn  Hansson  earned his M.B.A.  at the  Norwegian  School of Economics and
Business  Administration and Harvard Business School. In 1974 he was employed by
the Norwegian Shipowners'  Association.  In the period from 1975 to 1980, he was
Chief  Economist and Research  Manager of  INTERTANKO,  an industry  association
whose members control about 70% of the world's independently owned tanker fleet,
excluding  state owned and oil company  fleets.  During the 1980s,  he was Chief
Financial  Officer  of  Kosmos/Andres  Jahre,  at the  time  one of the  largest
Norwegian  based shipping and industry  groups.  In 1989,  Mr.  Hansson  founded
Ugland  Nordic  Shipping  AS, or UNS,  which  became one of the world's  largest
owners of specialized  shuttle tankers. He served as Chairman in the first phase
and as  Chief  Executive  Officer  as from  1993 to 2001  when  UNS,  under  his
management,  was  sold  to  Teekay  Shipping  Corporation,  or  Teekay,  for  an
enterprise  value of $780.0  million.  He continued  to work with  Teekay,  most
recently  as Vice  Chairman  of  Teekay  Norway  AS,  until he  started  working
full-time for the Company on September 1, 2004.  Mr.  Hansson is the founder and
has  been  Chairman  and  Chief  Executive  Officer  of the  Company  since  its
establishment  in 1995.  He also is a member  of  various  governing  bodies  of
companies    within     shipping,     insurance,     banking,     manufacturing,
national/international  shipping agencies including classification societies and
protection  and indemnity  associations.  Mr. Hansson is fluent in Norwegian and
English, and has a command of German and French for conversational purposes.

Turid  M.  Sorensen  was  appointed  Chief  Financial  Officer  by the  Board of
Directors  on  February  6,  2006.  She  has  a  bachelor   degree  in  Business
Administration  from the Norwegian  School of  Management.  Ms.  Sorensen has 20
years of  experience  in the shipping  industry.  During the period from 1984 to
1987,  she worked for Anders  Jahre AS and Kosmos AS in Norway and held  various
positions within accounting and information technology.  In the period from 1987
to 1995, Ms.  Sorensen was Manager of Accounting and IT for Skaugen  PertroTrans
Inc., in Houston,  Texas.  After  returning to Norway she was employed by Ugland
Nordic  Shipping ASA and Teekay Norway AS as Vice  President,  Accounting.  From
October 2004 until her appointment as Chief Financial Officer, she served as our
Treasurer and Controller.

Rolf Amundsen was appointed Chief Investor  Relations Officer and Advisor to the
Chairman  by the Board of  Directors  on February 6, 2006 and prior to that time
served as our Chief  Financial  Officer  from June 2004.  Mr.  Admundsen  has an
M.B.A. in economics and business administration,  and his entire career has been
in international banking.  Previously,  Mr. Amundsen has served as the president
of the financial  analysts  society in Norway.  Mr. Amundsen served as the chief
executive  officer  of a  Nordic  investment  bank  for  many  years,  where  he
established a large  operation for the  syndication  of  international  shipping
investments.

Andreas Ove Ugland has been a director of the Company since  February  1997. Mr.
Ugland has also served as director and Chairman of Ugland International  Holding
plc, a shipping/transport  company listed on the London Stock Exchange,  Andreas
Ugland & Sons AS, Grimstad,  Norway,  H0egh Ugland  Autoliners AS, Oslo and Buld
Associates Inc., Bermuda. Mr. Ugland has had his whole career in shipping in the
Ugland family owned shipping group. Mr. Ugland is a shareholder and the Chairman
of the Manager.

Andrew W. March has been a director of the Company  since June 2005.  Mr.  March
also currently serves in a management position with Vitol S.A., an international
oil trader,  involved in supply,  logistics  and transport and as a director for
Imarex,  an electronic  trading platform for freight  derivatives.  From 1978 to
2004, Mr. March served in various  positions with  subsidiaries of BP p.l.c., an
international oil major company.  Most recently,  from January 2001 to 2004, Mr.
March was Commercial  Director of BP Shipping Ltd.,  responsible for all aspects
of the business  including long term strategy.  From 1986 to 2000, Mr. March was
employed in various positions with BP Trading, serving as Global Product Trading
Manager from 1999. Mr. March received his MBA from Liverpool University.

Sir David Gibbons has been a director of the Company since  September  1995. Sir
David  served as the Premier of Bermuda  from August 1977 to January  1982.  Sir
David has served as  Chairman  of The Bank of N.T.  Butterfield  and Son Limited
from 1986 to 1997,  Chairman of Colonial  Insurance  Co. Ltd.  since 1986 and as
Chief Executive  Officer of Edmund Gibbons Ltd. since 1954. Sir David Gibbons is
a member of our Audit Committee.

George  C.  Lodge has been a  director  of the  Company  since  September  1995.
Professor  Lodge has been a member of the Harvard  Business School faculty since
1963. He was named associate professor of business  administration at Harvard in
1968 and received tenure in 1972.

Paul J. Hopkins has been a director of the Company since June 2005.  Mr. Hopkins
is also a Vice President and a director of Corridor  Resources  Inc., a Canadian
publicly traded  exploration and production  company.  From 1989 through 1993 he
served with Lasmo as Project Manager during the start-up of the  Cohasset/Panuke
oilfield  offshore  Nova Scotia,  the first  offshore oil  production in Canada.
Earlier,  Mr.  Hopkins  served  as a  consultant  on  frontier  engineering  and
petroleum  economic  evaluations in the international oil industry.  Mr. Hopkins
was seconded to Chevron UK in 1978 to assist with the gas export  system for the
Ninian Field.  From 1973,  he was employed  with Ranger Oil (UK) Limited,  being
involved in the drilling and  production  testing of oil wells in the North Sea.
Through  the end of 1972 he worked  with  Shell  Canada as part of its  offshore
Exploration Group.

Torbjorn  Gladso has been a director  of the Company  since  October  2003.  Mr.
Gladso is a partner in Saga  Corporate  Finance AS. He has extensive  experience
within  investment  banking since 1978. He has been the Chairman of the Board of
the Norwegian Register of Securities and Vice Chairman of the Board of Directors
of the Oslo Stock Exchange. Mr. Gladso is Chairman of our Audit Committee.

Jan Erik Langangen is the Executive Vice  President,  Business  Development  and
Legal, of the Manager.  Mr. Langangen  previously  served as the Chief Financial
Officer  from 1979 to 1983,  and as Chairman of the Board from 1987 to 1992,  of
Statoil,  an oil and gas company that is controlled by the Norwegian  government
and that is the largest  company in Norway.  He also  served as Chief  Executive
Officer of UNI Storebrand from 1985 to 1992. Mr.  Langangen was also Chairman of
the Board of the Norwegian  Governmental Value Commission from 1998 to 2001. Mr.
Langangen  is a  partner  of  Langangen  &  Helset,  a  Norwegian  law  firm and
previously was a partner of the law firm Langangen & Engesaeth from 1996 to 2000
and of the law firm  Thune & Co.  from 1994 to 1996.  Mr.  Langangen  received a
Masters of Economics from The Norwegian  School of Business  Administration  and
his law degree from the University of Oslo.

Frithjof Bettum was appointed Vice President--Technical  Operations & Chartering
of the  Manager  on October 1, 2005.  Mr.  Bettum has a  Mechanical  Engineering
degree from Vestfold University  College.  Mr. Bettum has 21 years of experience
in the shipping and the offshore  business.  From 1984 to 1992,  Mr.  Bettum was
employed  by Allum  Engineering  AS in  Sandefjord,  Norway  where he  served as
project  manager.  At Allum  Engineering AS Mr. Bettum worked on projects in the
areas of  engineering,  the new building and  conversion  management  of shuttle
tankers,  Floating Production,  Storage and Offloading (FPSO),  semi-submersible
drilling units and the shore based manufacturer industry. From 1993 to 2001, Mr.
Bettum was employed by Nordic  American  Shipping AS (which later became  Ugland
Nordic Shipping ASA) where he served as Vice  President--Offshore.  In 2004, Mr.
Bettum  joined  Teekay  Norway  AS as  Vice  President  Offshore  where  he  was
responsible for business  development,  the daily  operations of the company and
the conversion of shuttle tankers and offshore units.

     B.     COMPENSATION

Compensation of Directors and Officers

During  2005,  the  six  non-employee  directors  received,  in  the  aggregate,
approximately  $228,100 in cash fees for their services as directors.  From June
20, 2005 the Board was  expanded  from five to seven  directors of which each of
the non-employee  directors receives a fee at the annual rate of $45,000.  We do
not pay director  fees to employee  directors.  We do,  however,  reimburse  our
directors  for all  reasonable  expenses  incurred  by them in  connection  with
serving on our board of directors.  Directors may receive  restricted  shares or
other grants under our 2004 Stock Incentive Plan described below.

We have an employment agreement with Herbjorn Hansson,  our Chairman,  President
and Chief Executive Officer, Turid M. Sorensen, our Chief Financial Officer, and
Rolf Amundsen, our Chief Investor Relations Officer and Advisor to the Chairman.
Mr.  Hansson  does not  receive  any  additional  compensation  for serving as a
director  or the  Chairman  of the  Board.  The  aggregate  compensation  of our
executive officers during 2005 was $475,000.  The aggregate  compensation of our
executive  officers is expected to be  approximately  $720,000  during 2006.  On
certain terms the employment  agreement with Mr. Hansson may be terminated by us
or Mr.  Hansson  upon  six  months'  written  notice  to the  other  party.  The
employment  agreement  with  Ms.  Sorensen  may  be  terminated  by us or by Ms.
Sorensen  upon six months'  written  notice to the other party.  The  employment
agreement with Mr.  Amundsen may be terminated by us or Mr.  Amundsen upon three
months' written notice to the other party.

2004 Stock Incentive Plan

Under the terms of the  Company's  2004 Stock  Incentive  Plan,  the  directors,
officers  and certain key  employees of the Company and the Manager are eligible
to receive awards which include  incentive  stock options,  non-qualified  stock
options,  stock appreciation  rights,  dividend  equivalent  rights,  restricted
stock,  restricted stock units and performance shares. A total of 400,000 common
shares are reserved for issuance upon exercise of options,  as restricted  share
grants or otherwise under the plan. Included under the 2004 Stock Incentive Plan
are options to purchase common shares at an exercise price equal to $38.75,  the
offering  price  per  share of the  Company's  common  shares  in our  follow-on
offering in November 2004, subject to annual downward  adjustment if the payment
of dividends in the related  fiscal year exceed a 3% yield  calculated  based on
the initial strike price.  During 2005 the Company  granted,  under the terms of
the Company's 2004 Stock  Incentive  Plan, an aggregate of 320,000 stock options
that the Board of Directors had agreed to issue during 2004.  These options will
vest in equal  installments on each of the first four anniversaries of the grant
dates.

     C.     BOARD PRACTICES

The  members of the  Company's  board of  directors  serve until the next annual
general meeting  following his or her election to the board.  The members of the
current board of directors  were elected at the annual  general  meeting held in
2005.  The Company's  Board of Directors  has  established  an Audit  Committee,
consisting of two independent directors,  Messrs. Gladso and Gibbons. Mr. Gladso
serves  as the  audit  committee  financial  expert.  The  members  of the Audit
Committee  do not  receive  additional  remuneration  for  serving  on the Audit
Committee in this  capacity.  The Audit  Committee  provides  assistance  to the
Company's board of directors in fulfilling their responsibility to shareholders,
and investment community relating to corporate  accounting,  reporting practices
of the Company,  and the quality and integrity of the  financial  reports of the
Company.  The Audit Committee,  among other duties,  recommends to the Company's
board of  directors  the  independent  auditors  to be  selected  to  audit  the
financial  statements of the Company;  meets with the  independent  auditors and
financial  management  of the Company to review the scope of the proposed  audit
for the current year and the audit  procedures to be utilized;  reviews with the
independent auditors,  and financial and accounting personnel,  the adequacy and
effectiveness  of the  accounting  and  financial  controls of the Company;  and
reviews the financial  statements contained in the annual report to shareholders
with management and the independent auditors.

Pursuant to an exemption  for foreign  private  issuers,  we are not required to
comply with many of the corporate governance  requirements of the New York Stock
Exchange that are  applicable to U.S.  listed  companies.  A description  of the
significant  differences between our corporate  governance practices and the New
York Stock Exchange  requirements is available on our website  www.nat.bm  under
"Corporate Governance".

     D.     EMPLOYEES

As at  December  31,  2005,  the  Company  had one  full-time  employee  and one
part-time employee.

     E.     SHARE OWNERSHIP

The following table sets forth information  regarding the share ownership of the
Company  as of  June  26,  2006  by  its  directors  and  officers.  All  of the
shareholders are entitled to one vote for each share of common stock held.

Title        Identity of Person          No. of Shares        Percent of Class

Common       Herbjorn Hansson(1)          555,594                   2.64%
             Hon. Sir David Gibbons                                     *
             Thorbjorn Gladso                                           *
             Andrew  W. March                                           *
             Paul J. Hopkins                                            *
             George C. Lodge                                            *
             Andreas Ove Ugland(1)        520,594                   2.47%
             Turid M. Sorensen                                          *
             Rolf Amundsen                                              *

     (1) Includes 520,594 shares held by the Manager, of which Messrs. Hansson
         and Ugland are sole shareholders.

     *   Less than 1% of our outstanding shares of common stock.

ITEM 7.     MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

     A.     MAJOR SHAREHOLDERS

According to a Schedule 13G filed on March 31, 2005, Gilder,  Gagnon, Howe & Co.
LLC owned  748,559 or 5.9%,  as reported in that  Schedule 13G, of the Company's
common  shares.  According  to a Schedule  13G filed on June 30,  2005,  Gilder,
Gagnon, Howe & Co. LLC own 263,545 or 2.7%, as reported in that Schedule 13G, of
the Company's common shares.

     B.     RELATED PARTY TRANSACTIONS

Since May 30, 2003,  Scandic  American  Shipping Ltd., which is owned by Messrs.
Ugland and Hansson,  has been our Manager  pursuant to the Management  Agreement
with the Company. See Item 4--Information on the Company -- Business Overview --
The Management Agreement.

Mr. Jan Erik Langangen, Executive Vice President of the Manager, is a partner of
Langangen & Helset  Advokatfirma  AS which in the past has also provided and may
continue to provide legal services to us.

     C.     INTERESTS OF EXPERTS AND COUNSEL

            Not Applicable

ITEM 8.     FINANCIAL INFORMATION

     A.     CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See Item 18

Legal Proceedings

To the best of the Company's knowledge, the Company is not currently involved in
any legal or arbitration proceedings that would have a significant effect on the
Company's  financial  position  or  profitability  and no such  proceedings  are
pending or known to be contemplated by governmental authorities.

Dividend Policy

Our policy is to declare  quarterly  dividends  to  shareholders,  substantially
equal to our net operating cash flow during the previous  quarter after reserves
as the Board of Directors may from time to time  determine are required,  taking
into account contingent  liabilities,  the terms of our New Credit Facility, our
other cash needs and the requirements of Bermuda law.  However,  if we declare a
dividend in respect of a quarter in which an equity issuance has taken place, we
calculate the dividend per share as our net operating  cash flow for the quarter
(after taking into account the factors  described above) divided by the weighted
average number of shares over that quarter.  Net operating cash flow  represents
net income plus depreciation and non-cash  administrative  charges. The dividend
paid is the  calculated  dividend per share  multiplied  by the number of shares
outstanding at the end of the quarter.

Total dividend paid out in 2005 was $64,279,487 or $4.21 per share. The dividend
payments per share in 2005, 2004, 2003, 2002 and 2001 have been as follows:


   Period                 2005        2004        2003        2002        2001
   1st Quarter           $1.62       $1.15       $0.63       $0.36       $1.41
   2nd Quarter            1.15        1.70        1.27        0.34        1.19
   3rd Quarter            0.84        0.88        0.78        0.33        0.72
   4th Quarter            0.60        1.11        0.37        0.32        0.55

   Total                 $4.21       $4.84       $3.05       $1.35       $3.87


The  dividend  paid out in a quarter  is based on the  results  of the  previous
quarter.

The Company declared a dividend of $1.88 per share for the first quarter of 2006
which was paid to  shareholders  in  February  2006.  In  addition,  the Company
declared a dividend of $1.58 per share for the second quarter of 2006, which was
paid to shareholders in May 2006.

     B.     SIGNIFICANT CHANGES

            Not applicable

ITEM 9.     THE OFFER AND LISTING

            Not applicable except for Item 9.A.4. and Item 9.C

Price Range of Common Shares

Since  November 16, 2004,  the primary  trading market for our common shares has
been the New York Stock  Exchange,  or the NYSE,  on which our shares are listed
under the symbol "NAT." The primary trading market for our common shares was the
American  Stock  Exchange,  or the AMEX,  until November 15, 2004, at which time
trading of our common shares on the AMEX ceased.  The secondary  trading  market
for our common shares was the Oslo Stock Exchange, or the OSE, until January 14,
2005, at which time trading of our common share on the OSE ceased.

The following table sets forth the high and low closing prices for shares of our
common  stock as reported by the New York Stock  Exchange,  the  American  Stock
Exchange and the Oslo Stock Exchange:

                 NYSE       NYSE       AMEX       AMEX       OSE          OSE
The year ended:  HIGH       LOW        HIGH       LOW        HIGH         LOW
- --------------------------------------------------------------------------------
  2001            N/A        N/A     $22.89     $13.00   NOK 215.00   NOK 125.00
  2002            N/A        N/A     $16.55     $ 9.86   NOK 145.00   NOK  90.00
  2003            N/A        N/A     $16.90     $11.25   NOK 125.00   NOK  90.00
  2004         $41.30     $35.26     $41.59     $15.00   NOK 300.00   NOK 115.00
  2005 (1)     $56.68     $28.60        N/A        N/A   NOK 225.00   NOK 205.00


                         AMEX    AMEX    NYSE    NYSE       OSE           OSE
For the quarter ended:   HIGH    LOW     HIGH    LOW        HIGH          LOW
- --------------------------------------------------------------------------------
March 31, 2004          $27.10  $15.00     N/A     N/A   NOK 179.00   NOK 115.00
June 30, 2004           $34.59  $21.25     N/A     N/A   NOK 225.00   NOK 160.00
September 30, 2004      $37.75  $25.00     N/A     N/A   NOK 249.00   NOK 210.00
December 31, 2004 (1)   $41.59  $31.15  $41.30  $35.26   NOK 300.00   NOK 214.00
March 31, 2005 (1)         N/A     N/A  $56.68  $35.95   NOK 225.00   NOK 205.00
June 30, 2005              N/A     N/A  $49.79  $37.48          N/A          N/A
September 30, 2005         N/A     N/A  $46.48  $37.30          N/A          N/A
December 31, 2005          N/A     N/A  $37.90  $28.60          N/A          N/A
- --------------------------------------------------------------------------------

     (1)   The  AMEX  figures are based on trading  from the  beginning  of the
           quarter  through November 15, 2004 and the NYSE figures are based on
           trading  from November 16, 2004 through the end of the quarter.  The
           OSE numbers for 2005 are based on trading through January 14, 2005

The high and low market  prices for our common  shares by month  since  December
2005 have been as follows:


                                                 NYSE            NYSE
     For the month:                              HIGH            LOW
- --------------------------------------------------------------------------------
     January 2006                               $32.50          $29.00
     February 2006                              $36.92          $28.83
     March 2006                                 $31.11          $27.90
     April 2006                                 $33.53          $28.50
     May 2006                                   $35.99          $29.65
     June 1 - June 26, 2006                     $35.58          $31.51

     C.     MARKETS

            See Item 9A above.

ITEM 10.    ADDITIONAL INFORMATION

     A.     SHARE CAPITAL

            Not Applicable

     B.     MEMORANDUM AND ARTICLES OF ASSOCIATION

The following  description of our capital stock summarizes the material terms of
our Memorandum of Association and our bye-laws.

Under our Memorandum of Association, as amended, our authorized capital consists
of 51,200,000 common shares having a par value of $0.01 per share.

The  purposes  and powers of the  Company  are set forth in Items 6 and 7 of our
Memorandum of  Association  and in  paragraphs  (b) to (n) and (p) to (u) of the
Second Schedule of the Bermuda Companies Act of 1981 (the "Companies Act") which
is attached  as an exhibit to our  Memorandum  of  Association.  These  purposes
include the entering into of any  guarantee,  contract,  indemnity or suretyship
and to assure,  support,  secure,  with or without the consideration or benefit,
the performance of any  obligations of any person or persons;  and the borrowing
and raising of money in any currency or  currencies  to secure or discharge  any
debt or obligation in any manner.

Our bye-laws  provide that our board of directors  shall convene and the Company
shall hold annual general  meetings in accordance  with the  requirements of the
Companies Act at such times and places as the Board shall  decide.  Our board of
directors  may call  special  meetings at its  discretion  or as required by the
Companies  Act.  Under the  Companies  Act,  holders of  one-tenth of our issued
common shares may call special meetings of shareholders.

Bermuda  law permits  the  bye-laws of a Bermuda  company to contain a provision
eliminating  personal  liability of a director or officer to the company for any
loss  arising  or  liability  attaching  to him by  virtue of any rule of law in
respect of any  negligence  default,  breach of duty or breach of trust of which
the officer or person may be guilty. Bermuda law also grants companies the power
generally to indemnify  directors and officers of the company if any such person
was or is a party or threatened  to be made a party to a threatened,  pending or
completed action,  suit or proceeding by reason of the fact that he or she is or
was a director  and officer of the company or was serving in a similar  capacity
for another entity at the company's request.

Our  bye-laws  do not  prohibit a director  from being a party to, or  otherwise
having an interest in, any  transaction  or  arrangement  with the Company or in
which the Company is otherwise interested.  Our bye-laws provide that a director
who has an interest in any  transaction or arrangement  with the Company and who
has complied with the provisions of the Companies Act and with our bye-laws with
regard  to  disclosure  of  such  interest   shall  be  taken  into  account  in
ascertaining  whether  a quorum  is  present,  and will be  entitled  to vote in
respect of any  transaction or  arrangement  in which he is so  interested.  Our
bye-laws  provide our board of  directors  the  authority to exercise all of the
powers of the Company to borrow  money and to mortgage or charge all or any part
of our property  and assets as  collateral  security for any debt,  liability or
obligation.  Our directors are not required to retire  because of their age, and
our  directors  are not required to be holders of our common  shares.  Directors
serve for one year  terms,  and shall  serve  until  re-elected  or until  their
successors are appointed at the next annual general meeting.

Our bye-laws provide that each director,  alternate director, officer, person or
member of a committee, if any, resident representative,  or his heirs, executors
or  administrators,  which we refer to  collectively  as an indemnitee,  will be
indemnified  and held harmless out of our funds to the fullest extent  permitted
by Bermuda law  against  all  liabilities,  loss,  damage or expense  (including
liabilities  under contract,  tort and statute or any applicable  foreign law or
regulation  and all  reasonable  legal and other  costs  and  expenses  properly
payable)  incurred  or  suffered by him as such  director,  alternate  director,
officer,  person or  committee  member  or  resident  representative  (or in his
reasonable  belief that he is acting as any of the  above).  In  addition,  each
indemnitee  shall be indemnified  against all liabilities  incurred in defending
any proceedings,  whether civil or criminal,  in which judgment is given in such
indemnitee's favor, or in which he is acquitted.

There are no pre-emptive, redemption, conversion or sinking fund rights attached
to our common shares.  The holders of common shares are entitled to one vote per
share on all matters  submitted to a vote of holders of common shares.  Unless a
different  majority  is required by law or by our  bye-laws,  resolutions  to be
approved by holders of common shares  require  approval by a simple  majority of
votes cast at a meeting at which a quorum is present.

Special rights  attaching to any class of our shares may be altered or abrogated
with the  consent in writing of not less than 75% of the issued and  outstanding
shares of that class or with the sanction of a  resolution  passed at a separate
general meeting of the holders of such shares voting in person or by proxy.

Our Memorandum of  Association  and our bye-laws may be amended upon the consent
of not less than two-thirds of the issued and outstanding common shares.

In the event of our  liquidation,  dissolution  or winding  up,  the  holders of
common shares are entitled to share in our assets,  if any,  remaining after the
payment  of  all  of our  debts  and  liabilities,  subject  to any  liquidation
preference on any outstanding preference shares.

Our bye-laws provide that our board of directors may, from time to time, declare
and pay dividends out of contributed  surplus.  Each common share is entitled to
dividends if and when dividends are declared by our board of directors,  subject
to any preferred dividend right of the holders of any preference shares.

There are no  limitations on the right of  non-Bermudians  or  non-residents  of
Bermuda to hold or vote our common shares.

Our bye-laws permit the Company to refuse to register the transfer of any common
shares  if the  effect  of  that  transfer  would  result  in 50% or more of our
aggregated issued share capital,  or 50% or more of the outstanding voting power
being held by persons who are  resident for tax purposes in Norway or the United
Kingdom.

Our bye-laws permit the Company to increase its capital, from time to time, with
the consent of not less than two-thirds of the  outstanding  voting power of the
Company's issued and outstanding common shares.


     C.     MATERIAL CONTRACTS

On May 30, 2003,  the Company's  shareholders  approved a novation  agreement by
which  the  Management  Agreement  was  novated  from  UNS  to our  Manager  and
thereafter the contract period was extended to 2019.

For a description of our New Credit  Facility,  see Item 4 -- Information on the
Company -- Business Overview -- Our Credit Facility.

Otherwise,  the Company has not entered into any material  contracts outside the
ordinary course of business during the past two years.

     D.     EXCHANGE CONTROLS

The Company  has been  designated  as a  non-resident  of Bermuda  for  exchange
control  purposes by the Bermuda  Monetary  Authority,  whose permission for the
issue of the Common Shares was obtained prior to the offering thereof.

The transfer of shares between persons  regarded as resident outside Bermuda for
exchange  control  purposes  and the  issuance  of  Common  Shares to or by such
persons may be effected  without  specific  consent  under the Bermuda  Exchange
Control Act of 1972 and regulations  thereunder.  Issues and transfers of Common
Shares involving any person regarded as resident in Bermuda for exchange control
purposes  require specific prior approval under the Bermuda Exchange Control Act
1972.

Subject to the  foregoing,  there are no  limitations on the rights of owners of
the Common  Shares to hold or vote their  shares.  Because  the Company has been
designated as non-resident for Bermuda exchange control  purposes,  there are no
restrictions  on its ability to  transfer  funds in and out of Bermuda or to pay
dividends to United States residents who are holders of the Common Shares, other
than in respect of local Bermuda currency.

In accordance  with Bermuda law,  share  certificates  may be issued only in the
names of corporations or  individuals.  In the case of an applicant  acting in a
special capacity (for example, as an executor or trustee),  certificates may, at
the request of the  applicant,  record the  capacity in which the  applicant  is
acting.  Notwithstanding the recording of any such special capacity, the Company
is not bound to investigate or incur any responsibility in respect of the proper
administration of any such estate or trust.

The Company will take no notice of any trust  applicable to any of its shares or
other securities whether or not it had notice of such trust.

As an "exempted company", the Company is exempt from Bermuda laws which restrict
the  percentage of share capital that may be held by  non-Bermudians,  but as an
exempted   company,   the  Company  may  not  participate  in  certain  business
transactions  including:  (i) the  acquisition  or  holding  of land in  Bermuda
(except  that  required for its business and held by way of lease or tenancy for
terms of not more  than 21  years)  without  the  express  authorization  of the
Bermuda  legislature;  (ii) the taking of mortgages on land in Bermuda to secure
an amount in excess of $50,000 without the consent of the Minister of Finance of
Bermuda;  (iii) the  acquisition  of  securities  created  or issued  by, or any
interest in, any local company or business,  other than certain types of Bermuda
government  securities  or  securities of another  "exempted  company,  exempted
partnership  or  other  corporation  or  partnership  resident  in  Bermuda  but
incorporated abroad; or (iv) the carrying on of business of any kind in Bermuda,
except in so far as may be necessary for the carrying on of its business outside
Bermuda or under a license granted by the Minister of Finance of Bermuda.

There is a statutory  remedy under  Section 111 of the  Companies Act 1981 which
provides  that a shareholder  may seek redress in the Bermuda  courts as long as
such  shareholder can establish that the Company's  affairs are being conducted,
or have been conducted,  in a manner  oppressive or prejudicial to the interests
of some part of the  shareholders,  including such  shareholder.  However,  this
remedy has not yet been interpreted by the Bermuda courts.

The Bermuda  government  actively  encourages  foreign  investment in "exempted"
entities  like the  Company  that are based in  Bermuda  but do not  operate  in
competition  with local  business.  In addition to having no restrictions on the
degree of foreign  ownership,  the  Company  is subject  neither to taxes on its
income or dividends nor to any exchange controls in Bermuda. In addition,  there
is no capital  gains tax in  Bermuda,  and  profits  can be  accumulated  by the
Company, as required, without limitation.  There is no income tax treaty between
the United  States and Bermuda  pertaining  to the taxation of income other than
applicable to insurance enterprises.

     E.     TAXATION

The Company is incorporated  in Bermuda.  Under current Bermuda law, the Company
is not subject to tax on income or capital gains, and no Bermuda withholding tax
will be imposed upon  payments of dividends by the Company to its  shareholders.
No Bermuda  tax is imposed on holders  with  respect to the sale or  exchange of
Shares.  Furthermore,  the Company has received  from the Minister of Finance of
Bermuda under the Exempted  Undertakings Tax Protection Act 1966, as amended, an
assurance  that, in the event that Bermuda enacts any  legislation  imposing any
tax  computed on profits or income,  including  any  dividend  or capital  gains
withholding tax, or computed on any capital asset,  appreciation,  or any tax in
the nature of an estate,  duty or  inheritance  tax, then the  imposition of any
such tax shall not be  applicable.  The  assurance  further  provides  that such
taxes, and any tax in the nature of estate duty or inheritance tax, shall not be
applicable  to  the  Company  or  any of  its  operations,  nor  to the  shares,
debentures or other obligations of the Company, until March 2016.

     F.     DIVIDENDS AND PAYING AGENTS

            Not Applicable

     G.     STATEMENT BY EXPERTS

            Not Applicable

     H.     DOCUMENTS ON DISPLAY

The  Company is  subject to the  informational  requirements  of the  Securities
Exchange Act of 1934, as amended.  In accordance with these requirements we file
reports and other information with the Securities and Exchange Commission. These
materials,  including  this annual report and the  accompanying  exhibits may be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Commission  at 100 F Street,  NE, Room 1580,  Washington,  D.C.  20549.  You may
obtain  information  on the operation of the public  reference room by calling 1
(800)  SEC-0330,  and you may obtain copies at prescribed  rates from the Public
Reference Section of the Commission at its principal office in Washington,  D.C.
The SEC maintains a website  (http://www.sec.gov.)  that contains reports, proxy
and information statements and other information regarding registrants that file
electronically  with the SEC. In addition,  documents referred to in this annual
report may be inspected at the Company's headquarters at Thistle House 4 Burnaby
Street Hamilton, HM11 Bermuda.

We furnish holders of our common shares with annual reports  containing  audited
financial  statements and a report by our independent  public  accountants,  and
intend  to  make  available  quarterly  reports  containing  selected  unaudited
financial  data for the first three  quarters of each fiscal  year.  The audited
financial statements will be prepared in accordance with United States generally
accepted  accounting  principles.  As a "foreign  private issuer," we are exempt
from the rules under the Securities  Exchange Act prescribing the furnishing and
content of proxy  statements to  shareholders.  While we intend to furnish proxy
statements to  shareholders  in accordance  with the rules of the New York Stock
Exchange,  those proxy  statements  do not conform to Schedule  14A of the proxy
rules  promulgated  under the Exchange Act. All reports,  proxy  statements  and
other  information filed by us with the New York Stock Exchange may be inspected
at the New York Stock Exchange's  offices at 20 Broad Street, New York, New York
10005. In addition,  as a "foreign private issuer," we are exempt from the rules
under the Exchange Act relating to short swing profit reporting and liability.

     I.     SUBSIDIARY INFORMATION

            Not applicable.

ITEM 11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in interest  rates related to
the variable rate of the Company's borrowings,  or the Loan under our New Credit
Facility.

Amounts borrowed under the New Credit Facility bears interest at a rate equal to
LIBOR plus a margin  between  0.70% to 1.20% per year  (depending on the loan to
vessel  value  ratio).   Increasing  interest  rates  could  affect  our  future
profitability.  In certain  situations,  the  Company  may enter into  financial
instruments to reduce the risk associated with fluctuations in interest rates.

A 100 basis  point  increase  in LIBOR  would have  resulted  in an  increase of
approximately  $0.4 million in our interest  expense for the year ended December
31, 2005.

The Company is exposed to the spot market. Historically, the tanker markets have
been volatile as a result of the many conditions and factors that can affect the
price,   supply  and  demand  for  tanker   capacity.   Changes  in  demand  for
transportation  of oil over longer distances and supply of tankers to carry that
oil may materially affect our revenues,  profitability and cash flows.  Eight of
our nine  vessels  are  currently  operated in the spot market or on spot market
related time  charters.  We believe that over time,  spot  employment  generates
premium earnings compared to longer-term employment.

We estimate  that during 2005, a $1,000 per day decrease in the spot market rate
would have decreased our voyage revenue by approximately $1.8 million.

ITEM 12.    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

            Not Applicable

                                     PART II

ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

            Not Applicable

ITEM 14.    MATERIAL  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
            PROCEEDS

            Not Applicable

ITEM 15.    CONTROLS AND PROCEDURES.

We  evaluated  the  effectiveness  of  the  Company's  disclosure  controls  and
procedures as December 31, 2005. Based on that  evaluation,  the chief executive
officer and the chief financial officer concluded that the Company's  disclosure
controls and procedures were effective to provide reasonable  assurance that the
information  required to be disclosed by the Company in reports  filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed,  summarized
and reported within the time periods specified in the SEC's rules and forms. The
Company  believes  that a system of  controls,  no matter how well  designed and
operated,  cannot provide absolute assurance that the objectives of the controls
are met, and no evaluation of controls can provide  absolute  assurance that all
control  issues  and  instances  of fraud,  if any,  within a company  have been
detected.

or

There  have been no changes in  internal  controls  over  financial  reporting
(identified in connection with management's evaluation of such internal controls
over financial  reporting)  that occurred during the year covered by this annual
report that has  materially  affected,  or is  reasonably  likely to  materially
affect, the Company's internal controls over financial reporting.


ITEM 16.    RESERVED.

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

The Board of  Directors  has  determined  that Mr.  Torbjorn  Gladso is an audit
committee  financial  expert.  Mr.  Gladso is  "independent"  as  determined  in
accordance with the rules of the New York Stock Exchange.

ITEM 16B.   CODE OF ETHICS.

The Company has  adopted a code of ethics that  applies to all of the  Company's
employees,  including  our principal  executive  officer,  principal  accounting
officer or controller.  The Code may be downloaded at our website  (www.nat.bm).
Additionally,  any person,  upon request,  may ask for a hard copy of electronic
file of the Code. If we make any substantive  amendment to the Code of Ethics or
grant any waivers,  including any implicit waiver,  from a provision of our Code
of  Ethics,  we will  disclose  the  nature of that  amendment  or waiver on our
website.  During the year ended December 31, 2005, no such amendment was made or
waiver granted.

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES.

     (a)    Audit Fees

The Company's Board of Directors has established  preapproval and procedures for
the  engagement of the Company's  independent  public  accounting  firms for all
audit and non-audit  services.The  following table sets forth,  for the two most
recent  fiscal  years,  the  aggregate  fees  billed for  professional  services
rendered by our principal accountant,  Deloitte  Statsautoriserte  Revisorer AS,
for the audit of the Company's annual financial statements and services provided
by the principal  accountant in connection with statutory and regulatory filings
or engagements for the two most recent fiscal years.

FISCAL YEAR ENDED DECEMBER 31, 2005                 $71,400
FISCAL YEAR ENDED DECEMBER 31, 2004                 $49,700

     (b)    Audit-Related Fees (1)

FISCAL YEAR ENDED DECEMBER 31, 2005                $150,455
FISCAL YEAR ENDED DECEMBER 31, 2004                 $90,400

     (1)   Audit-Related-Fees  consists of accounting  consultations  related to
           accounting,  financial reporting or disclosure matters not classified
            as "Audit Services".

     (c)    Tax Fees

            Not applicable


     (d)    All Other Fees

            Not applicable.

     (e)    Audit Committee's Pre-Approval Policies and Procedures

Our audit committee pre-approves all audit, audit-related and non-audit services
not prohibited by law to be performed by our independent auditors and associated
fees prior to the  engagement  of the  independent  auditor with respect to such
services.

     (f)    Not applicable.

ITEM 16D.   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

            Not Applicable

ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS.

            Not Applicable

                                    PART III

ITEM 17.    FINANCIAL STATEMENTS

            See item 18.


ITEM 18.    FINANCIAL STATEMENTS

            See pages F-1 through F-11

<PAGE>

NORDIC AMERICAN TANKER SHIPPING LIMITED

TABLE OF CONTENTS
- --------------------------------------------------------------------------------
                                                                           Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS                         F-2

FINANCIAL STATEMENTS                                                        F-3


Balance Sheets                                                              F-3

Statements of Operations                                                    F-4

Statements of Cash Flows                                                    F-5

Statements of Shareholders' Equity                                          F-6

Notes to Financial Statements                                               F-7

<PAGE>

To the shareholders of Nordic American Tanker Shipping Limited


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and  Stockholders  of Nordic  American Tanker Shipping
Limited Bermuda

We have  audited  the  accompanying  balance  sheets of Nordic  American  Tanker
Shipping Ltd. (the  "Company") as of December 31, 2005 and 2004, and the related
statements of operations, statements of shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company has determined that it
is not  required  to  have,  nor were we  engaged  to  perform,  an audit of its
internal control over financial reporting.  Our audits included consideration of
internal  control  over  financial  reporting  as a basis  for  designing  audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the  effectiveness  of the Company's  internal  control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the  financial  position of the  Company as of December  31, 2005 and
2004,  and the results of their  operations and their cash flows for each of the
three years in the period ended December 31, 2005, in conformity with accounting
principles generally accepted in the United States of America.


Oslo, Norway, May 18, 2006
Deloitte Statsautoriserte Revisorer AS

<PAGE>

BALANCE SHEETS

All figures in USD
                                  Notes       Dec. 31, 2005       Dec. 31, 2004
- --------------------------------------------------------------------------------
Assets
Current Assets
Cash and Cash Equivalents                        14,240,482          30,732,516
Accounts Receivables, net           4            19,556,725           4,539,354
Voyages in Progress                               2,445,906                   0
Prepaid Expenses and Other Assets   5             3,147,527           1,479,710

Total Current Assets                             39,390,640          36,751,580
                                               ---------------------------------

Long-term Assets
Vessels, net                        6           463,933,101         187,301,038
Other Long-term Assets                            2,520,712             150,793

Total Long-term Assets                          466,453,813         187,451,831
                                               ---------------------------------
Total Assets                                    505,844,453         224,203,411
                                               ---------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable                                  1,562,188             411,366
Deferred Revenue                   11               537,055           1,286,070
Accrued Liabilities                               2,873,039             637,582

Total Current Liabilities          12             4,972,282           2,335,018
                                               ---------------------------------

Long-term Liabilities
Long-term Debt                      9           130,000,000                   0

Total Long-term Liabilities                     130,000,000                   0
                                               ---------------------------------

Shareholders' Equity
Common Shares,                     13               166,445             130,678
par value $0.1 per share,
issued and outstanding
(51,200,000 shares authorized);
16,644,496 shares issued and
outstanding, (13,067,838 issued
and outstanding in 2004)

Additional Paid-in Capital                      432,682,337         265,752,581
Accumulated Deficit                             (61,976,611)        (44,014,866)

Total Shareholders' Equity                      370,872,171         221,868,393

Total Liabilities & Shareholders' Equity        505,844,453         224,203,411
                                               ---------------------------------

     The footnotes are an integral part of these financial statements

<PAGE>

STATEMENTS OF OPERATIONS

All figures in USD
                                                Year Ended December 31,
                                 Notes       2005          2004          2003
- --------------------------------------------------------------------------------
Voyage Revenue                     3    117,110,178    67,451,598    37,370,756
Voyage Expenses                         (30,980,916)   (4,925,353)     (184,781)
Vessel Operating Expenses -
 excluding depreciation
 expense presented below                (11,220,770)   (1,976,766)            0
Administrative Expenses           2,7    (8,492,164)  (10,851,688)     (468,087)
Depreciation                       6    (17,529,000)   (6,918,164)   (6,831,040)

Net Operating Income                     48,887,328    42,779,627    29,886,848
                                       -----------------------------------------

Interest Income                             850,803       143,230        26,462
Interest Expense                 9,10    (3,453,963)   (1,971,304)   (1,797,981)
Other Financial Income (Charges)             33,574      (135,621)      (15,040)

Net Financial Items                      (2,569,586)   (1,963,695)   (1,786,559)
                                       -----------------------------------------
Net profit before Tax                    46,317,742    40,815,932    28,100,289
                                       -----------------------------------------
Tax Expense                                       0             0             0

Net Profit for the Year                  46,317,742    40,815,932    28,100,289
                                       -----------------------------------------

Basic Earnings per Share                       3.03          4.05          2.89

Diluted Earnings per Share                     3.03          4.05          2.89
Basic Weighted Average Number
 of Shares Outstanding                   15,263,622    10,078,391     9,706,606
Diluted Weighted Average Number
 of Shares Outstanding                   15,263,622    10,078,391     9,706,606

     The footnotes are an integral part of these financial statements

<PAGE>


STATEMENTS OF CASH FLOWS

All figures in USD
                                                 Year Ended December 31,
                                             2005          2004          2003
- --------------------------------------------------------------------------------
Cash Flows from Operating Activities

Net Profit                               46,317,742    40,815,932    28,100,289

Reconciliation of Net Profit to
Net Cash from
Operating Activities
Depreciation                             17,529,000     6,918,164     6,831,040
Amortization of Prepaid Finance Costs       717,910       112,838        14,480
Share-based Compensation                  3,582,995     9,252,365             0
Stock Incentive Plan                      1,415,000             0             0
Increase/Decrease in:
Accounts Receivables                    (15,017,371)    3,602,956    (4,865,784)
Accounts Payable and Accrued Liabilities  3,386,273     1,010,626      (178,140)
Deferred Revenue                           (749,015)    1,286,075             0
Other Assets                             (6,126,946)     (181,695)       (8,334)

Net Cash Provided by Operating
 Activities                              51,055,588    62,817,261    29,893,551
                                       -----------------------------------------
Cash Flows from Investing Activities
Investment in Vessels                  (294,161,063)  (66,137,277)            0

Net Cash Used in Investing Activities  (294,161,063)  (66,137,277)            0
                                       -----------------------------------------

Cash Flows from Financing Activities
Proceeds from Issuance of Common Stock  161,967,534   112,137,953             0
Proceeds from Use of Credit Facility    135,000,000    96,000,000             0
Repayments of Credit Facility            (5,000,000) (126,000,000)            0
Loan Facility Costs                      (1,074,606)   (1,455,503)            0
Dividends Paid                          (64,279,487)  (47,195,842)  (29,605,410)

Net Cash Provided by (Used in)
 Financing Activities                   226,613,441    33,486,608   (29,605,410)
                                       -----------------------------------------
Net (Decrease) Increase in Cash,
 and Cash Equivalent                    (16,492,034)   30,166,592       288,141
                                       -----------------------------------------
Beginning Cash and Cash Equivalents      30,732,516       565,924       277,783
                                       -----------------------------------------
Ending Cash and Cash Equivalents         14,240,482    30,732,516       565,924
                                       -----------------------------------------

Cash paid for Interest                      916,104     1,774,264     1,975,125


     The footnotes are an integral part of these financial statements

<PAGE>

<TABLE>

STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>
All figures in USD, except where noted

                                                                                         Accumulated
                                                              Additional                    Other           Total        Total
                                        No. of     Common      Paid-in    Accumulated   Comprehensive   Shareholders'  Comprehensive
                                        Shares     Shares      Capital      Deficit          Loss          Equity       Income
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>        <C>          <C>            <C>            <C>            <C>
Balance at 01.01.03                    9,706,606   97,066    144,395,866   (36,129,835)   (2,016,000)   106,347,097

Net Profit                                                                  28,100,289                   28,100,289   28,100,289

Unrealized Loss on
Derivative Instruments                                                                      (365,723)      (365,723)    (365,723)

Adjustment for Losses on
Derivatives Reclassified to Earnings                                                       1,231,723      1,231,723    1,231,723

Dividend Paid                                                              (29,605,410)                 (29,605,410)

Total Comprehensive Income                                                                                            28,966,289
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.03                    9,706,606   97,066    144,395,866   (37,634,956)   (1,150,000)   105,707,976
- ------------------------------------------------------------------------------------------------------------------------------------

Net Profit                                                                  40,815,932                   40,815,932   40,815,932

Common Shares Issued                   3,361,232   33,612    121,356,715                                121,390,327

Unrealized Loss on
Derivative Instruments                                                                       (20,710)       (20,710)     (20,710)

Adjustment for Losses on
Derivatives Reclassified to Earnings                                                       1,170,710      1,170,710    1,170,710

Dividend Paid                                                              (47,195,842)                 (47,195,842)

Total Comprehensive Income                                                                                            41,965,932
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.04                   13,067,838  130,678    265,752,581   (44,014,866)            0    221,868,393
- ------------------------------------------------------------------------------------------------------------------------------------

Net Profit                                                                  46,317,742                   46,317,742   46,317,742

Common Shares Issued                   3,576,658   35,767    165,514,756                                165,550,523

Stock Option Plan Valuation                                    1,415,000                                  1,415,000

Dividend Paid                                                              (64,279,487)                 (64,279,487)

Total Comprehensive Income                                                                                            88,283,674
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at 12.31.05                   16,644,496  166,445    432,682,337   (61,976,611)            0    370,872,171
- ------------------------------------------------------------------------------------------------------------------------------------

                                 The footnotes are an integral part of these financial statements
</TABLE>

<PAGE>



                     NORDIC AMERICAN TANKER SHIPPING LIMITED

                          NOTES TO FINANCIAL STATEMENTS


1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These  financial  statements  have been prepared in accordance  with  accounting
principles generally accepted in the United States of America (US GAAP).

Nature of Business:  The principal  business of Nordic  American Tanker Shipping
Limited (the "Company") is to own and operate crude oil tankers.

Use of Estimates:  Preparation of financial  statements in accordance  with U.S.
GAAP  necessarily  includes  amounts based on estimates and assumptions  made by
management.  Actual  results  could  differ from those  amounts.  The effects of
changes in  accounting  estimates  are  accounted  for in the same period as the
estimates are changed.

Concentration of Credit Risk: Financial instruments that potentially subject the
Company  to  concentrations  of  credit  risk  consist  principally  of cash and
accounts  receivable.  The Company  maintains its cash with reputable  financial
institutions.  The terms of these  deposits are on demand to minimize  risk. The
Company  has not  experienced  any losses  related to these  cash  deposits  and
believes it is not exposed to any significant credit risk.

Accounts receivable consist of  uncollateralized  receivables from international
customers  primarily in the international  shipping  industry.  To minimize risk
associated with  international  transactions,  all sales are denominated in U.S.
currency.   The  Company  routinely  assesses  the  financial  strength  of  its
customers.  Accounts  receivable  are presented  net of allowances  for doubtful
accounts  relating to demurrage claims.  If amounts become  uncollectible,  they
will be charged to operations when that determination is made.

Interest  Rate Risk:  The Company is exposed to interest  rate risk for its debt
borrowed under the New Credit Facility.  In certain situations,  the Company may
enter into financial instruments to reduce the risk associated with fluctuations
in interest  rates.  The Company has no outstanding  derivatives at December 31,
2005 and has not entered into any such arrangements in 2005.

Cash and Cash  Equivalents:  Cash and cash equivalents  consist of deposits with
original maturities of three months or less.

Foreign Currency Risk: The Company's  functional  currency is the U.S. dollar as
all  revenues are  received in U.S.  dollars and the  majority of the  Company's
expenditures are made in U.S. dollars.  The Company's reporting currency is U.S.
dollars. The Company considers currency risk to be insignificant.

Property and Equipment:  Depreciation is provided on a straight-line  basis over
the estimated useful lives of the assets.  The Company's  property and equipment
are  recorded at the cost method and consist  solely of vessels.  The  estimated
useful  life of the  Company's  vessels  is 25 years from the date the vessel is
delivered from the shipyard. Repairs and maintenance are expensed as incurred.

Impairment of Long-Lived  Assets:  Long-lived assets are required to be reviewed
for impairment  whenever  events or changes in  circumstances  indicate that the
carrying  amount  of  an  asset  may  not  be  recoverable.   If  the  estimated
undiscounted  future cash flows expected to result from the use of the asset and
its  eventual  disposition  is less than the carrying  amount of the asset,  the
asset is deemed  impaired.  The  amount of the  impairment  is  measured  as the
difference between the carrying value and the fair value of the asset.

Revenue and expense  recognition:  Revenue and expense recognition  policies for
voyage and time charter agreements are as follows:

Bareboat:  Revenues from bareboat  charters are recorded at a fixed  charterhire
rate per day over the term of the charter. The charterhire is payable monthly in
advance.  During  the  charter  period the  charterer  will be  responsible  for
operating and  maintaining  the vessel and will bear all costs and expenses with
respect to the vessel.

Time charters  under spot related  terms:  The revenue from time charters  under
spot related terms payable under the charters is based on a formula  designed to
generate  earnings to the Company as if the Company had  operated the vessels in
the spot market on two routes used for the calculation, less 5% in commission to
the charterer.  The charterhire is payable to the Company monthly. The charterer
is responsible for all voyage related costs while the Company is responsible for
providing the crew and paying other operating costs

Spot charters.  Voyage revenues and voyage expenses are recognized on a pro rata
basis based on the relative  transit time in each  period.  Estimated  losses on
voyages are  provided  for in full at the time such  losses  become  evident.  A
voyage is deemed to commence  upon the  completion  of discharge of the vessel's
previous  cargo and is deemed to end upon the  completion  of  discharge  of the
current cargo. Voyage expenses primarily include only those specific costs which
are  borne by the  Company  in  connection  with  voyage  charters  which  would
otherwise have been borne by the charterer under time charter agreements.  These
expenses  principally consist of fuel, canal and port charges.  Demurrage income
represents  payments  by the  charterer  to the vessel  owner when  loading  and
discharging  time exceed the stipulated  time in the voyage  charter.  Demurrage
income is measured in accordance  with the provisions of the respective  charter
agreements  and the  circumstances  under which  demurrage  claims  arise and is
recognized  on a pro  rata  basis  over the  length  of the  voyage  to which it
pertains. At December 31, 2005 and 2004, the Company has no reserves against its
due from charterers balance associated with demurrage revenues.

Pooling  arrangements:  Revenues and voyage expenses of the vessels operating in
pool arrangements are pooled and the resulting net pool revenues,  calculated on
a  time  charter  equivalent  basis,  are  allocated  to the  pool  participants
according to an agreed formula. Formulas used to allocate net pool revenues vary
among different pools but generally  allocate  revenues to pool  participants on
the basis of the  number of days a vessel  operates  in the pool with  weighting
adjustments  made to  reflect  vessels'  differing  capacities  and  performance
capabilities.  The same revenue and expenses principles stated above are applied
in determining  the pool's net pool revenues.  The pool managers are responsible
for collecting voyage revenue,  paying voyage expenses and distributing net pool
revenues to the participants.

Based on the guidance from EITF 99-19 earnings generated from pools in which the
Company is the principal of the pool's vessels' activities are recorded based on
gross method. Earnings generated from pools in which the Company is not regarded
as the principal of the vessels' activities are recorded as per net method.

The  Company  accounts  for the net pool  revenues  allocated  by these pools as
"Voyage Revenue" in its statements of operations.

Vessel Operating Expenses: Vessel Operating Expenses include crewing, repair and
maintenance,  insurance,  stores,  lube oils and communication  expenses.  These
expenses are recognized when incurred.

Accounting  for  Drydocking  Costs:  The  Company's  vessels are  required to be
drydocked  approximately every 30 to 60 months for major repairs and maintenance
that cannot be performed while the vessels are in operation. The Company follows
the deferral  method of accounting  for  drydocking  costs whereby  actual costs
incurred are deferred and are amortized on a straight-line basis over the period
through the date the next  drydocking  is scheduled  to become due.  Unamortized
drydocking  costs of vessels that are sold are written off to income in the year
of the vessel's sale.  The  capitalized  and  unamortized  drydocking  costs are
included  in  the  book  value  of  the  vessels.  Amortization  expense  of the
drydocking costs is included in depreciation expense.

Inventories:  Inventories, which comprise principally of bunker fuel, are stated
at cost which is determined on a first-in, first-out (FIFO) basis.

Financial Instruments: The fair values of cash and cash equivalents,  short-term
investments,  accounts  receivable,  and accounts payable  approximate  carrying
value because of the short-term nature of these instruments.

Loan Financing  costs:  Finance costs,  including  fees,  commissions  and legal
expenses, which are presented as other assets are capitalized and amortized on a
straight-line basis over the term of the relevant Credit Facility.  Amortization
of finance costs is included in interest expense.

Segment Information: The Company has identified only one operating segment under
Statement of Financial  Accounting  Standards  ("SFAS") No. 131  "Segments of an
Enterprise and Related  Information."  The Company has only one type of vessel -
Suezmax  crude oil  tankers -  operating  on time  charter  contracts  at market
related rates, in the spot market and on long-term bareboat contract.

Geographical Segment: The Company currently operates four of its vessels in spot
market pools with other  vessels that are not owned by it. The pools are managed
by third  party pool  administrators.  The  earnings  of all of the  vessels are
aggregated,  or  pooled,  and  divided  according  to the  relative  performance
capabilities of the vessel and the actual earning days each vessel is available.
The pool vessels are operated in the spot market by the pool administrators.  As
a significant  portion of the Company's  vessels are operated in pools it is not
practical  to allocate  geographical  data to each vessel and thereby not giving
meaningful information to the reader.

Derivative  Instruments  and Hedging  Activities:  The Company  accounts for its
derivative  instruments  and  hedging  activities  according  to SFAS  No.  133,
"Accounting for Derivative  Instruments and Hedging  Activities",  as amended by
SFAS No. 137 and SFAS No. 138. This standard,  as amended,  requires  derivative
instruments to be recorded in the balance sheet at their fair value.  Changes in
the fair value of derivatives that do not qualify for hedge  treatment,  as well
as ineffective portions of any hedge, are recorded to earnings.  Changes in fair
value for qualifying cash flow-hedges are recorded in equity and are realized in
earnings in conjunction with the gain or loss on the hedged item or transaction.

Changes in the fair value of qualifying hedges offset  corresponding  changes in
the fair value of the hedged item in the statement of operations.

Share-Based  Compensation:   The  Company  has  chosen  early  adoption  of  the
accounting  standard  No.  123 (R)  "Share-Based  Payment"  ("SFAS123R"),  which
establishes a fair value-based method of accounting for share-based compensation
plans.  The adoption of the standard did not have any significant  effect on the
financial  statements as the Company  previously  used the SFAS 123. The Company
applied the modified prospective method.

Earnings per Share: SFAS No. 128 "Earnings Per Share ("EPS"),"requires EPS to be
computed and  reported as both basic EPS and diluted EPS.  Basic EPS is computed
by  dividing  net  income  by the  weighted  average  number  of  common  shares
outstanding  for the period.  Diluted EPS is computed by dividing  net income by
the  weighted  average  number  of  common  shares  and  dilutive  common  stock
equivalents (i.e. stock options, warrants) outstanding during the period.

The  Company's  average  stock price during 2005 was above the average  exercise
price of the  options  and a  dilutive  effect on EPS could  potentially  arise.
However,  the proceeds of an exercise of all outstanding  options  calculated as
per the Treasury Stock Method would exceed the costs of acquiring  shares at the
average 2005 stock price.  The potential  effect of the  outstanding  options is
therefore anti-dilutive and is not included in the numbers stated above.

Income taxes: The Company is incorporated in Bermuda. Under current Bermuda law,
the Company is not subject to corporate income taxes.

Reclassifications:  Certain  amounts on the balance  sheets and the statement of
operations in prior year financial accounts have been reclassified to conform to
the current year presentation.

New  Pronouncements:  In December 2004, the FASB issued SFAS No. 153, "Exchanges
of  Non-monetary  Assets",  an  amendment of APB Opinion No. 29. The adoption of
this  statement,  effective  June 2005, did not have any impact on the Company's
results of operations, financial position or cash flows.

In May 2005, the Financial  Accounting Standards Board ("FASB") issued Statement
("SFAS") No. 154,  "Accounting  Changes and Error  Corrections",  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after  December 15,  2005.  SFAS 154 requires  voluntary  changes in  accounting
principle be  retrospectively  applied to  financial  statements  from  previous
periods  unless  such  application  is  impracticable.  Under the  newly  issued
standard  changes in  depreciation,  amortization,  or depletion for long-lived,
non-financial  assets should be accounted for as a change in accounting estimate
that is affected by a change in accounting principle.  The Company believes that
the adoption of this standard  will not have a material  impact on the Company's
results of operations, financial position or cash flow.

2.      RELATED PARTY TRANSACTIONS

The Manager,  Scandic  American  Shipping Ltd., is jointly owned by the Chairman
and CEO of the Company,  Mr. Herbjorn Hansson,  and a Board Member,  Mr. Andreas
Ove Ugland. The Manager, under the Management Agreement,  assumes commercial and
operational  responsibility  of the Company's  vessels and is required to manage
the Company's  day-to-day business subject,  always, to the Company's objectives
and policies as established from time to time by the Board of Directors. For its
services  under the Management  Agreement,  the Manager is entitled to cover the
cost  incurred  plus a management  fee equal to $100,000 per annum.  The Manager
also has a right to 2% of the  Company's  total  outstanding  shares (see Note 8
"Share-Based   Compensation").   The  Company  has  recognized  total  costs  of
$2,196,264 for the services provided under the Management Agreement for the year
ended December 31, 2005. The comparable  amount for the years 2004 and 2003 were
$653,799 and $0 respectively.  Additionally the Company recognized $3,582,995 in
non-cash  share-based  compensation  expense during the year 2005 related to the
issuance of shares to the Manager (see Note 8 "Share-Based  Compensation").  The
comparable   amount  for  the  years  2004  and  2003  was  $9,252,365  and  $0,
respectively.  Payable at December 31, 2005 was $396,314 and payable at December
31, 2004 was  $105,080.  These items are included in the accounts  payable.  The
costs are included in administrative expenses.

Mr. Jan Erik Langangen, Executive Vice President of the Manager, is a partner of
Langangen & Helset  Advokatfirma  AS which in the past has also provided and may
continue to provide legal  services to us. The Company has  recognized  costs of
$77,526 for the services provided by Langangen & Helset Advokatfirma AS in 2005.
The  comparable  amount  for the  years  2004 and 2003 was  $33,435  and  $3,361
respectively.  Payable at December  31, 2005 was $0 and payable at December  31,
2004 was $38,157. These costs are included as administrative expenses.

3.      REVENUE

For the twelve  months  ending  December 31, 2005 the  Company's  only source of
income was from the Company's  eight vessels.  The table below shows the current
employment  of  the  vessels.  All of  the  Company's  revenues  are  earned  in
international markets.

                                                         Charterer*/
Vessel name                       Employment             Commercial Operator
- ----------------------------------------------------------------------------

Gulf Scandic                      Bareboat               Gulf Navigation*
Nordic Hawk                       Spot / TC              BP Shipping*
Nordic Hunter                     Spot / TC              BP Shipping*
Nordic Freedom                    Spot                   Teekay Shipping
Nordic Voyager                    Spot                   Stena Bulk
Nordic Fighter                    Spot                   Frontline
Nordic Discovery                  Spot                   Frontline
Nordic Saturn                     Spot                   OMI
- ----------------------------------------------------------------------------

One customer  accounted for 37%, 97% and 100% of the Company's  revenues  during
the year ended December 31, 2005, 2004 and 2003, respectively.

4.      ACCOUNTS RECEIVABLE

                                                   2005                 2004
     ---------------------------------------------------------------------------
     BP Shipping                                 4,030,009            4,310,979
     Gulf Navigation Company                             0              189,114
     Gemini Tankers Ltd                          2,725,145                    0
     Stena Bulk                                  5,192,581                    0
     Frontline                                   4,628,353                    0
     Teekay Shipping Corporation                 2,980,637                    0
     Others < 10%                                        0               39,261
     ---------------------------------------------------------------------------
     Total Accounts Receivable                  19,556,725            4,539,354

There is no allowance for doubtful accounts as at December 31, 2005 and 2004.

5.      PREPAID EXPENSES AND OTHER CURRENT ASSETS

                                                   2005                 2004
     ---------------------------------------------------------------------------
     Bunkers and lubricants inventory            2,136,762                    0
     Other < 5%                                  1,010,765            1,479,710
     ---------------------------------------------------------------------------
     Total as per December 31,                   3,147,527            1,479,710

6.      PROPERTY AND EQUIPMENT

Property and  equipment  consist of eight modern  double hull Suezmax  crude oil
tankers.  Depreciation is calculated on a straight-line basis over the estimated
useful  life of the  vessels.  The  estimated  useful life of a new vessel is 25
years.

                                                   2005                 2004
     ---------------------------------------------------------------------------
     Opening Balance                           236,913,247          170,775,970
     Acquisitions                              294,161,063           66,137,277
     ---------------------------------------------------------------------------
     Closing Balance                           531,074,310          236,913,247

     Opening Balance                           (49,612,209)         (42,694,045)
     Depreciation                              (17,529,000)          (6,918,164)
     ---------------------------------------------------------------------------
     Closing Balance                           (67,141,209)         (49,612,209)
     ---------------------------------------------------------------------------
     Net Book Value as per December 31,        463,933,101          187,301,038

Included in the above amounts as at December 31, 2005 are drydocking charges and
ballast tank  improvements  with a net book value of $2.2 million.  Depreciation
expenses for drydocking and ballast tank improvements were $0.16 million.  There
were no such charges for the comparable  period of 2004.  The Company's  vessels
are mortgaged for amounts owing under the New Credit Facility.

7.      ADMINISTRATIVE EXPENSES
                                              2005         2004         2003
     ---------------------------------------------------------------------------
     Management fee                          100,000      175,000      250,000
     Directors and officers insurance        121,427      112,500      101,666
     Salary and wages                        635,393      165,490            0
     Audit, legal and consultants            678,858      587,831      106,281
     Outsourced administrative services    1,460,871      313,309            0
     Share-based compensation              3,582,995    9,252,365            0
     2004 Stock Incentive Plan             1,415,000            0            0
     Other fees and expenses                 497,620      245,193       10,140
     ---------------------------------------------------------------------------
     Total administrative expenses         8,492,164   10,851,688      468,087


The  decrease  in  total  administrative  expenses  is due to  the  decrease  in
share-based  compensation  caused by the  change in the terms of the  Management
Agreement with the Manager effective from October 2004. The Management Agreement
formerly  provided that the Manager would receive 1.25% of any gross charterhire
paid to the Company.  In order to further  align the  Manager's  interests  with
those  of the  Company,  the  Manager  agreed  with us to amend  the  Management
Agreement  to  eliminate  this  payment.  The  Company  issued to the Manager in
October 2004 restricted  common shares equal to 2% of the Company's  outstanding
common shares.  Any time additional  common shares are issued,  the Manager will
receive  additional  restricted  common  shares to maintain the number of common
shares issued to the Manager at 2% of our total  outstanding  common shares.  In
connection  with the follow-on  offering in March 2005,  restricted  shares were
issued  to  the  Manager  in  accordance  with  the  Management  Agreement.  The
share-based compensation expense related to the issuance of restricted shares to
the Manager of $3,582,995 in 2005 was classified as administrative expenses.

The  decrease  in  share-based  compensation  is  offset  by  increase  in other
administrative  expenses due to the change in operating  structure as of October
2004 from a passive leasing company into an operating company.

8.      SHARE-BASED COMPENSATION

2004 Stock Incentive Plan

Under the terms of the Company's  2004 Stock  Incentive  Plan, or the Plan,  the
directors,  officers  and certain key  employees  of the Company and the Manager
will be  eligible to receive  awards  which  include  incentive  stock  options,
non-qualified  stock options,  stock appreciation  rights,  dividend  equivalent
rights,  restricted stock,  restricted stock units and performance  shares.  The
Company  believes  that such awards  better align the interests of its employees
with those of its  shareholders.  A total of 400,000  common shares are reserved
for issuance upon exercise of options,  as restricted  share grants or otherwise
under the plan.  A total of 320,000  options have been issued as at December 31,
2005.

Stock  option  awards were  granted  with an exercise  price equal to the market
price  of the  Company's  common  shares  at the date of a  public  offering  in
November 2004, with later  adjustments when dividends to shareholders  exceed 3%
of the initial stock option exercise price.  Stock option awards  generally vest
equally over four years from grant date and have a 10-year contractual term.

The fair value of each option  award is estimated on the date of grant using the
Black & Scholes option  valuation model that uses the  assumptions  noted in the
following table.  Stock options to non-employees  are measured at each reporting
date and fair value is estimated  with the same model used for  estimating  fair
value of the options  granted to employees.  Because the option  valuation model
incorporates  ranges of  assumptions  for inputs,  those  ranges are  disclosed.
Expected   volatilities  are  based  on  implied  volatilities  from  historical
volatility  of the  Company's  stock and  other  factors.  Expected  life of the
options  is  estimated  to be equal to the  vesting  period for  employees  when
calculating  the fair value of the options.  When  calculating the fair value of
the options  issued to  non-employees  the expected  life is equal to the actual
life of options.  The Company recognizes the compensation cost for stock options
issued to non-employees over the service period, which is considered to be equal
to the vesting period.

Stock  options to employees are measured at fair value at the grant date and the
compensation  cost is  recognized  on a  straight-line  basis  over the  vesting
period.  The  assumptions  used when estimating the fair value at grant date are
specified in the table below.

Stock options to  non-employees  are measured at fair value at the balance sheet
date and the assumptions used are specified separately in the table below.

The risk-free rate for periods within the contractual  life of the stock options
is based on the U.S.  Treasury  yield  curve in  effect at the time of grant for
options to employees.  The risk-free  rate at year-end is used for stock options
issued to non-employees.


                                      12.31.2005        12.31.2005
- -----------------------------------------------------------------------
Weighted average figures              Employees        Non-employees
- -----------------------------------------------------------------------
Expected volatility                     42.60%            42.08%
Expected dividends                        3%                3%
Expected life                            3.81              9.27
Risk-free rate (range)              3.52% - 4.43%      4.53% - 4.61%

A summary of option activity under the Plan as of December 31, 2005, and changes
during the year then ended is presented below:

                                    Shares         Shares       Weighted-average
Options                           employees    non-employees    exercise price
- --------------------------------------------------------------------------------
Outstanding at January 1, 2005         -                                -
Granted                             240,000        80,000            $35.70
Exercised                              -                                -
Forfeited or expired                   -                                -
Outstanding at December 31, 2005    240,000        80,000            $35.70
Exercisable at December 31, 2005     55,000        12,500            $35.70

Outstanding  and  exercisable  stock  options  as at  December  31,  2005 have a
weighted-average  remaining  term of 9.07  years  for  employees  and  9.30  for
non-employees.  The exercise price for outstanding  stock options as at December
31, 2005 is $35.70.

<TABLE>

                                                   Weighted-
                                                   average                     Weighted-average
                                                  grant-date      Options-       grant-date
                                    Options-      fair value        Non-        fair value-
                                    Employees     -Employees     employees      Non-employees
- -------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>           <C>             <C>
Non-vested at January 1, 2005           -              -             -               -
Granted during the year              240,000        $18.44        80,000          $22.93
Vested during the year               (55,000)       $18.65       (12,500)         $29.29
Forfeited during the year               -              -             -               -
Estimated forfeitures unvested          -              -             -               -
Non-vested at December 31, 2005      185,000        $18.38        67,500          $21.75
</TABLE>

Please refer to Note 7 in regards to the  compensation  cost related to the Plan
recognized  in the  profit  and loss  account.  Unrecognized  compensation  cost
related to the Plan is $3,831,763 as at December 31, 2005. That cost is expected
to be recognized over a weighted-average period of 1.95 years.

Restricted Shares

The Management  Agreement formerly provided that the Manager would receive 1.25%
of any gross  charterhire  paid to us. In order to further  align the  Manager's
interests  with those of the  Company,  the Manager  agreed with us to amend the
Management Agreement, effective October 12, 2004, to eliminate this payment, and
we have  issued  to the  Manager  restricted  common  shares  equal to 2% of our
outstanding  common shares at par value of $0.01 per share.  Any time additional
common shares are issued, the Manager will receive additional  restricted common
shares to maintain  the number of common  shares  issued to the Manager at 2% of
our   total   outstanding   common   shares.   These   restricted   shares   are
non-transferable  for three  years from  issuance.  During  2005 the Company has
issued to the  Manager  76,658  shares at an average  fair value of $46.74.  The
share-based compensation expense related to the issuance of restricted shares to
the Manager of $3,582,995 in 2005 was classified as administrative expenses.

The shares are considered restricted as the holders of the shares cannot dispose
of them for three years from issuance.

9.      LONG-TERM DEBT

In September 2005, the Company entered into a new $300 million  revolving credit
facility,  which is  referred  to as the New  Credit  Facility.  The New  Credit
Facility  became  effective as of October 2005 and replaced the previous  credit
facility  from  October  2004,  a portion  of which was set to mature in October
2005. The New Credit Facility will mature in September 2010.

The New Credit  Facility  provides  funding for future vessel  acquisitions  and
general  corporate  purposes.  The New Credit  Facility cannot be reduced by the
lender and there is no repayment  obligation  of the  principal  during the five
year term.  Amounts  borrowed  under the New Credit  Facility bear interest at a
rate equal to LIBOR plus a margin between 0.70% and 1.20% (depending on the loan
to  vessel  value  ratio).  The  Company  pays  a  commitment  fee of 30% of the
applicable margin on any undrawn amounts.

Borrowings  under the Credit  Facility are secured by mortgages over our vessels
and  assignment of earnings and  insurance.  We will be able to pay dividends in
accordance  with our dividend  policy as long as we are not in default under the
Credit Facility.

In February  2005, the Company  borrowed $5.0 million under the previous  Credit
Facility to finance  part of the  purchase  price of the second  vessel that was
acquired in February 2005. The borrowings were repaid in March 2005.

In September 2005, the Company  borrowed $60.0 million under the previous credit
facility to finance  part of the purchase  price of the seventh  vessel that was
acquired in August  2005,  and $7.0  million to finance the down payment for the
acquisition of the eighth vessel that was acquired in November 2005.

In October 2005,  the Company  refinanced  the borrowings of $67.0 million under
our previous credit facility by drawing on the New Credit Facility.

In  November  2005,  the Company  borrowed  $63.0  million  under the New Credit
Facility to finance  part of the  purchase  price of the eighth  vessel that was
acquired in September 2005.

Accrued  interest as per December 31, 2005 is $900,000 and is payable during the
first quarter of 2006.

10.     FINANCIAL ITEMS

Interest expense consists of interest expense on the long-term debt,  commitment
fee and loan  financing  costs related to the $300 million New Credit  Facility.
The $130 million  borrowed  bears an interest  rate equal to LIBOR plus a margin
between  0.7% and 1.2%.  The loan  financing  costs  are  expenses  incurred  in
connection  with the refinancing of the New Credit  Facility.  These charges are
amortized  over the term of the New Credit  Facility on a  straight-line  basis.
Amortization of loan costs is included in the interest expense. The amortization
of loan financing costs was for the years 2005, 2004 and 2003 $717,910, $112,838
and $14,480 respectively.  Total capitalized loan financing costs are $1,713,835
as per December 31, 2005 and as per December 31, 2004 $1,357,140.

The amortization of loan financing costs for the years 2006 to 2009 are $364,000
per year and $257,835 for the year 2010.

The  commitment  fee is based on 30% of the  applicable  margin  on any  undrawn
amounts.

11.     DEFERRED REVENUE

Deferred revenue of $537,055 represents prepaid freight received from one of the
Company's  customers  prior to December  31,  2005,  for services to be rendered
during January 2006.

12.     TOTAL CURRENT LIABILITIES

                                                              2005         2004
    ----------------------------------------------------------------------------
    Accounts Payable                                       751,977      411,366
    Accounts Payable, Technical & Commercial Managers      784,425            0
    Deferred Revenue                                       537,055    1,286,070
    Accrued Interests                                    1,170,044            0
    Accrued Expenses, Technical & Commercial Managers    1,459,445            0
    Other Current Liabilities  <5%                         269,336      637,582
    ----------------------------------------------------------------------------
    Total Current Liabilities                            4,972,282    2,335,018

13.     STOCK HOLDERS' EQUITY

Authorized, and issued and outstanding common shares roll-forward is as follows:

                                                          Issued and
                                         Authorized       Outstanding
                                          Shares            Shares
    -------------------------------------------------------------------
    Balance at 01.01.04                  51,200,000        9,706,606
    Issuance of Common
    Shares in
    Secondary Offering                                     3,105,000
    Share-based Compensation                                 256,232
    -------------------------------------------------------------------
    Balance at 12.31.04                  51,200,000       13,067,838
    -------------------------------------------------------------------

    Issuance of Common
    Shares in
    Secondary Offering                                     3,500,000
    Share-based Compensation                                  76,658
    -------------------------------------------------------------------
    Balance at 12.31.05                  51,200,000       16,644,496
    -------------------------------------------------------------------

The total issued and outstanding  shares as of December 31, 2005 were 16,644,496
shares of which 332,890 shares were restricted as described in Note 8. The total
issued and outstanding  shares as of December 31, 2004 were 13,067,838 shares of
which 256,232 shares were restricted as described in Note 8.

14.     DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT

In 2003, the Company had  outstanding a $30 million  variable rate loan that was
repaid in November 2004. The Company had hedged the variable  interest  exposure
by an interest  rate swap  whereby the Company  paid a fixed  interest  rate and
received a variable interest (LIBOR). The interest rate swap was designated as a
cash flow hedge of the interest  payments on the loan.  The  interest  rate swap
matured in 2004. The Company did not hold any derivative instruments at December
31, 2005.

The effective  portion of gains and losses on the interest rate swap  designated
as a cash flow hedge was deferred to accumulated other comprehensive  income and
was  reclassified to earnings as the hedged interest  payments were  recognized.
The Company reclassified  $1,170,000 from accumulated other comprehensive income
to earnings in 2004. The reclassified loss was included in interest expense.

The fair value of the swap was recorded as a liability of $1,150,000 at December
31, 2003.

15.     COMMITMENTS AND CONTINGENCIES

Litigation  and  Environmental  Matters  -The  Company may be a party to various
legal  proceedings  generally  incidental  to its  business  and is subject to a
variety of environmental and pollution  control laws and regulations.  As is the
case with other companies in similar industries, the Company faces exposure from
actual  or  potential  claims  and  legal  proceedings.  Although  the  ultimate
disposition of legal proceedings  cannot be predicted with certainty,  it is the
opinion of the Company's management that the outcome of any claim which might be
pending or threatened, either individually or on a combined basis, will not have
a materially adverse effect on the financial position of the Company,  but could
materially affect the Company's results of operations in a given year.

16.     SUBSEQUENT EVENTS

In February  2006,  the Company  agreed to acquire a double hull Suezmax  tanker
from an unrelated third party for a purchase price of $69.0 million.  The vessel
was delivered to the Company on April 10, 2006.

In March 2006, the Company sold 4,297,500  shares  (including  shares sold under
the  over-allotment  option)  in a  public  offering  in the  U.S.  to fund  the
acquisition  of the  ninth  vessel,  repay  outstanding  debt  and to  fund  the
acquisition  of the tenth  vessel  that the Company is  actively  pursuing.  The
offering  was priced at $28.50 per share,  and net  proceeds to the Company were
$115.2 million.

In April 2006, the Company  borrowed $69.0 million under the New Credit Facility
to finance the ninth vessel delivered to the Company on April 10, 2006.

<PAGE>

ITEM 19.    EXHIBITS

1.1  Memorandum  of  Association  of the Company  incorporated  by  reference to
     Exhibit 3.1 to the Company's  registration statement on Form F-1 filed with
     the Securities and Exchange Commission on August 28, 1995 (Registration No.
     33-96268).

1.2  Bye-Laws of the Company  incorporated  by  reference to Form 6-K filed with
     the Securities and Exchange Commission on November 18, 2004.

2.1  Form of Share  Certificate  incorporated by reference to Exhibit 4.1 to the
     Company's  registration statement on Form F-1 filed with the Securities and
     Exchange Commission on August 28, 1995 (Registration No. 33-96268).

4.1  Form of Bareboat  Charter between Nordic  American Tanker Shipping  Limited
     and BP Shipping  Ltd,  incorporated  by  reference  to Exhibit  10.3 in the
     Registration Statement filed on Form F-1, Registration No. 33-96268.

4.2  Form of  Management  Agreement  between  Nordic  American  Tanker  Shipping
     Limited and Ugland Nordic  Shipping AS incorporated by reference to Exhibit
     10.8 in the Registration Statement on Form F-1, Registration No. 33-96268.

4.3  Novation  Agreement  dated May 30, 2003,  among Ugland Nordic  Shipping AS,
     Scandic American  Shipping Ltd. and Nordic American Tanker Shipping Limited
     incorporated  by  reference  to Exhibit  4.3 in the  Annual  Report for the
     fiscal year ended December 31, 2002 on Form 20-F, filed with the Securities
     and Exchange Commission on June 27, 2003.

4.4  Amended and Restated  Management  Agreement dated October 12, 2004, between
     Scandic American  Shipping Ltd. and Nordic American Tanker Shipping Limited
     incorporated  by  reference  to Form  6-K  filed  with the  Securities  and
     Exchange Commission on October 29, 2004.

4.5  2004 Stock  Incentive Plan  incorporated by reference to Exhibit 4.5 to the
     Company's annual report on Form 20-F for the fiscal year ended December 31,
     2004 filed with the Securities and Exchange Commission on June 30, 2005.

4.6  Revolving  Credit  Facility  Agreement  by and  among the  Company  and the
     financial  institutions  listed in schedule 1 thereto,  dated September 14,
     2005.

12.1 Rule 13a-14(a) Certification of the Chief Executive Officer.

12.2 Rule 13a-14(a) Certification of the Chief Financial Officer.

13.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

13.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.  Section
     1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

23.1 Consent of Deloitte Statsautoriserte Revisorer AS.

<PAGE>

                                   SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly caused and authorized the  undersigned to sign
this annual report on its behalf.

                                    NORDIC AMERICAN TANKER
                                    SHIPPING LIMITED



                                    By:    /s/ Herbjorn Hansson
                                    -----------------------------
                                    Name:      Herbjorn Hansson
                                    Title:     Chairman, Chief Executive Officer
                                               and President

DATED:  June 29, 2006
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>2
<FILENAME>d675261_ex4-6.txt
<TEXT>
                                                          Exhibit 4.6

THOMMESSEN



                                 USD 300,000,000
                       REVOLVING CREDIT FACILITY AGREEMENT

                                       for

                     Nordic American Tanker Shipping Limited
                                   as Borrower

                                   provided by

                           The Financial Institutions
                              listed in Schedule 1
                                   as Lenders

                                      With

                                DnB NOR Bank ASA
                           as Mandated Lead Arranger

                                       and

                                DnB NOR Bank ASA
                                    as Agent








                             Dated 14 September 2005
<PAGE>
                                                                 Execution copy



                                TABLE OF CONTENTS


1 DEFINITIONS AND INTERPRETATION                                             4

2 THE FACILITY                                                              13

3 PURPOSE                                                                   13

4 CONDITIONS PRECEDENT                                                      14

5 DRAWDOWN                                                                  14

6 REPAYMENT                                                                 15

7 PREPAYMENT AND CANCELLATION                                               15

8 INTEREST                                                                  17

9 INTEREST PERIODS                                                          18

10 CHANGES TO THE CALCULATION OF INTEREST                                   19

11 FEES                                                                     20

12 TAX GROSS-UP AND INDEMNITIES                                             20

13 INCREASED COSTS                                                          21

14 OTHER INDEMNITIES                                                        21

15 MITIGATION BY THE LENDERS                                                22

16 COSTS AND EXPENSES                                                       23

17 SECURITY                                                                 23

18 REPRESENTATIONS AND WARRANTIES                                           24

19 INFORMATION UNDERTAKINGS                                                 27

20 FINANCIAL COVENANTS                                                      29

21 GENERAL UNDERTAKINGS                                                     29

22 VESSEL COVENANTS                                                         31

23 EVENTS OF DEFAULT                                                        35

24 CHANGES TO THE PARTIES                                                   37

25 ROLE OF THE AGENT AND THE ARRANGER                                       39

26 SHARING AMONG THE FINANCE PARTIES                                        43

27 PAYMENT MECHANICS                                                        45

28 SET-OFF                                                                  46

29 NOTICES                                                                  47

30 CALCULATIONS                                                             47

31 MISCELLANEOUS                                                            48

32 GOVERNING LAW AND ENFORCEMENT                                            49

<PAGE>

SCHEDULES

1    Lenders and commitments

2    Conditions precedent

3    Form of Drawdown Notice

4    Form of Compliance Certificate

5    Form of Transfer Certificate

6    Form of Assignment Agreement

7    Mandatory Cost Formula


<PAGE>

THIS  REVOLVING  CREDIT  FACILITY  AGREEMENT is dated 14 September 2005 and made
between

(1)  Nordic American Tanker Shipping  Limited,  of Reid House, 31 Church Street,
     Hamilton HM 12, Bermuda, as borrower (the "Borrower"),

(2)  The banks and  financial  institutions  listed in Schedule  ii, as original
     lenders (together, the "Lenders"),

(3)  DnB NOR Bank ASA of Stranden 21, N-0250 Oslo, Norway,  organisation  number
     984 851 006, as mandated lead arranger (the "Arranger"), and

(4)  DnB NOR Bank ASA of Stranden 21, N-0250 Oslo, Norway,  organisation  number
     984 851 006, as facility agent (the "Agent")




IT IS AGREED as follows


1    DEFINITIONS AND INTERPRETATION

1.1  Definitions

In this Agreement, unless the context otherwise requires

"Agreement"  means  this  revolving  credit  facility  agreement,  as it  may be
amended,  supplemented and varied from time to time, including its Schedules and
any Transfer Certificate

"Applicable  Margin" means the margin as  determined  and adjusted in accordance
with Clause 8 2 (Adjustment of Applicable Margin)

"Assignment  Agreement"  means  the  assignment  agreement  collateral  to  this
Agreement for the first  priority  assignment of the Earnings and the Insurances
to be made between the Borrower and the Agent (on behalf of the Finance Parties)
as security for all amounts due from time to time under the Finance Documents in
accordance  with  Clause  17  (Security),  substantially  in the form set out in
Schedule 6 (Form of Assignment Agreement)

"Availability  Period"  means the  period  from and  including  the date of this
Agreement until one (1) month prior to the Final Maturity Date

"Available Commitment" means a Lender's Commitment less

a)   the amount of its participation in any outstanding Loans, and

b)   in relation to any proposed Loan, its  participation  in any Loans that are
     due to be made on or before the proposed Drawdown Date,

other than that Lender's participation in any Loans that are due to be repaid or
repaid on or before the proposed Drawdown Date

"Available  Facility"  means the  aggregate  for the time being of each Lender's
Available Commitment

"Break Costs" means the amount (if any) by which

a)   the interest  which a Lender  should have  received for the period from the
     date of receipt of all or part of its participation in a Loan or Unpaid Sum
     to the last day of the current  Interest  Period in respect of such Loan or
     Unpaid Sum,  had the  principal  amount or Unpaid Sum been paid on the last
     day of that Interest Period, exceeds

b)   the amount  which that Lender  would be able to obtain by placing an amount
     equal to the principal  amount or Unpaid Sum received by it on deposit with
     a leading bank in the relevant  interbank  market for a period  starting on
     the Business Day  following  receipt or recovery and ending on the last day
     of the current Interest Period

"Business  Day" means a day (other than a Saturday or Sunday) on which banks are
open for  business  in Oslo and London (or any other  relevant  place of payment
under Clause 27 (Payment mechanics)

"Charterers" means any charterers of any of the Vessels from time to time

"Charterparties"   means   each   of  the   time   charterparty(ies),   bareboat
charterparty(ies)  or other  contracts of  employment  (as the case may be) made
between the Borrower (as owner) and the relevant  Charterers  for the charter of
the Vessels

"Commercial Management Agreement" means the agreement made or to be made between
the Borrower and the  Commercial  Manager for the  commercial  management of the
Borrower and the Vessels (hereunder,  but not limited to, the appointment of the
Technical Manager)

"Commercial  Manager" means Scandic American Shipping Ltd (European Branch), P0
Box 56, N-3201 Sandefjord, Norway

"Commitment" means

a)   in relation to a Lender, the amount set opposite its name under the heading
     "Commitment" in Schedule 1 (Lenders and  Commitments) and the amount of any
     other Commitment transferred to it pursuant to Clause 24 2 (Assignments and
     transfers by the Lenders), and

b)   in relation to any New Lender, the amount of any Commitment  transferred to
     it pursuant to Clause 24 2 (Assignments and transfers by the Lenders),

to the extent not cancelled, reduced or transferred by it under this Agreement

"Compliance  Certificate"  means a certificate  substantially in the form as set
out in Schedule 4 (Form of Compliance Certificate)

"Default"  means an Event of Default or any event or  circumstance  specified in
Clause 23 (Events of Default)  which  would (with the expiry of a grace  period,
the  giving of  notice,  the  making  of any  determination  under  the  Finance
Documents or any combination of any of the foregoing) be an Event of Default

"DOC" means in relation to the Technical  Manager a valid document of compliance
issued to the Technical Manager pursuant to paragraph 13 2 of the ISM Code

"Drawdown  Date" means the  Business  Day on which the  Borrower  has  requested
drawdown of a Loan pursuant to this Agreement or, as the context  requires,  the
date on which such Loan is actually made

"Drawdown  Notice"  means  the  notice  substantially  in the form set  forth in
Schedule 3 (Form of Drawdown Notice)

"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 of or
operation of any of the Vessels, including (but not limited to)

a)   all freight,  hire and passage  moneys  payable to the Borrower,  including
     (without limitation) payments of any nature under any of the Charterparties
     or any other  charter or agreement  for the  employment,  use,  possession,
     management and/or operation of any of the Vessels,

b)   any claim under any  guarantees  related to freight and hire payable to the
     Borrower as a consequence of the operation of any of the Vessels,

c)   compensation payable to the Borrower in the event of any requisition of any
     of the  Vessels  or for the  use of any of the  Vessels  by any  government
     authority or other competent authority,

d)   remuneration for salvage, towage and other services performed by any of the
     Vessels payable to the Borrower,

e)   demurrage and retention money receivable by the Borrower in relation to any
     of the Vessels,

f)   all moneys which are at any time payable under the Insurances in respect of
     loss of earnings,

g)   if and whenever any of the Vessels is employed on terms  whereby any moneys
     falling within paragraph a) to f) 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 such Vessel, and

h)   any other money  whatsoever due or to become due to the Borrower from third
     parties in relation to any of the Vessels, or otherwise

"Earnings Account" means account no 7093 04 41587 with the Agent of the Borrower
to which all the Earnings shall be paid

"Environmental Approval" means any permit, licence,  consent, approval and other
authorisations and the filing of any notification, report or assessment required
under any Environmental Law for the operation of any of the Vessels

"Environmental Claim" means any claim,  proceeding or investigation by any party
in respect of any Environmental Law or Environmental Approval

"Environmental   Law"  means  any  applicable  national  or  international  law,
regulation,  convention  or treaty  in any  jurisdiction  in which the  Borrower
and/or the  Charterers  conducts  business  which relates to

a)   the pollution or protection of the environment,

b)   harm to or the protection of human health,

c)   conditions on the workplace,

d)   any emission or substance capable of causing harm to any living organism or
     the environment, or

e)   to the carriage of material which is capable of polluting the environment

"Equity"  means has the  meaning  given to that  term in Clause 20 1  (Financial
definitions)

"Event of Default" means any event or  circumstance  specified as such in Clause
23 (Events of Default)

"Existing Vessels" means

a)   MT "Nordic  Hawk",  a 151,458  dwt  suezmax  vessel  built in 1997 with IMO
     number  9131149 owned by and  registered in the name of the Borrower in the
     Bahamas Ship Registry,

b)   MT "Nordic  Hunter",  a 151,458 dwt suezmax  vessel  built in 1997 with IMO
     number  9131151 owned by and  registered in the name of the Borrower in the
     Bahamas Ship Registry,

c)   MT "Gulf  Scandic",  a 151,458  dwt suezmax  vessel  built in 1997 with IMO
     number 9131137,  owned by and registered in the name of the Borrower in the
     Isle of Man Ship Registry,

d)   MT "Nordic  Fighter",  a 153,181 dwt suezmax  vessel built in 1998 with IMO
     number 9157715,  owned by and registered in the name of the Borrower in the
     Norwegian International Ship Registry,

e)   MT "Nordic  Freedom",  a 159,500 dwt suezmax  vessel built in 2005 with IMO
     number  9288887 owned by and  registered in the name of the Borrower in the
     Bahamas Ship Registry,

f)   MT "Nordic  Voyager",  a 149,591 dwt suezmax  vessel built in 1997 with IMO
     number  9102930 owned by and  registered in the name of the Borrower in the
     Norwegian International Ship Registry, and

g)   MT "Nordic Discovery",  a 153,181 dwt suezmax vessel built in 1998 with IMO
     number  9157727 owned by and  registered in the name of the Borrower in the
     Norwegian International Ship Registry

"Facility" means the committed revolving credit facility referred to in Clause 2
1 (Facility)

"Fee  Letter"  means any  letter or  letters  dated on or about the date of this
Agreement  between the Arranger and the Borrower (or the Agent and the Borrower)
setting out any fees referred to in Clause 11 (Fees)

"Final  Maturity Date" means the date falling five (5) years  following the date
of this Agreement

"Finance  Documents"  means this  Agreement,  the  Security  Documents,  any Fee
Letters and 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 to the Finance Parties under this
Agreement or any of the other documents referred to herein or therein

"Finance Party" means the Agent, the Arranger or a Lender

"Financial  Indebtedness" means any obligation (whether incurred as principal or
as surety) for the payment or  repayment  of money,  whether  present or future,
actual or contingent

"GAAP" means the generally accepted  accounting  principles in the United States
of America

"Insurances"  means,  in  relation  to each of the  Vessels,  all  policies  and
contracts of insurance (which expression  includes all entries of such Vessel in
a protection and indemnity or war risk association)  which are from time to time
during the  Security  Period in place or taken out or entered into by or for the
benefit of the  Borrower  (whether  in the sole name of the  Borrower  or in the
joint names of the Borrower  and any other  person) in respect of the Vessels or
otherwise in connection with the Vessels and all benefits thereunder  (including
claims of whatsoever nature and return of premiums)

"Interest Payment Date" means the last Business Day of each Interest Period

"Interest  Period" means, in relation to a Loan, each of the successive  periods
determined in accordance with Clause 9 1 (Selection of Interest  Periods),  and,
in relation to an Unpaid Sum, each period determined in accordance with Clause 8
4 (Default interest)

"Investment" means any direct or indirect

a)   extension of credit or capital contribution to any other person,

b)   purchase of vessels,

c)   acquisition of shares, and

d)   acquisition of debt instruments issued by any other person

"ISM Code" means the International Safety Management Code for the Safe Operation
of Ships and for Pollution Prevent

"ISPS Code" means the International  Ship and Port Facility Security (ISPS) Code
as  adopted  by  the  International  Maritime  Organization's  (IMO)  Diplomatic
Conference of December 2002

"Lenders"  means the banks  and  financial  institutions  listed in  Schedule  1
(Lenders and Commitments) and any New Lender,  which in each case has not ceased
to be a Party in accordance with the terms of this Agreement

"LIBOR" means in relation to a Loan

a)   the rate per annum  equal to the  offered  quotation  for  deposits  in USD
     ascertained  by the  Agent  to be the  rate as  displayed  on the  Reuters'
     screen,  page  LIBOR01,  at or  about  11 00  hours  (London  time)  on the
     applicable Quotation Day, or

b)   if no such rate is available, the arithmetic means of the rate per annum at
     which  the  Lenders  are  able to  acquire  USD in the  amount  and for the
     Interest Period of such Loan in the London  interbank market at or about 11
     00 hours (London time) on the applicable  Quotation Day, as (in the absence
     of manifest error) conclusively certified by the Agent to the Borrower

"Loan" means at any time, the principal amount of an outstanding advance made by
the Lenders under the Facility

"Majority Lenders" means

a)   if there are no Loans  outstanding,  a Lender or Lenders whose  Commitments
     aggregate  more  than 66 67% of the  Total  Commitments  (or,  if the Total
     Commitments  have been reduced to zero,  aggregated more than 66 67% of the
     Total Commitments immediately prior to the reduction), or

b)   at any other time, a Lender or Lenders  whose  participations  in the Loans
     then outstanding aggregate more than 66 67% of the Loans then outstanding

"Management  Agreements"  means  the  Commercial  Management  Agreement  and the
Technical Management Agreement

"Managers" means the Commercial Manager and the Technical Manager

"Mandatory   Cost"  means  the  cost  of  complying   with  certain   regulatory
requirements,  expressed as a percentage rate per annum  calculated by the Agent
under Schedule 7 (Mandatory Cost Formula)

"Market Value" means,  in respect of each Vessel,  the fair market value of each
Vessel in USD,  being the average of  valuations  of such Vessel  obtained  from
minimum two (2) reputable and independent shipbrokers,  acceptable to the Agent,
with or without  physical  inspection  of the relevant  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  buyer and seller,  on an "as is,
where is" basis,  free of any existing  charter or other  contract of employment
and/or pool arrangement

"Material Adverse Effect" means a material adverse effect on

a)   the business,  operation,  assets or condition  (financial or otherwise) of
     the Borrower, or

b)   the  ability of the  Borrower to perform  any of its  material  obligations
     under the Finance Documents

"MOAs"  means  each of the  Memorandum  of  Agreements  being made  between  the
relevant seller and the Borrower for the purchase of any New Vessel

"Mortgages"  means  each  of the  first  priority  mortgages  and the  deeds  of
covenants collateral thereto to be executed and recorded by the Borrower against
each of the Vessels in the Bahamas,  Isle of Man or the Norwegian  International
Ship  Registry (as the case may be) (or such other ship  registry  acceptable to
the Agent) in favour of the Agent (on behalf of the Finance Parties) as security
for all amounts due from time to time under the Finance  Documents in accordance
with Clause 17 (Security),  in form and substance  satisfactory to the Agent (on
behalf of the Finance Parties)

"New Lender" has the meaning set out in Clause 24 (Changes to the Parties)

"New  Vessels"  means (i) any modern  crude oil aframax  tanker  and/or  suezmax
tanker  all of double  hull and not be built  before  1996 and (ii)  such  other
double hull crude oil tanker  vessels as shall be approved  from time to time by
all of the Lenders,  purchased by the Borrower  after the date of this Agreement
and which has been approved by the Lenders to be entered into the Security Pool

"Original  Financial  Statements"  means  the  audited  consolidated   financial
statements of the Borrower for the year ended 31 December 2004

"Party" means a party to this Agreement  (including its successors and permitted
transferees)

"Quotation  Day"  means the day  occurring  two (2)  Business  Days prior to the
commencement of an Interest Period

"Repayment Date" means the last day of the Interest Penod for the relevant Loan

"Security  Documents" means all or any security documents as may be entered into
from time to time pursuant to Clause 17 (Security)

"Security  Interest"  means any mortgage,  charge  (whether  fixed or floating),
encumbrance,  pledge, lien,  assignment by way of security,  finance lease, sale
and  repurchase  or sale and leaseback  arrangement,  sale of  receivables  on a
recourse basis or other security  interest or any other agreement or arrangement
having the effect of conferring security

"Security  Period" means the period commencing on the date of this Agreement and
ending the date on which the Agent  notifies the other  Finance  Parties and the
Borrower  that

a)   all amounts  which have become due for payment by the Borrower or any other
     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 of the Finance Documents,

c)   the Borrower has no future or contingent  liability  under any provision of
     this Agreement or the other Finance Documents, and

d)   the  Agent  and the  Majority  Lenders  do 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 proceeding relating to a Finance Document or any
     asset covered (or previously  covered) by a Security  Interest created by a
     Finance Document

"Security Pool" means the Existing Vessels and the New Vessels

"Security Pool Value" means the Market Value of all of the Vessels  entered into
the Security Pool from time to time

"SMC" means a valid safety management certificate issued for each of the Vessels
pursuant to paragraph 13 7 of the ISM Code

"SMS" means a safety  management  system for each of the Vessels  developed  and
implemented  in  accordance  with  the ISM  Code and  including  the  functional
requirements duties and obligations that follow from the ISM Code

"Tax on  Overall  Net  Income"  means a Tax  imposed  on a Finance  Party by the
jurisdiction  under  the  laws of which  it is  incorporated,  or in which it is
located or treated as resident for tax purposes, on

a)   the net income, profits or gains of that Finance Party world wide, or

b)   such of the net  income,  profits  or  gains of that  Finance  Party as are
     considered to arise in or relate to or are taxable in that jurisdiction

"Taxes" means all present and future taxes, levies,  imposts,  duties,  charges,
fees,  deductions  and  withholdings,  and any  restrictions  and or  conditions
resulting in a charge  together with  interest  thereon and penalties in respect
thereof and "tax" and "taxation" shall be construed accordingly

"Technical  Management Agreement" means the agreement made or to be made between
the Borrower  and the  Technical  Manager for the  technical  management  of the
Vessels

"Technical  Manager" means any reputable technical manager of any of the Vessels

"Total  Assets"  has the  meaning  given to that term in Clause 20 1  (Financial
definitions)

"Total Commitments" means the aggregate of the Lenders'  Commitments,  being USD
300,000,000 at the date of this Agreement

"Total Debt" means has the meaning  given to that term in Clause 20 1 (Financial
definitions)

"Total Loss" means, in relation to any Vessel

a)   the actual, constructive, compromised, agreed, arranged or other total loss
     of such Vessel,

b)   any expropriation, confiscation, requisition or acquisition of such Vessel,
     whether for full consideration, a consideration less than its 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  governmental  or official  authority  (excluding a
     requisition  for hire for a fixed period not exceeding one (1) year without
     any right to  extension)  unless it is within  one (1) month from the Total
     Loss Date redelivered to the full control of the Borrower, and

c)   any arrest,  capture,  seizure or detention of such Vessel  (including  any
     hijacking or theft)  unless it is within two (2) months from the Total Loss
     Date redelivered to the full control of the Borrower

"Total Loss Date" means

a)   in the case of an actual  total  loss of any  Vessel,  the date on which it
     occurred  or, if that is unknown,  the date when such Vessel was last heard
     of,

b)   in the case of a constructive,  compromised,  agreed or arranged total loss
     of any Vessel, the earlier of

     (i)  the date on which a notice  of  abandonment  is given to the  insurers
          (provided a claim for total loss is admitted by such  insurers) or, if
          such  insurers  do not  forthwith  admit such a claim,  at the date at
          which either a total loss is subsequently  admitted by the insurers or
          a total loss is  subsequently  adjudged by a competent court of law or
          arbitration  panel to have  occurred or, if earlier,  the date falling
          six (6) months after notice of abandonment of such Vessel was given to
          the insurers, and

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

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 Agent that the event  constituting
     the total loss occurred

"Transaction   Documents"   means  the   Finance   Documents,   the  MOAs,   the
Charterparties and the Management Agreements,  together with the other documents
contemplated herein or therein

"Transfer Certificate" means a certificate  substantially in the form as set out
in Schedule 5 (Form of Transfer  Certificate)  or any other form agreed  between
the Agent and the Borrower

"Transfer Date" means, in respect of a Transfer,  the proposed  Transfer Date as
set out in the Transfer Certificate relating to the Transfer

"Unpaid Sum" means any sum due and payable but unpaid by the Borrower  under the
Finance Documents

"USD"  means  United  States  Dollars,  being the lawful  currency of the United
States of America

"Value Adjusted Equity" means Value Adjusted Total Assets less Total Debt of the
Borrower

"Value Adjusted Total Assets" means, on a consolidated  basis,  the total market
value of all of the assets of the Borrower, which shall be determined as follows

a)   the Market Value of the Vessels, and

b)   the market value,  if assessable (in the reasonable  opinion of the Agent),
     or otherwise the book value of all other assets of the Borrower  (including
     any vessels), less any capitalised goodwill or other intangible assets

"VAT" means value added tax and any other tax of similar nature

"Vessels" means the Existing Vessels and the New Vessels

1.2  Construction

In this Agreement, unless the context otherwise requires

a)   Clause and Schedule headings are for ease of reference only,

b)   words denoting the singular number shall include the plural and vice versa.
     In  particular,  for so  long  as DnB  NOR  Bank  ASA is the  only  Lender,
     references  to  "Lenders"  or  "Majority  Lenders"  shall be construed as a
     reference to DnB NOR Bank ASA,

c)   references to Clauses and Schedules are  references,  respectively,  to the
     Clauses and Schedules of this Agreement,

d)   references to a provision of law is a reference to that provision as it may
     be amended or re-enacted,  and to any  regulations  made by the appropriate
     authority pursuant to such law,

e)   references to "control"  means the power to appoint a majority of the board
     of directors or to direct the management and policies of an entity, whether
     through the ownership of voting capital, by contract or otherwise,

f)   references to "indebtedness"  includes any obligation  (whether incurred as
     principal  or as surety) for the  payment or  repayment  of money,  whether
     present or future, actual or contingent,

g)   references  to  "shares"   shall  include  stock,   partnership   interest,
     participation rights, contributions or other equivalent rights of ownership
     or   participation   of  or  in   any   body,   corporation,   partnership,
     unincorporated joint venture or other unincorporated entity, and

h)   references to a "person" shall include any individual,  firm,  partnership,
     joint  venture,  company,   corporation,   trust,  fund,  body,  corporate,
     unincorporated  body of  persons,  or any state or any agency of a state or
     association (whether or not having separate legal personality)


2    THE FACILITY

2.1  Facility

Subject  to the  terms  of this  Agreement,  the  Lenders  have  agreed  to make
available to the Borrower a committed  revolving credit facility in an aggregate
amount equal to the Total Commitments

2.2  Maximum liability

The aggregate maximum principal amount of all Loans  outstanding,  including any
requested drawdown, shall not on any requested Drawdown Date and/or on the first
day of an Interest Period, exceed the Total Commitments

2.3  Finance Parties' rights and obligations

The  obligations  of each Finance Party under the Finance  Documents are several
Failure  by a  Finance  Party to  perform  its  obligations  under  the  Finance
Documents  does not affect the  obligations of any other Party under the Finance
Documents  No Finance  Party is  responsible  for the  obligations  of any other
Finance Party under the Finance Documents

The  rights  of each  Finance  Party  under or in  connection  with the  Finance
Documents are, subject to provisions  related to the Majority  Lenders' decision
as set out herein,  separate and  independent  rights and any debt arising under
the Finance  Documents to a Finance Party from the Borrower  shall be a separate
and  independent  debt A Finance  Party may,  except as otherwise  stated in the
Finance  Documents  and subject to provisions  related to the Majority  Lenders'
decisions  as set out herein,  separately  enforce its rights  under the Finance
Documents

3    PURPOSE

3.1  Purpose

The Borrower shall apply all amounts borrowed by it

a)   to  refinance  the   outstanding   indebtedness   under  that  certain  USD
     300,000,000  revolving credit facility  agreement dated 19 October 2004 (as
     amended),

b)   to provide funding for subsequent acquisitions of the New Vessels, and

c)   for general corporate purposes

3.2  Monitoring

Without  prejudice to the  obligations  of the Borrower  under this Clause 3, no
Finance  Party is bound to  monitor  or verify  the  application  of any  amount
borrowed pursuant to this Agreement

4    CONDITIONS PRECEDENT

4.1  Initial conditions precedent

The  Borrower  may not deliver a Drawdown  Notice  unless the Agent has received
originals or certified  copies of all of the documents and other evidence listed
in Schedule 2 (Conditions  precedent) in form and substance  satisfactory to the
Agent The Agent shall notify the Borrower and the Lenders promptly upon being so
satisfied

4.2  Further conditions precedent

The  Lenders  will  only  be  obliged  to  comply  with  Clause  5  4  (Lenders'
participation)  if on  the  date  of the  Drawdown  Notice  and on the  proposed
Drawdown Date

a)   no Default is continuing or would result from the proposed Loan, and

b)   the representations and warranties  contained in Clause 18 (Representations
     and  warranties)  deemed to be repeated on those dates are true and correct
     in all material respects

4.3  Maximum number of Loans

The Facility may be drawn in one or more Loans if there would not at anyone time
be more than five (5) Loans outstanding hereunder

4.4  Waiver of conditions precedent

The  conditions  specified  in this  Clause 4 are solely for the  benefit of the
Lenders  and may be  waived  on  their  behalf  in  whole or in part and with or
without  conditions  by the Agent  (acting on the  instructions  of the Majority
Lenders)


5    DRAWDOWN

5.1  Delivery of the Drawdown Notice

The  Borrower  may  utilise  the  Facility  by  delivering  to the  Agent a duly
completed  Drawdown  Notice no later than 10 00 hours  (London  time)  three (3)
Business Days prior to the proposed Drawdown Date

5.2  Completion of the Drawdown Notice

Each Drawdown Notice is irrevocable and shall be duly completed

5.3  Currency and amount

a)   The currency specified in a Drawdown Notice must be USD

b)   The amount of a proposed  Loan must be an amount which is not more than the
     Available  Facility and which is a minimum of USD 5,000,000 and an integral
     multiple of USD 1,000,000 or, if less, the Available Facility

c)   The amount outstanding under all of the Loans, including any proposed Loans
     shall, at no time exceed  sixty-six point  sixty-seven per cent (66 67%) of
     the Security Pool Value

d)   The amount  available  to be drawn to finance  the  acquisition  of any New
     Vessel's)  shall be no greater than the Market Value of such New Vessel(s),
     however  limited  to the  purchase  price of the  Vessel  as set out in the
     relevant MOA

e)   The amount  available to be drawn for general  corporate  purposes shall be
     limited to USD 50,000,000 in the aggregate

5.4  Lenders' participation

If the conditions set out in this Agreement have been met

a)   each Lender shall make its  participation  in each Loan  available no later
     than 10 00 hours (London time) on the Drawdown Date for that Loan,

b)   the amount of each Lender's participation in each Loan will be equal to the
     proportion  borne by its Available  Commitment  to the  Available  Facility
     immediately prior to making the Loan, and

c)   the Agent  shall  notify  each  Lender  of the  amount of each Loan and the
     amount of its participation in that Loan two (2) Business Days prior to the
     relevant Drawdown Date


6    REPAYMENT

6.1  Repayment and roll-over of Loans

The Borrower  shall repay each Loan in full on the Repayment Date for that Loan,
however  so that where a Loan (the "New  Loan") is subject to and in  accordance
with the other  terms of this  Agreement,  to be made on a day on which  another
Loan (the "Maturing Loan") is due to be repaid, then

a)   the Maturing Loan shall be deemed to be repaid on its Repayment Date to the
     extent  that the  amount  of the New Loan is equal to or  greater  than the
     amount of the Maturing Loan, and

b)   to that  extent,  the  amount of the New Loan  shall be deemed to have been
     credited to the  account of the  Borrower,  and the  Lenders  shall only be
     obliged to make  available  an amount  equal to the amount by which the New
     Loan exceeds the Maturing Loan

6.2  Final repayment

The Borrower shall repay all Loans  outstanding  under this Agreement in full on
the Final Maturity Date


7    PREPAYMENT AND CANCELLATION

7.1  Mandatory prepayment - Total Loss or sale

If any of the Vessels is sold or becomes a Total  Loss,  the  relevant  Facility
shall be prepaid with an amount equal to that Vessel's proportionate part of the
Market Value of all of the Vessels

a)   in case of a sale,  on or before the date on which the sale is completed by
     delivery of the relevant Vessel to the buyer, or

b)   in the case of a Total Loss, on the earlier of the date falling one hundred
     and twenty  (120)  days  after the Total  Loss Date and the  receipt by the
     Agent (on behalf of the Lenders) of the  proceeds of Insurance  relating to
     such Total Loss (or in the event of a requisition for title of such Vessel,
     immediately-after the occurrence of such requisition of title)

7.2  Mandatory prepayment -- Market Value

If the Market Value of all of the Vessels falls below one hundred and thirty per
cent  (130%)  or one  hundred  and fifty per cent (150 00%) of the Loans (as the
case may be and as set out in Clause 22 4 (Minimum Market Value)),  the Borrower
shall within fifteen (15) Business Days, either

a)   prepay the Facility with an amount, or

b)   provide the Lenders with such  additional  security,  in form and substance
     satisfactory  to the Agent (on behalf of the Lenders), required to restore
     the aforesaid ratio

7.3  Mandatory prepayment -- change of Commercial Manager

On a change of the Commercial Manager,  the Parties will enter into negotiations
for a period not exceeding forty-five (45) days to determine how to continue the
Loans under the Facility If no such  agreement  is reached  between the Borrower
and the Lenders within such period,  the Facility shall within five (5) Business
Days be  cancelled  and the  Borrower  shall  prepay the Loans at the end of the
relevant current Interest Periods

7.4  Mandatory prepayment -- illegality

If it becomes  unlawful in any applicable  jurisdiction  for a Lender to perform
any of its  obligations as contemplated by this Agreement or to fund or maintain
its participation in any Loan

a)   that Lender shall  promptly  notify the Agent upon  becoming  aware of that
     event,

b)   upon the Agent  notifying the Borrower,  the Commitment of that Lender will
     be immediately cancelled, and

c)   the Borrower shall prepay that Lender's  participation in the Loans made to
     the Borrower on the last day of the Interest Period for each Loan occurring
     after  the  Agent has  notified  the  Borrower  or,  if  earlier,  the date
     specified  by the Lender in the  notice  delivered  to the Agent  (being no
     earlier than the last day of any applicable grace period permitted by law)

7.5  Voluntary prepayment

The  Borrower  may, if it gives the Agent not less than five (5)  Business  Days
prior notice,  prepay the whole or any part of a Loan (but if in part,  being an
amount of minimum USD 5,000,000)

7.6  Voluntary cancellation

The  Borrower  may, if it gives the Agent not less than five (5)  Business  Days
prior  notice,  cancel in whole or in part the  amount of the Total  Commitments
undrawn at the date on which such  cancellation  is to be  effective  (but if in
part, being an amount of minimum USD 5,000,000)

Any  cancellation  under this  Clause 7 6 shall  reduce the  Commitments  of the
Lenders rateably

7.7  Terms and conditions for prepayments and cancellation

7 7 1  Irrevocable notice

Any notice of  prepayment or  cancellation  given by a Party under this Clause 7
shall  be  irrevocable  and,  unless  a  contrary  indication  appears  in  this
Agreement,  shall specify the date upon which the prepayment or  cancellation is
to be made and the amount of that cancellation or prepayment

7 7 2  Additional payments

Any prepayment under this Agreement shall be made together with accrued interest
on the amount  prepaid  and,  subject  to any Break  Costs,  without  premium or
penalty

7 7 3  Time of prepayment and cancellation

The Borrower shall not repay or prepay all or any part of any Loan or cancel all
or any part of the Commitments  except at the times and in the manner  expressly
provided for in this Agreement

7 7 4  No reinstatement

No  amount  of  the  Total  Commitments   cancelled  under  this  Agreement  may
subsequently be reinstated

7 7 5  Forwarding of notice of prepayment and cancellation

If the Agent receives a notice under this Clause 7 it shall  promptly  forward a
copy of that notice to the Borrower or the affected Lender, as appropriate


8    INTEREST

8.1  Calculation of interest

The rate of interest for each Loan for each  Interest  Period is the  percentage
rate per annum which is the aggregate of

a)   the Applicable Margin,

b)   LIBOR, and

c)   Mandatory Cost

Effective  interest pursuant to the Norwegian  Financial  Agreement Act 1999 has
been  calculated by the Agent as set out in a separate  notice from the Agent to
the Borrower

8.2  Adjustment of Applicable Margin

8 2 1  Definitions

For the purpose of this Clause 8 2 1, the following definitions shall apply

a)   "Margin Reset Date" means the date the Borrower  delivers,  or such date as
     the Borrower should have delivered,  a valuation of the Market Value of the
     Vessels to the Agent

b)   "Margin Period" means

     (i)  the period from (and  including)  the date of this  Agreement  to (but
          excluding) the first Margin Reset Date, and,

     (ii) each  period  from  (and  including)  a  Margin  Reset  Date  to  (but
          excluding) the next Margin Reset Date

8 2 2  Determination of Applicable Margin

The Applicable Margin shall be determined by reference to the ratio of the Loans
to the Security Pool Value as follows

- -----------------------------------------------------------------------------
  Loans / Security Pool Value                        Applicable Margin
- -----------------------------------------------------------------------------
  60 01% - 66 67%                                   1 20 per cent per annum
  50 00% - 60 00%                                   0 95 per cent per annum
  Less than 50 00%                                  0 70 per cent per annum
- -----------------------------------------------------------------------------

8 2 3  Adjustment of Applicable Margin

Following  receipt  of  evidence  of  change in the  Market  Value of any of the
Vessels,  the Agent shall  determine the Applicable  Margin which shall apply to
all Loans made under this Agreement during the Margin Period  commencing on that
Margin Reset Date

8.3  Payment of interest

The Borrower  shall pay accrued  interest on the Loan on each  Interest  Payment
Date (and if the  Interest  Period is longer  than six (6)  months,  on the date
falling at six (6) monthly intervals after the first day of the Interest Period)

8.4  Default interest

If the  Borrower  fails  to pay any  amount  payable  by it  under  the  Finance
Documents on its due date,  interest shall accrue on the overdue amount from the
due date and up to the date of actual  payment (both before and after  judgment)
at a rate  determined  by the Agent to be two per cent (2 00%)  higher  than the
rate which would have been payable if the overdue amount had,  during the period
of  non-payment,  constituted  the relevant  Loan in the currency of the overdue
amount for successive Interest Periods, each of a duration selected by the Agent
(acting  reasonably)  Any  interest  accruing  under  this  Clause  8 4 shall be
immediately  payable by the Borrower on demand by the Agent Default interest (if
unpaid)  arising on an overdue amount will be compounded with the overdue amount
at the end of each Interest  Period  applicable to that overdue  amount but will
remain immediately due and payable

8.5  Notification of rates of interest

The  Agent  shall   promptly   notify  the  Lenders  and  the  Borrower  of  the
determination of a rate of interest under this Agreement


9    INTEREST PERIODS

9.1  Selection of Interest Periods

a)   The  Borrower  may select an  Interest  Period  for a Loan in the  Drawdown
     Notice

b)   The Borrower may select an Interest  Period of one (1), two (2),  three (3)
     or six (6) months or any such other period agreed  between the Borrower and
     the Agent (on behalf of the Lenders),  provided however,  that the Borrower
     may not choose  more than three (3) one (1) month  Interest  Periods in any
     calendar year

c)   An Interest  Period for a Loan shall not extend  beyond the Final  Maturity
     Date, but shall be shortened so that it ends on the Final Maturity Date

d)   Each Interest  Period for a Loan shall start on the relevant  Drawdown Date
     or (if already made) on the last day of its preceding Interest Period

9.2  Non-Business Day

If an Interest  Period would otherwise end on a day which is not a Business Day,
that Interest  Period will instead end on the next Business Day in that calendar
month (if there is one) or the preceding Business Day (if there is not)

9.3  Notification of Interest Periods

The Agent will  notify the  Borrower  and the  Lenders of the  Interest  Periods
determined in accordance with this Clause 9


10   CHANGES TO THE CALCULATION OF INTEREST

10.1  Market disruption

a)   If a Market  Disruption Event occurs in relation to a Loan for any Interest
     Period,  then the rate of interest on each Lender's  share of that Loan for
     the Interest Period shall be the rate per annum which is the sum of

     (i)  the Applicable Margin, and

     (ii) the rate  notified to the Agent by that Lender as soon as  practicable
          and in any event before  interest is due to be paid in respect of that
          Interest  Period,  to be that which expresses as a percentage rate per
          annum the cost to that  Lender of funding  its  participation  in such
          Loan from whatever source it may reasonably select

b)   In this Agreement, "Market Disruption Event" means

     (i)  at or about 11 00 hours  (London  time) on the  Quotation  Day for the
          relevant Interest Period LIBOR is not available, or

     (ii) before  close of  business  in  London  on the  Quotation  Day for the
          relevant  Interest  Period,  the Agent receives  notifications  from a
          Lender or Lenders  (whose  participations  in a Loan exceed  fifty per
          cent (50 00%) of such Loan)  that the cost to it or them of  obtaining
          matching deposits in the London interbank market would be in excess of
          LIBOR

10.2  Alternative basis of interest or funding

If a Market  Disruption  Event occurs and the Agent or the Borrower so requires,
the Agent and the Borrower  shall enter into  negotiations  (for a period of not
more than  thirty  (30) days) with a view to  agreeing  a  substitute  basis for
determining the rate of interest Any  alternative  basis agreed pursuant to this
Clause 10 2 shall,  with the prior  consent of all the Lenders and the Borrower,
be binding on all Parties

10.3  Break Costs

The Borrower shall, within three (3) Business Days of demand by a Finance Party,
pay to that Finance  Party its Break Cost  attributable  to all or any part of a
Loan or Unpaid Sum being paid by the  Borrower  on a day other than a  Repayment
Date for such Loan or Unpaid Sum

Each  Lender  shall,  as soon as  reasonably  practicable  after a demand by the
Agent,  provide a  certificate  confirming  the amount of its Break Cost for any
Interest Period in which they accrue


11   FEES

11.1  Commitment fee

The  Borrower  shall  pay to the  Agent  (for  distribution  to the  Lenders)  a
commitment  fee  computed  at the  rate  of  thirty  per  cent  (30  00%) of the
Applicable  Margin on the Total Available  Commitment  accruing from the date of
this Agreement payable quarterly in arrears

11.2  Other fees

The  Borrower  shall pay to the Agent and the Arranger (as the case may be) (for
distribution among the Lenders according to a separate agreement/invitation) the
fees in the amount and at the times agreed in the Fee Letter


12   TAX GROSS-UP AND INDEMNITIES

12.1  Taxes

12 1 1  No withholding

All payments by the Borrower under the Finance  Documents shall be made free and
clear of and without  deduction or  withholding  for or on account of any Tax or
any other governmental or public payment imposed by the laws of any jurisdiction
from which or through  which such  payment is made,  unless a Tax  deduction  or
withholding is required by law

12 1 2  Tax gross-up

The  Borrower  shall  promptly  upon  becoming  aware  that it  must  make a Tax
deduction or  withholding  (or that there is any change in the rate or the basis
of a Tax deduction or withholding)  notify the Agent  accordingly  Similarly,  a
Lender  shall  notify  the Agent on  becoming  so aware in  respect of a payment
payable to that Lender If the Agent receives such  notification from a Lender it
shall notify the Borrower and that Lender

If a Tax deduction or withholding is required by law to be made by the Borrower

a)   the amount of the payment due from the  Borrower  shall be  increased to an
     amount which (after  making any Tax  deduction  or  withholding)  leaves an
     amount equal to the payment  which would have been due if no Tax  deduction
     or withholding had been required, and

b)   the Borrower shall make that Tax deduction or  withholding  within the time
     allowed and in the minimum amount required by law

Within thirty (30) days of making either a Tax deduction or  withholding  or any
payment  required in  connection  with that Tax  deduction or  withholding,  the
Borrower  shall  deliver  to the Agent for the  Finance  Party  entitled  to the
payment  evidence  reasonably  satisfactory  to that Finance  Party that the Tax
deduction  or  withholding  has been  made or (as  applicable)  any  appropriate
payment paid to the relevant taxing authority

12.2  Tax indemnity

The Borrower  shall  (within three (3) Business Days of demand by the Agent) pay
to the Agent for the account of the  relevant  Finance  Party an amount equal to
the loss, liability or cost which a Finance Party determines will be or has been
(directly or  indirectly)  suffered for or on account of any Tax by such Finance
Party in respect of a Finance  Document,  save for any Tax on Overall Net Income
assessed  on a Finance  Party or to the extent such loss,  liability  or cost is
compensated under Clause 12 1 (Tax gross-up)

12.3  VAT

All amounts set out, or expressed to be payable under a Finance  Document by any
Party to a Finance Document shall be deemed to be exclusive of any VAT If VAT is
chargeable,  the Borrower shall pay to the Agent for the account of such Finance
Party (in addition to the amount required pursuant to the Finance  Documents) an
amount equal to such VAT


13   INCREASED COSTS

13.1  Increased Costs

The  Borrower  shall,  upon demand  from by the Agent,  pay for the account of a
Finance Party the amount of any Increased Cost incurred by that Finance Party or
any of its  affiliates as a result of (i) the  introduction  of or any change in
(or  in  the  interpretation,  administration  or  application  of)  any  law or
regulation  (including  any laws and  regulations  implementing  new or modified
capital  adequacy  requirements)  or (ii)  compliance with any law or regulation
made after the date of this Agreement

In this Agreement, the term "Increased Costs" means

a)   a reduction in the rate of return from the Facility or on a Finance Party's
     (or its affiliate's) overall capital,

b)   an additional or increased cost, or

c)   a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its affiliates to the
extent that it is  attributable  to that Finance  Party having  entered into its
Commitments or funding or performing its obligations under any Finance Document

A Finance  Party  intending  to make a claim  pursuant to this Clause 13 1 shall
notify  the Agent of the event  giving  rise to the claim,  following  which the
Agent shall  promptly  notify the Borrower  Each Finance  Party shall as soon as
practicable  after a demand by the Agent,  provide a  confirmation  showing  the
amount of its Increased Costs

13.2  Exceptions

Clause 13 1 (Increased  Costs) does not apply to the extent any Increased  Costs
is a) attributable to a Tax deduction or withholding  required by law to be made
by the Borrower, b) compensated for by Clause 12 1 (Tax gross-up) or Clause 12 2
(Tax Indemnity), or c) attributable to the wilful breach by the relevant Finance
Party or its affiliates of any law or regulation


14   OTHER INDEMNITIES

14.1  Currency indemnity

If any sum due from the Borrower under the Finance  Documents (a "Sum"),  or any
order,  judgement  or  award  given  or made  in  relation  to a Sum,  has to be
converted from the currency (the "First  Currency") in which that Sum is payable
into another currency (the "Second Currency") for the purpose of

a)   making or filing a claim or proof against the Borrower,

b)   obtaining  or  enforcing  an order,  judgement  or award in relation to any
     litigation or arbitration proceedings,

the Borrower shall as an independent obligation,  within three (3) Business Days
of demand,  indemnify  each  Finance  Party to whom that Sum is due  against any
cost,  loss  or  liability  arising  out of or as a  result  of  the  conversion
including any discrepancy  between (A) the rate of exchange used to convert that
Sum from the First  Currency into the Second  Currency and (B) the rate or rates
of exchange available to that person at the time of its receipt of that Sum

The Borrower waives any right it may have in any  jurisdiction to pay any amount
under the Finance  Documents  in a currency or currency  unit other than that in
which it is expressed to be payable

14.2  Other indemnities

The Borrower  shall within three (3)  Business  Days of demand,  indemnify  each
Finance  Party  against any costs,  loss or  liability  incurred by that Finance
Party as a result of

a)   the occurrence of any Event of Default,

b)   a failure by the Borrower to pay any amount due under the Finance Documents
     on its due date, including without limitation,  any cost, loss or liability
     arising as a result of Clause 26 (Sharing among the Finance Parties),

c)   funding,  or  making  arrangements  to fund,  its  participation  in a Loan
     requested  by the  Borrower in a Drawdown  Notice but not made by reason of
     the operation of any one or more of the provisions of this Agreement (other
     than by reason of default or negligence by that Lender alone), or

d)   a Loan (or part of a Loan) not being prepaid in accordance with a notice of
     prepayment given by the Borrower

14.3  Indemnity to the Agent

The  Borrower  shall  promptly  indemnify  the Agent  against any cost,  loss or
liability  incurred  by  the  Agent  (acting  reasonably)  as  a  result  of

a)   investigating any event which it reasonably believes is a possible Event of
     Default, or

b)   acting or verifying any notice,  request or instruction which it reasonably
     believes to be genuine, correct or appropriately authorised


15   MITIGATION BY THE LENDERS

15.1  Mitigation

Without in any way limiting the  obligations  of the  Borrower  hereunder,  each
Finance Party shall,  in  consultation  with the Borrower,  take all  reasonable
steps to mitigate  any  circumstances  which arise and which would result in any
amount becoming payable under or pursuant to, or cancelled pursuant to, any of

a)   Clause 7 1 (Mandatory prepayment - Total Loss or sale),

b)   Clause 7 2 (Mandatory prepayment - Market Value),

c)   Clause 7 3 (Mandatory prepayment - Illegality),

d)   Clause 12 (Tax gross-up and indemnities), and

e)   Clause 13 (Increased Costs),

including (but not limited to) transferring its rights and obligations under the
Finance Documents to another affiliate

A Finance  Party is not  obliged to take any steps under this Clause 15 1 if, in
the  opinion  of that  Finance  Party  (acting  reasonably),  to do so  might be
prejudicial to it

15.2  Indemnity

The  Borrower  shall  indemnify  each  Finance  Party for all costs and expenses
reasonably incurred by that Finance Party as a result of steps taken by it under
Clause 15 1 (Mitigation)


16   COSTS AND EXPENSES

16.1  Transaction expenses

The  Borrower  shall  promptly on demand pay to the Agent and the  Arranger  the
amount  of all costs  and  expenses  (including  legal  fees) and  out-of-pocket
expenses reasonably incurred by any of them in connection with

a)   the negotiation, preparation, printing, perfection, execution, registration
     and  syndication of this Agreement and any other  documents  referred to in
     this Agreement,

b)   any other Finance Documents executed after the date of this Agreement,

c)   any amendment,  variation,  waiver, consent or suspension of rights (or any
     proposal  for  any of the  foregoing)  requested  (or,  in  the  case  of a
     proposal, made) by or on behalf of the Borrower and relating to any Finance
     Document, and

d)   any other matter, not of an ordinary  administrative nature, arising out of
     or in connection with any Finance Document

16.2  Enforcement costs

Following an Event of Default, the Borrower shall promptly on demand,  reimburse
the Agent and/or  another  Finance  Party (as the case may be) the amount of all
costs and expenses  (including  internal and  external  fees)  incurred by it in
connection with the preservation,  protection, enforcement or maintenance of, or
attempt to preserve or enforce,  any of the rights of the Finance  Parties under
the Finance Documents


17   SECURITY

The  Borrower's   obligations  and  liabilities  under  the  Finance  Documents,
including  (without  limitation)  the  Borrower's  obligation to repay the Loans
together  with all unpaid  interest,  default  interest,  commissions,  charges,
expenses and any other derived liability  whatsoever of the Borrower towards the
Finance Parties in connection  with this Agreement,  shall at any time until all
amounts due to the Finance  Parties  hereunder  have been paid and/or  repaid in
full, be secured by

a)   the Mortgages, and

b)   the Assignment Agreement

(together the "Security Documents")

The Borrower  undertakes to ensure that the above  Security  Documents are being
duly  executed by the  parties  thereto in favour of the Agent (on behalf of the
Finance  Parties) on or about the date of this  Agreement,  legally valid and in
full force and effect,  and to execute or procure the  execution of such further
documentation  as the Agent may  reasonably  require  in order for the  relevant
Finance Parties to maintain the security position envisaged hereunder


18   REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to each Finance Party as follows

18.1  Status

The Borrower is a company, duly incorporated and validly existing under the laws
of Bermuda  and has the power to own its assets and carry on its  business as it
is currently being conducted

18.2  Binding obligations

The  Transaction  Documents to which the Borrower is a party  constitute  legal,
valid, binding and enforceable obligations in accordance with their terms

18.3  No conflict with other obligations

The  entry  into  and  performance  by the  Borrower  of,  and the  transactions
contemplated by, the Transaction  Documents do not and will not conflict with a)
any law or regulation or any order or decree of any governmental agency or court
by which it is bound, b) any constitutional documents of the Borrower, or c) any
agreement or document to which it is a party or by which it or any of its assets
are bound

18.4  Power and authority

The Borrower has the power to enter into, perform and deliver, and has taken all
necessary actions to authorise its entry into,  performance and delivery of, the
Transaction  Documents to which it is a party and the transactions  contemplated
by those Transaction Documents

18.5  Authorisations and consents

All  authorisations,   approvals,   consents  and  other  matters,  official  or
otherwise,  required  by the  Borrower in  connection  with the  entering  into,
performance,  validity and  enforceability of the Transaction  Documents and the
transactions  contemplated hereby and thereby have been obtained or effected and
are in full force and effect

18.6  Taxes

The Borrower has complied with all material  taxation laws in all  jurisdictions
where it is  subject  to  taxation  and has paid all  material  Taxes  and other
amounts due to governments  and other public bodies No claims are being asserted
against  it with  respect  to any  Taxes  or other  payments  due to  public  or
governmental  bodies The  Borrower is not required to make any  withholdings  or
deductions  for or on account  of Tax from any  payment it may make under any of
the Finance Documents

18.7  No filing or stamp duty

Save as provided  herein and/or as have been or shall be completed  prior to the
relevant  Drawdown Date, it is not necessary that any Finance Document be filed,
recorded or enrolled with any court or other authority in the jurisdiction where
the Borrower is incorporated  or that any stamp,  registration or similar tax be
paid on or in relation to the Finance Documents or the transactions contemplated
by the Finance Documents

18.8  No Default

a)   No Event of Default is continuing or might reasonably be expected to result
     from the  making  of any Loan or the  entry  into,  performance  of, or any
     transaction contemplated by, any Finance Document

b)   No other event or circumstances is outstanding  which constitutes a default
     or (with the  expiry of a grace  period,  giving of notice or the making of
     any  determination  or any combination of the foregoing) might constitute a
     default  or  termination  event  (howsoever   described)  under  any  other
     agreement  or  instrument  which is binding on the  Borrower  or any of its
     subsidiaries  or to  which  the  Borrower's  (or any of its  subsidiaries')
     assets are subject which might have a Material Adverse Effect

18.9  No misleading information

Any factual information, documents, exhibits or reports relating to the Borrower
and which  have been  furnished  to the  Finance  Parties by or on behalf of the
Borrower are  complete  and correct in all material  respects and do not contain
any  misstatement  of  fact or omit to  state a fact  making  such  information,
exhibits or reports misleading in any material respect

18.10  Original Accounts

a)   Complete  and  correct  The  Original   Financial   Statements  fairly  and
     accurately represent the assets, liabilities and the financial condition of
     the Borrower and have been  prepared in accordance  with GAAP  consistently
     applied

b)   No  undisclosed  liabilities  As of  the  date  of the  Original  Financial
     Statements,  the Borrower had no material liabilities,  direct or indirect,
     actual or contingent,  and there is no material,  unrealised or anticipated
     losses  from any  unfavourable  commitments  not  disclosed  by or reserved
     against in the Original Financial Statements or in the notes thereto

c)   No material  change  Since the date of the Original  Financial  Statements,
     there has been no  material  adverse  change in the  business,  operations,
     assets or condition (financial or otherwise) of the Borrower

18.11  Pari passu ranking

The Borrower's  payment  obligations  under the Finance  Documents rank at least
pari  passu  with the  claims  of all its  other  unsecured  and  unsubordinated
creditors,  except for  obligations  preferred  by  mandatory  law  applying  to
international shipping companies generally

18.12  No litigation

No litigation,  arbitration or administrative  proceedings or labour disputes of
or before any court,  arbitral  body or agency,  which if adversely  determined,
might  reasonably be expected to have a Material  Adverse  Effect,  have (to the
best of the Borrower's  knowledge and belief) been started or threatened against
the Borrower

18.13  No existing Security Interest

Save as described in Clause 17 (Security),  no Security Interest exists over all
or any of the present or future revenues or assets of the Borrower

18.14  No immunity

The execution and delivery by the Borrower of each Transaction Document to which
it is a party constitute,  and its exercise of its rights and performance of its
obligations  under  each  Transaction  Document  will  constitute,  private  and
commercial acts performed for private and commercial purposes,  and the Borrower
will not (except for bankruptcy or any similar proceedings) be entitled to claim
for itself or any or all of its assets immunity from suit, execution, attachment
or other legal process in any other  proceedings  taken in Norway and/or Bermuda
(as the case may be) in relation to any Transaction Document

18.15  No winding-up

The  Borrower has not taken any  corporate  action nor have any other steps been
taken or  legal  proceedings  been  started  or  threatened  against  it for its
reorganisation, winding-up, dissolution or administration or for the appointment
of a  receiver,  administrator,  administrative  receiver,  trustee  or  similar
officer of it or any or all of its assets

18.16  Environmental compliance

The Borrower and the Charterers (as the case may be) have performed and observed
in all material respects all Environmental Laws, Environmental Approvals and all
other material  covenants,  conditions,  restrictions or agreements  directly or
indirectly  concerned with any contamination,  pollution or waste or the release
or discharge of any toxic or hazardous substance in connection with the Vessels

18.17  Environmental Claims

No  Environmental  Claim has been  commenced  or (to the best of the  Borrower's
knowledge and belief) is threatened against the Borrower or the Charterers where
that claim  would be  reasonably  likely,  if  adversely  determined,  to have a
Material Adverse Effect

18.18  ISM Code and ISPS Code Compliance

All  requirements  of the ISM  Code  and the  ISPS  Code as they  relate  to the
Borrower,  the Managers,  the Charterers and the Vessels have been complied with
in all material respects

18.19  The Existing Vessels

Each of the Existing Vessels will on the Drawdown Date be

a)   in  the  absolute   ownership  of  the  Borrower  free  and  clear  of  all
     encumbrances  (other  than  current  crew wages and the  Mortgage)  and the
     Borrower  will be the sole,  legal and  beneficial  owner of such  Existing
     Vessel,

b)   registered  in the name of the Borrower  with the  Bahamas,  Isle of Man or
     Norwegian  International  Ship Registry (as the case may be) under the laws
     and flag of the Bahamas, Isle of Man or Norway (as the case may be),

c)   operationally seaworthy in every way and fit for service, and

d)   classed  with DnV or  Lloyds  (as the case  may  be),  free of all  overdue
     requirements and recommendations

18.20  No money laundering

The  Borrower is acting for its own account in relation to the  Facility  and in
relation to the performance and the discharge of its obligations and liabilities
under the Finance Documents and the transactions and other arrangements effected
or contemplated by the Finance  Documents to which the Borrower is a party,  and
the foregoing  will not involve or lead to  contravention  of any law,  official
requirement or other regulatory measure or procedure implemented to combat money
laundering (as defined in Article 1 of the Directive  (91/308/EEC) and Directive
2001/97 of the  European  Parliament  and of 4 December  2001  amending  Council
Directive 91/308)

18.21  Repetition

The  representations  and  warranties set out in this Clause 18 are deemed to be
made by the  Borrower  on the date of this  Agreement  and shall be deemed to be
repeated

a)   on the date of a Drawdown Notice,

b)   on the relevant Drawdown Date,

c)   on the first day of each Interest Period, and

d)   in each Compliance Certificate forwarded to the Agent pursuant to Clause 19
     2  (Compliance  certificate)  (or,  if no such  Compliance  Certificate  is
     forwarded,  on each day such certificate  should have been forwarded to the
     Agent at the latest)


19   INFORMATION UNDERTAKINGS

The Borrower  gives the  undertakings  set out in this Clause 19 to each Finance
Party and such undertakings shall remain in force throughout the Security Period

19.1  Financial statements

The  Borrower  shall  supply to the Agent in  sufficient  copies  for all of the
Lenders

a)   as soon as the same become  available,  but in any event within one hundred
     and  thirty-five  (135) days after the end of each of its financial  years,
     its audited consolidated financial statements for that financial year, and

b)   as soon as the same become  available,  but in any event  within sixty (60)
     days after the end of each  quarter  of each of its  financial  years,  its
     consolidated unaudited financial statements for that financial quarter

19.2  Compliance Certificate

The Borrower  shall supply to the Agent,  with each set of financial  statements
delivered pursuant to Clause 19 1 a) (Financial statements) (or upon the request
of the Agent), a Compliance  Certificate  signed by an authorised officer of the
Borrower setting out (in reasonable  detail)  computations as to compliance with
Clause  20  (Financial  covenants)  as at the date as at which  those  financial
statements were drawn up

19.3  Requirements as to financial statements

The  Borrower  shall  procure that each set of  financial  statements  delivered
pursuant  to  Clause  19  1  (Financial  statements)  is  prepared  using  GAAP,
accounting  practices  and financial  reference  periods  consistent  with those
applied in the preparation of the Original Financial Statements for the Borrower
unless,  in relation to any set of financial  statements,  it notifies the Agent
that there has been a change in GAAP,  the  accounting  practices  or  reference
periods and its auditors deliver to the Agent

a)   a description  of any change  necessary for those  financial  statements to
     reflect GAAP,  accounting  practices  and reference  periods upon which the
     Original Financial Statements were prepared, and

b)   sufficient information, in form and substance as may be reasonably required
     by the  Agent,  to  enable  the  Lenders  to  determine  whether  Clause 20
     (Financial   covenants)  has  been  complied  with  and  make  an  accurate
     comparison  between the  financial  position  indicated in those  financial
     statements and the Original Financial Statements

Any reference in this Agreement to those financial statements shall be construed
as a reference to those  financial  statements  as adjusted to reflect the basis
upon which the Original Financial Statements were prepared

19.4  Information - miscellaneous

The Borrower  shall notify the Agent and/or  supply to the Agent (in  sufficient
copies for all the Lenders, if the Agent so requests)

a)   any Charterparty if and when requested by the Agent,

b)   all material  documents  dispatched by the Borrower to its  shareholders or
     its creditors generally at the same time as they are dispatched,

c)   promptly  upon becoming  aware of them,  the details of any event which has
     occurred  or may  occur  which  have a  material  impact  on the  condition
     (financial or otherwise) of the Borrower,

d)   promptly  upon  becoming  aware of them,  the  details  of any  litigation,
     arbitration or administrative proceedings which are current,  threatened or
     pending  against the Borrower,  and which might,  if adversely  determined,
     have a Material Adverse Effect, and

e)   promptly,  such further  information  regarding the  business,  operations,
     assets and  operations  (financial  or  otherwise)  of the  Borrower as any
     Finance Party (through the Agent) may reasonably request

19.5  Notification of default

The Borrower shall notify the Agent of any default (and the steps, if any, being
taken to remedy it) promptly upon becoming aware of its occurrence

19.6  Notification of Environmental Claims

The Borrower shall inform the Agent in writing as soon as reasonably practicable
upon becoming aware of the same

a)   if any  Environmental  Claim  has  been  commenced  or (to the  best of the
     Borrower's  knowledge and belief) is threatened  against the Borrower,  the
     Charterers or any of the Vessels, and

b)   of any fact and circumstances which will or are reasonably likely to result
     in any  Environmental  Claim  being  commenced  or  threatened  against the
     Borrower, the Charterers or any of the Vessels,

where the claim would be reasonably  likely, if determined  against the Borrower
or any of the Vessels, to have a Material Adverse Effect


20   FINANCIAL COVENANTS

20.1  Financial definitions

For the  purposes  of the  financial  covenants  set out herein,  the  following
definitions shall apply

"Equity" means Total Assets less Total Debt

"Total Assets"  means,  on a  consolidated  basis,  the book value of all assets
(including any properties)  less any capitalised  goodwill and other  intangible
assets

"Total Debt" means,  on a  consolidated  basis,  the aggregate book value of all
provisions, other long term liabilities and current liabilities of the Borrower

20.2  Financial covenants

The Borrower shall at all times during the Security Period maintain an Equity of
minimum USD 150,000,000


21   GENERAL UNDERTAKINGS

The Borrower  gives the  undertakings  set out in this Clause 21 to each Finance
Party and such undertakings shall remain in force throughout the Security Period

21.1  Authorisations etc.

The Borrower shall promptly

a)   obtain,  comply and do all that is  necessary to maintain in full force and
     effect, and

b)   supply certified copies to the Agent (if so requested) of,

any authorisation,  consent, approval,  resolution,  licence, exemption, filing,
notarisation  or  registration  required  under  any  law or  regulation  of its
jurisdiction of incorporation to enable it to perform its obligations  under the
Transaction  Documents and to ensure the legality,  validity,  enforceability or
admissibility   in  evidence  in  its   jurisdiction  of  incorporation  of  any
Transaction Document

21.2  Compliance with laws

The  Borrower  shall  comply  in all  respects  with all laws to which it may be
subject,  if failure so to comply would materially impair its ability to perform
its obligations under the Transaction Documents

21.3  Pari passu ranking

The Borrower shall ensure that its  obligations  under the Finance  Documents do
and  will  rank at least  pari  passu  with all its  other  present  and  future
unsecured and unsubordinated obligations, except for those obligations which are
preferred  by  mandatory  law  applying  to  international   shipping  companies
generally in the  jurisdictions  of its  incorporation or in the jurisdiction in
the ports of calls

21.4  Title

The Borrower will hold legal title to and own the entire beneficial  interest in
the Vessels,  the Insurances and their Earnings,  free of all Security  Interest
and other  interests  and rights of every kind,  except for those created by the
Financial Documents and as set out in Clause 21 5 (Negative pledge)

21.5  Negative pledge

The Borrower  shall not create or permit to subsist any Security  Interest  over
any of the Vessels nor upon any of its present or future undertakings, property,
assets, rights or revenues, other than

a)   Security Interest under the Security Documents,

b)   Security  Interest  arising in the ordinary  course of business  (hereunder
     liens in  respect of  salvage,  general  average,  other  liens  covered by
     insurance and Security Interest arising by operation of maritime law), and

c)   Security  Interests  consented  to in  writing  by the Agent  (acting  upon
     instructions from the Majority Lenders)

21.6  Borrowings

The Borrower  shall not enter into any new  Financial  Indebtedness,  other than
current liabilities related to the day to day operation of the Vessels

21.7  Disposals

The Borrower shall not sell,  transfer or otherwise  dispose of the whole or any
part of its interest in any of the Vessels,  the Earnings nor otherwise  dispose
of all or any  substantial  part of its assets without the prior written consent
of the Agent (acting upon the instructions from the Majority Lenders)

21.8  Distributions

The Borrower shall not distribute any dividend,  reduce any of its share capital
or make any other  distributions in whatever form to its  shareholder(s)  or any
other person(s) if (i) it is not or will, following such distribution, not be in
compliance  with the  covenants  set out in this  Agreement  (hereunder  but not
limited to the financial covenants in Clause 20 (Financial covenants)) or (1) an
Event of Default has occurred or occurs as a consequence of such distribution

21.9  Bank accounts

The  Borrower  shall hold and  maintain  all its bank  accounts  (hereunder  the
Earnings  Account)  with the Agent and ensure that all  Earnings are paid to the
Earnings Account

21.10  Change of business

The  Borrower  shall  ensure that no  substantial  change is made to the general
nature of the business of the Borrower from that carried out at the date of this
Agreement

21.11  Taxation

The Borrower  shall pay and  discharge  all Taxes  imposed upon it or its assets
within the time period allowed without  incurring  penalties  unless and only to
the extent that such payment is being contested in good faith or can be lawfully
withheld

21.12  No mergers etc.

The Borrower shall not enter into any merger, amalgamation, de-merger, split-up,
divest,  consolidation  with or into any other  person or be the  subject of any
reconstruction without the prior consent of the Agent (on behalf of the Lenders)

21.13  Environmental compliance

The Borrower  shall (and shall procure that the  Charterers  will) comply in all
material  respects  with  all  Environmental  Laws  subject  to  the  terms  and
conditions  of any  Environmental  Approval,  implement  procedures  to  monitor
compliance with and to prevent  liability under any Environmental Law and obtain
and maintain any Environmental Approval

21.14  Commercial management

The Borrower  shall procure that the  Commercial  Manager  shall  continue to be
commercial manager of the Borrower and there shall be no material change to such
commercial  management  and/or the Commercial  Management  Agreement without the
prior written consent of the Agent

21.15  Transaction Documents

The Borrower shall procure that none of the  Transaction  Documents  (other than
the  Charterparties)  are amended or  terminated,  or any waiver or any material
terms thereof are agreed  thereunder  without the prior  written  consent of the
Agent (on behalf of the Lenders)

21.16  Listing

The Borrower shall remain listed on a recognised  stock  exchange  acceptable to
the Agent

21.17  Limitations on Investments

Except with the prior  written  consent of the  Majority  Lenders,  the Borrower
shall  not (and the  Borrower  shall  ensure  that no  entity  controlled  by it
(directly or indirectly)  shall not) make any Investment in an amount  exceeding
the Value Adjusted Equity at the time of the Investment


22   VESSEL COVENANTS

22.1  General

The Borrower  gives the  undertakings  set out in this Clause 22 to each Finance
Party and such undertakings shall remain in force throughout the Security Period

22.2  Insurance

a)   The Borrower  shall  maintain or ensure that each of the Vessels is insured
     against  such risks,  including  but not  limited  to, Hull and  Machinery,
     Protection & Indemnity  (including maximum cover for pollution liability as
     normally adopted by the industry for similar vessels), Hull interest and/or
     Freight  Interest and War Risk insurances,  in such amounts,  on such terms
     and with such insurers as the Agent shall approve

b)   The value of the Hull and Machinery  insurance  shall cover at least eighty
     per cent (80  00%) of the  Market  Value  of the  relevant  Vessel  and the
     aggregate insurance value of the Vessels (except Protection & Indemnity and
     Loss of Hire), shall be at least equal to the higher of the Market Value of
     all of the  Vessels  and one  hundred  and twenty per cent (120 00%) of the
     Loans

c)   The  Borrower  shall  procure  that the  Agent (on  behalf  of the  Finance
     Parties) is noted as first priority  mortgagee in the insurance  contracts,
     together with the  confirmation  from the underwriters to the Agent thereof
     that the notice of assignment  with regards to the  Insurances and the loss
     payable  clauses are noted in the  insurance  contracts  and that  standard
     letters of undertaking are executed by the insurers

d)   Not later  than seven (7) days  prior to the  expiry  date of the  relevant
     Insurances  the  Borrower  shall  procure  the  delivery  to the Agent of a
     certificate  from the  insurance  broker(s)  through  whom  the  Insurances
     referred to in  paragraph  a) have been renewed and taken out in respect of
     the Vessels with  insurance  values as required by paragraph  b), that such
     Insurances  are in full  force and  effect and that the Agent (on behalf of
     the Finance Parties) have been noted by the relevant insurers

e)   If the Majority  Lenders so require,  the Agent may, for the account of the
     Borrower,  take out a Loss of Hire, a Mortgagee's  Interest Insurance and a
     Mortgagee's Interest -Additional Perils Pollution Insurance (covering up to
     one  hundred  and  twenty per cent (120 00%) of the Loan)  relevant  to the
     Vessels

f)   If any of the  Insurances  referred to in paragraph a) form part of a fleet
     cover,  the Borrower shall procure that the insurers shall undertake to the
     Agent that they shall neither  set-off against any claims in respect of any
     of the  Vessels any  premiums  due in respect of other  vessels  under such
     fleet  cover or any  premiums  due for other  insurances,  nor cancel  this
     Insurance  for reason of  non-payment  of premiums for other  vessels under
     such  fleet  cover or of  premiums  for such  other  insurances,  and shall
     undertake  to issue a separate  policy in respect of any of the  Vessels if
     and when so requested by the Agent

g)   The  Borrower  shall  procure  that the  Vessels  always  are  employed  in
     conformity with the terms of the  instruments of Insurances  (including any
     warranties  expressed or implied therein) and comply with such requirements
     as to extra premium or otherwise as the insurers may prescribe

h)   The Borrower  will not make any change to the  Insurances  described  under
     paragraph a) and b) above  without the prior  written  consent of the Agent
     (on behalf of the Lenders)

22.3  Classification and repairs

The  Borrower  shall keep the Vessels in a good,  safe and  efficient  condition
consistent with first class ownership and management practice and in particular

a)   so as to maintain its class at the highest level with DnV or Lloyds (as the
     case may be) or another  classification society approved by the Agent, free
     of overdue recommendations and qualifications, and

b)   so as to comply  with the laws and  regulations  (statutory  or  otherwise)
     applicable to vessels  registered under the flag state of the Vessels or to
     vessels  trading to any  jurisdiction to which any of the Vessels may trade
     from time to time

22.4  Minimum Market Value

a)   The Market Value of the Vessels  shall not be less than (i) one hundred and
     thirty  per cent  (130 00%) in the first  year  following  the date of this
     Agreement  and (ii) one  hundred  and  fifty per cent (150 00%) at all time
     thereafter

b)   The Borrower shall, at its own expense, arrange for the market Value of the
     Vessels to be  determined  annually  (or when  reasonably  requested by the
     Agent)  and  include  the  amount  of such  Market  Value  in the  relevant
     Compliance   Certificate  to  be  delivered  together  with  the  financial
     statement as set out in Clause 19 1 a) (Financial statements)

22.5  Restrictions on chartering, appointment of Managers etc.

The Borrower shall not without the pnor written  consent of the Agent (on behalf
of the Majority Lenders)

a)   enter  into  any  Charterparty  which  is not on  arm's  length  terms  and
     conditions,

b)   appoint a technical  manager for the Vessels which is not reputable (in the
     opinion of the Agent) or enter into any Technical  Management  Agreement(s)
     which are not on arm's length terms and conditions, or

c)   change the classification society of any of the Vessels

22.6  Notification of certain events

The Borrower shall immediately notify the Agent of

a)   any accident to any of the Vessels  involving  repairs where the costs will
     or is  likely  to  exceed  USD  500,000  (or the  equivalent  in any  other
     currency),

b)   any  requirement or  recommendation  made by any insurer or  classification
     society  or by  any  competent  authority  which  is  not,  or  cannot  be,
     immediately complied with,

c)   any exercise or purported  exercise of any lien on any of the Vessels,  the
     Earnings or the Insurances,

d)   any occurrence as a result of which any of the Vessels has become or is, by
     the passing of time or otherwise, likely to become a Total Loss,

e)   any claim for a material breach of the ISM Code or the ISPS Code being made
     against  the  Borrower,  the  Managers,  the  Charterers  or  otherwise  in
     connection with any of the Vessels, and

f)   any arrest or detention  of any of the  Vessels,  any exercise or purported
     exercise  of  any  lien  on  any  of the  Vessels,  their  Earnings  and/or
     Insurances

22.7  Operation of the Vessels

a)   The  Borrower  shall  comply,  or procure the  compliance  in all  material
     respects with the ISM Code and the ISPS Code,  all  Environmental  Laws and
     all other laws or  regulations  relating to the Vessels,  their  ownership,
     operation  and  management or to the business of the Borrower and shall not
     employ any of the Vessels nor allow their employment

     (i)  in  any  manner   contrary  to  law  or  regulation  in  any  relevant
          jurisdiction including but not limited to the ISM Code, and

     (ii) in the event of  hostilities  in any part of the world (whether war is
          declared  or not),  in any zone  which is  declared  a war zone by any
          government  or by the war risk  insurers of any of the Vessels  unless
          the Borrower has (at its expense) effected any special,  additional or
          modified  insurance  cover which shall be necessary  or customary  for
          first class shipowners  trading vessels within the territorial  waters
          of such country at such time and has  provided  evidence of such cover
          to the Agent

     Without  limitation  to the  generality  of this Clause 22 7, the  Borrower
     shall comply or procure compliance,  with, as applicable,  all requirements
     of the International  Convention for the Safety of Life at Sea (SOLAS) 1974
     as  adopted,  amended  or  replaced  from time to time  including,  but not
     limited to, the STCW 95, the ISM Code or the ISPS Code

22.8  ISM Code compliance

The Borrower will

a)   procure that each of the Vessels  remains subject to a SMS for the duration
     of the Facility,

b)   procure that a valid and current SMC is maintained  for each of the Vessels
     for the duration of the Facility,

c)   if not itself,  procure that the Technical Manager of the Vessels maintains
     a valid and current DOC for the duration of the Facility,

d)   immediately  notify  the  Agent in  writing  of any  actual  or  threatened
     withdrawal,  suspension,  cancellation or modification of the SMC of any of
     the Vessels or of the DOC of the Technical Manager, and

e)   immediately  notify  the  Agent in  writing  of any  "accident"  or  "major
     non-conformity",  each as those terms is defined in the  Guidelines  in the
     application of the IMO  International  Safety Management Code issued by the
     International Chamber of Shipping and International Shipping Federation

22.9  Inspections and class records

a)   The Borrower shall permit,  and shall procure that any  charterers  permit,
     one person  appointed  by the Agent to inspect the Vessels  once a year for
     the account of the Borrower upon the Agent giving prior written notice

b)   The  Borrower  shall  instruct  the  classification  society to send to the
     Agent,  following  a written  request  from the Agent,  copies of all class
     records held by the classification society in relation to the Vessels

22.10  Surveys

The  Borrower  shall  submit to or cause the  Vessels  to be  submitted  to such
periodic or other surveys as may be required for classification  purposes and to
ensure  full  compliance  with  regulations  of the  relevant  flag state of the
Vessels  and to supply  or to cause to be  supplied  to the Agent  copies of all
survey reports and  confirmations  of class issued in respect  thereof  whenever
such is required by the Agent, however limited to once a year

22.11  Arrest

The Borrower shall or shall procure that the Charterers shall,  promptly pay and
discharge

a)   all liabilities which give or may give rise to maritime or possessory liens
     on or claims  enforceable  against any of the Vessels,  the Earnings or the
     Insurances,

b)   all tolls,  taxes,  dues,  fines,  penalties and other  amounts  charged in
     respect of any of the Vessels, the Earnings or the Insurances, and

c)   all other  outgoings  whatsoever  in  respect  of any of the  Vessels,  the
     Earnings and the Insurances,

and forthwith upon receiving a notice of arrest of any of the Vessels,  or their
detention in exercise or purported  exercise of any lien or claim,  the Borrower
shall or shall  procure  that the  Charterers  shall  procure  their  release by
providing  bail or  providing  the  provision  of security or  otherwise  as the
circumstances may require

22.12  Total Loss

In the event that any of the Vessels  shall  suffer a Total Loss,  the  Borrower
shall, within a period of one hundred and twenty (120) days after the Total Loss
Date, obtain and present to the Agent, a written  confirmation from the relevant
insurers  that the claim  relating to the Total Loss has been  accepted in full,
and the Insurance  proceeds  shall be applied in prepayment of the relevant Loan
in accordance with Clause 7 1 (Mandatory prepayment - Total Loss or sale)

22.13  Flag, name and registry

The  Borrower  shall not,  without  the prior  written  consent of the Agent (on
behalf of the Lenders), change the flag, name or registry of any of the Vessels


23   EVENTS OF DEFAULT

Each of the  events or  circumstances  set out in this  Clause 23 is an Event of
Default

23.1  Non-payment

The  Borrower  does not pay on the due date any  amount  payable  pursuant  to a
Finance Document at the place and in the currency in which it is expressed to be
payable unless

a)   its failure to pay is caused by administrative or technical error affecting
     the transfer of funds despite timely payment  instructions by the Borrower,
     and

b)   payment is made within five (5) days of its due date

23.2  Financial covenants

Any requirement in Clause 20 (Financial covenants) is not satisfied

23.3  Other obligations

a)   The Borrower  does not comply with any  provision of the Finance  Documents
     (other than those referred to in Clause 23 1 (Non-payment)  and Clause 23 2
     (Financial covenants), which are not capable of remedy))

b)   No Event of Default  under  paragraph  a) above in relation to Clause 22 11
     (Arrest)  will  occur if the  failure to comply is capable of remedy and is
     remedied  within ten (10)  Business Days of the earlier of the Agent giving
     notice to the  Borrower or the  Borrower  becoming  aware of the failure to
     comply

23.4  Misrepresentations

Any representation or statement made or deemed to be made by the Borrower in the
Finance  Documents  or any  other  document  delivered  by or on  behalf  of the
Borrower under or in connection  with any of the Finance  Documents is or proves
to have been incorrect or misleading in any material respect when made or deemed
to be made

23.5  Cross default

Any of the following occurs

a)   any Financial  Indebtedness of the Borrower is not paid when due nor within
     any originally applicable grace period,

b)   any Financial  Indebtedness  of the Borrower is declared to be or otherwise
     becomes due and payable prior to its  specified  maturity as a result of an
     event of default (however described),

c)   any commitment for any Financial  Indebtedness of the Borrower is cancelled
     or  suspended  by a  creditor  of the  Borrower  as a result of an event of
     default (however described), or

d)   any  creditor of the  Borrower  becomes  entitled to declare any  Financial
     Indebtedness  of the  Borrower  due  and  payable  prior  to its  specified
     maturity as a result of an event of default (however described),

unless the aggregate amount of Financial  Indebtedness  falling within paragraph
a) to d) above is less than USD 500,000 (or its equivalent in other currencies)

23.6  Insolvency

a)   The  Borrower is unable or admits  inability  to pay its debts as they fall
     due,  suspends  making payments on any of its debts or, by reason of actual
     or anticipated financial  difficulties,  commences negotiations with one or
     more of its creditors with a view to rescheduling any of its indebtedness

b)   The  value of the  assets  of the  Borrower  is less  than its  liabilities
     (taking into account contingent and prospective liabilities)

c)   A moratorium is declared in respect of any indebtedness of the Borrower

23.7  Insolvency proceedings

Any corporate  action,  legal proceedings or other procedure or step is taken in
relation to

a)   The suspension of payments,  a moratorium of any indebtedness,  winding-up,
     dissolution,   administration  or  reorganisation   (by  way  of  voluntary
     arrangement, scheme or arrangement or otherwise) of the Borrower,

b)   a composition,  compromise,  assignment or arrangement with any creditor of
     the Borrower,

c)   the  appointment  of  a  liquidator,  receiver,   administrative  receiver,
     administrator or other similar officer in respect of the Borrower, or

d)   enforcement of any Security Interest over any assets of the Borrower

23.8  Creditor's process

Any expropriation,  attachment, sequestration, distress or execution affects any
asset or assets of the Borrower  having an aggregate value of USD 500,000 and is
not discharged within thirty (30) days

23.9  Unlawfulness

It is or  becomes  unlawful  for the  Borrower  to perform  any of its  material
obligations under the Finance Documents

23.10  Material adverse change

Any event or series of events  occur  which,  in the  reasonable  opinion of the
Agent (on behalf of the Lenders), might have a Material Adverse Effect

23.11  Permits

Any  licence,  consent,  permission  or  approval  required in order to enforce,
complete or perform any of the Transaction  Documents is revoked,  terminated or
modified having a Material Adverse Effect

23.12  Litigation

There is current, pending or threatened any claims,  litigation,  arbitration or
administrative  proceedings  against the  Borrower  which  might,  if  adversely
determined, has a Material Adverse Effect

23.13  Acceleration

Upon the  occurrence  of an Event of  Default,  the Agent  may,  and shall if so
directed by the Majority Lenders, by written notice to the Borrower

a)   cancel the Total Commitments whereupon they shall immediately be cancelled,

b)   declare that all or part of the Facility  together  with accrued  interest,
     and all other amounts accrued or outstanding  under the Finance  Documents,
     be either immediately due and payable and/or payable upon demand, whereupon
     they shall become either  immediately due and payable or payable on demand,
     and/or

c)   start enforcement in respect of the Security  Interests  established by the
     Security Documents, and/or

d)   take any other action, with or without notice to the Borrower, exercise any
     other  right or pursue  any other  remedy  conferred  upon the Agent or the
     Finance Parties by any of the Finance Documents or by any applicable law or
     regulation or otherwise as a consequence of such Event of Default


24   CHANGES TO THE PARTIES

24.1  No assignment by the Borrower

The  Borrower  may not assign or  transfer  or have  assumed any part of, or any
interest in, its rights and/or obligations under the Finance Documents

24.2  Assignments and transfers by the Lenders

A Lender  (the  "Existing  Lender")  may at any time  assign,  transfer  or have
assumed its rights or  obligations  under the Finance  Documents with regards to
the Facility (a "Transfer") to

a)   another Existing Lender or an affiliate of an Existing Lender, or

b)   after  consultation with the Borrower (such consultation is not required in
     case an Event of Default has occurred and is continuing) to another bank or
     financial  institution  or to a  trust,  fund  or  other  entity  which  is
     regularly  engaged in or established for the purpose of making,  purchasing
     or  investing  in loans,  securities  or other  financial  assets (the "New
     Lender")

24.3  Limitations of responsibility of Existing Lenders

24 3 1  Borrower's performance, etc

Unless  expressly   agreed  to  the  contrary,   an  Existing  Lender  makes  no
representation or warranty and assumes no responsibility to the New Lender for

a)   the legality,  validity,  effectiveness,  adequacy or enforceability of the
     Finance Documents or any other documents,

b)   the financial condition of the Borrower,

c)   the performance and observance by the Borrower of its obligations under the
     Finance Documents or any other documents, or

d)   the  accuracy  of any  statements  (whether  written or oral) made in or in
     connection with the Finance Documents or any other document

24 3 2  New Lender's own credit appraisal, etc

Each New Lender  confirms to the Existing  Lender and the other Finance  Parties
that it

a)   has made (and will continue to make) its own independent  investigation and
     assessment of the  financial  condition and affairs of the Borrower and its
     related entities in connection with its participation in this Agreement and
     has  not  relied  exclusively  on  any  information  provided  to it by the
     Existing Lender in connection with any Finance Document, and

b)   will continue to make its own independent appraisal of the creditworthiness
     of the  Borrower  and its related  entities  whilst any amount is or may be
     outstanding under the Finance Documents or any Commitment is in force

24 3 3  Re-transfer to an Existing Lender, etc

Nothing in any Finance Document obliges an Existing Lender to

     a)   accept  a  re-transfer  from a New  Lender  of any of the  rights  and
          obligations assigned or transferred under this Clause 24, or

b)   support  any losses  directly or  indirectly  incurred by the New Lender by
     reason of the  nonperformance  by the Borrower of its obligations under the
     Finance Documents or otherwise

24.4  Procedure for transfer

Any Transfer shall be effected as follows

a)   the Existing  Lender must notify the Agent of its intention to Transfer all
     or part of its  rights  and  obligations  by  delivering  a duly  completed
     Transfer  Certificate to the Agent duly executed by the Existing Lender and
     the New Lender,

b)   subject to Clause 24 2  (Assignments  and  transfers by the  Lenders),  the
     Agent  shall as soon as  reasonable  possible  after  receipt of a Transfer
     Certificate execute the Transfer Certificate and deliver a copy of the same
     to each of the Existing Lender and the New Lender, and

c)   subject to Clause 24 2  (Assignments  and  transfers by the  Lenders),  the
     Transfer shall become effective on the Transfer Date

24.5  Effects of the Transfer

On the Transfer Date

a)   to the extent that in the Transfer Certificate the Existing Lender seeks to
     transfer  its rights  and  obligations  under the  Finance  Documents,  the
     Borrower and the Existing Lender shall be released from further obligations
     to one another  under the Finance  Documents  and their  respective  rights
     against one another  under the Finance  Documents  shall be cancelled  (the
     "Discharged Rights and Obligations"),

b)   the  Borrower  and the New Lender  shall  assume  obligations  towards  one
     another  and/or  acquire  rights  against one another which differ from the
     Discharged  Rights and Obligations only insofar as the Borrower and the New
     Lender have assumed  and/or  acquired the same in place of the Borrower and
     the Existing Lender,

c)   the Agent, the Arranger, the New Lender and the other Lenders shall acquire
     the same rights and assume the same obligations  between themselves as they
     would have acquired and assumed had the New Lender been an original  Lender
     hereunder with the rights and/or obligations acquired or assumed by it as a
     result of the Transfer  and to that extent the Agent,  the Arranger and the
     Existing  Lender shall each be released  from further  obligations  to each
     other under the Finance Documents, and

d)   the New Lender shall become a Party as a "Lender"

24.6  Further assurances

The  Borrower  undertakes  to procure  that in  relation  to any  Transfer,  the
Borrower  shall  (at its own cost) at the  request  of the  Agent  execute  such
documents as may in the  discretion of the Agent be necessary to ensure that the
New Lender attains the benefit of the Finance Documents

24.7  Disclosure of Information

Any Lender may disclose

a)   to any of its affiliates and a potential assignee,

b)   to whom  that  Lender  enters  into (or may  potentially  enter  into)  any
     sub-participation  in  relation  to, or any other  transaction  under which
     payments are to be made by reference  to, this  Agreement or the  Borrower,
     and

c)   to whom, to the extent that, information is required to be discloses by any
     applicable law,

such  information  about the Borrower  and the Finance  Documents as that Lender
shall consider  appropriate,  provided that such disclosure  shall be subject to
the prior written approval by the Borrower if such potential  assignee is not an
affiliate of any of the Lenders


25   ROLE OF THE AGENT AND THE ARRANGER

25.1  Appointment and authorisation of the Agent

a)   Each other Finance  Party  appoints the Agent to act as its agent under and
     in connection with the Finance Documents

b)   Each other  Finance  Party  authorises  the Agent to  exercise  the rights,
     powers,  authorities and discretions  specifically given to the Agent under
     or in  connection  with the  Finance  Documents  together  with  any  other
     incidental rights, powers, authorities and discretions

25.2  Duties of the Agent

The Agent shall not have any duties or  responsibilities  except those expressly
set forth in the Finance  Documents,  and the Agent's  duties  under the Finance
Documents are solely mechanical and administrative in nature The Agent shall

a)   promptly forward to a Party the original or a copy of any document which is
     delivered to it in its capacity as Agent for the attention of that Party by
     another Party,

b)   supply the other Finance  Parties with all material  information  which the
     Agent receives from the Borrower,

c)   if it receives notice from a Party referring to this Agreement,  describing
     an Event of  Default  and  stating  that  the  circumstance  is an Event of
     Default, promptly notify the Finance Parties, and

d)   from it receives sufficient information, promptly notify the Lenders of the
     occurrence  of any Event of  Default  arising  under  Clause 23  (Events of
     Default)

25.3  Role of the Arranger

Except as specifically  provided in the Finance  Documents,  the Arranger has no
obligations  of any kind to any  other  Party  under or in  connection  with any
Finance Document

25.4  Relationship

The  relationship  between  the Agent and the other  Finance  Parties is that of
agent and  principal  only  Nothing in this  Agreement  shall be construed as to
constitute  the Agent or the  Finance  Parties as trustee or  fiduciary  for any
other  person,  and neither the Agent nor the Finance  Parties shall be bound to
account  to any  Finance  Party  for any sum or the  profit  element  of any sum
received by it for its own account

25.5  Business with the Borrower

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

25.6  Rights and discretions of the Agent

a)   The Agent may rely on

     (i)  any  representation,  notice or document believed by it to be genuine,
          correct and appropriately authorised, and

     (ii) any statement made by a director,  authorised signatory or employee of
          any person regarding any matters which may reasonably be assumed to be
          within his knowledge or within his power to verify

b)   The Agent may assume (unless it has received  notice to the contrary in its
     capacity as Agent for the Lenders) that

     (i)  no Event of Default has occurred (unless it has actual knowledge of an
          Event of Default under Clause 23 1 (Non-payment), and

     (ii) any right,  power,  authority or discretion vested in any Party or the
          Majority Lenders has not been exercised

c)   The Agent may  engage,  pay for and rely on the advise or  services  of any
     lawyers, accountants, surveyors or other experts

d)   The  Agent  may  act in  relation  to the  Finance  Documents  through  its
     personnel and agents

e)   The Agent may  disclose to any other Party any  information  it  reasonably
     believes it has received as agent under this Agreement

f)   Notwithstanding  any  other  provision  of  any  Finance  Document  to  the
     contrary, neither the Agent nor the Arranger is obliged to do or omit to do
     anything if it would or might in its reasonable opinion constitute a breach
     of any law or regulation or a breach of duty of  confidentiality  or render
     it liable to any person

25.7  Majority Lenders' instructions

a)   Unless a contrary indication appears in a Finance Document, the Agent shall
     (i) exercise any right,  power,  authority  or  discretion  vested in it as
     Agent in  accordance  with  any  instructions  given to it by the  Majority
     Lenders  (or,  if so  instructed  by the  Majority  Lenders,  refrain  from
     exercising any right, power, authority or discretion vested in it as Agent)
     and (ii) not be liable for any act (or  omission) if it acts in  accordance
     with an instruction of the Majority Lenders

b)   Unless  a  contrary   indication   appears  in  a  Finance  Document,   any
     instructions  given by the  Majority  Lenders  will be  binding  on all the
     Finance Parties

c)   The Agent may refrain from acting in accordance  with the  instructions  of
     the  Majority  Lenders  (or,  if  appropriate,  the  Lenders)  until it has
     received  such  security as it may require for any cost,  loss or liability
     (together with any associated VAT) which it may incur in complying with the
     instructions

d)   In  the  absence  of  instructions   from  the  Majority  Lenders  (or,  if
     appropriate,  the Lenders) the Agent may act (or refrain from acting) as it
     considers to be in the best interest of the Lenders

e)   The Agent is not  authorised  to act on behalf of a Lender  (without  first
     obtaining that Lender's  consent) in any legal or  arbitration  proceedings
     relating to any Finance Document

25.8  Responsibility for documentation

Neither the Agent nor the Arranger

a)   is responsible to for the adequacy,  accuracy  and/or  completeness  of any
     information  (whether oral or written) supplied by the Agent, the Arranger,
     the  Borrower  or any other  person in or in  connection  with any  Finance
     Document, or

b)   is  responsible  for the  legality,  validity,  effectiveness,  adequacy or
     enforceability of any Finance Document or any other agreement,  arrangement
     or document entered into, made in anticipation of or in connection with any
     Finance Document

25.9  Exclusion of liability

a)   Without  limiting  paragraph b) below, the Agent will not be liable for any
     action taken by it under or in connection with any Finance Document, unless
     directly caused by its gross negligence or wilful misconduct

b)   No Party  (other  than the  Agent)  may take any  proceedings  against  any
     officer,  employee  or agent of the Agent in  respect of any claim it might
     have  against the Agent or in respect of any act or omission of any kind by
     that officer, employee or agent in relation to any Finance Document and any
     officer, employee and agent of the Agent may rely on this Clause

c)   The Agent will not be liable for any delay (or any related consequences) in
     crediting an account with an amount required under the Finance Documents to
     be paid by the Agent if the Agent has taken all necessary  steps as soon as
     reasonably   practicable  to  comply  with  the  regulations  or  operating
     procedures  of any  recognised  clearing or  settlement  system used by the
     Agent for that purpose

d)   Nothing in this  Agreement  shall oblige the Agent or the Arranger to carry
     out any "know your  customer"  or other checks in relation to any person on
     behalf of any Lender and each Lender confirms to the Agent and the Arranger
     that it is solely  responsible  for any such checks it is required to carry
     out and that it may not rely on any  statement  in  relation to such checks
     made by the Agent or the Arranger

25.10  Lenders' indemnity to the Agent

Each Lender shall (in  proportion to its share of the Total  Commitments  or, if
the  Total  Commitments  are then  reduced  to zero,  to its  share of the Total
Commitments  immediately  prior to their reduction to zero) indemnify the Agent,
within three (3) Business  Days of demand,  against any cost,  loss or liability
incurred by the Agent  (otherwise than by reason of the Agent's gross negligence
or wilful misconduct) in acting as Agent under the Finance Documents (unless the
Agent has been reimbursed by the Borrower pursuant to a Finance Document)

25.11  Resignation of the Agent

a)   The Agent may resign and  appoint one of its  affiliates  as  successor  by
     giving notice to the other Finance Parties and the Borrower

b)   Alternatively  the Agent may resign by giving  notice to the other  Finance
     Parties  and the  Borrower  in  which  case  the  Majority  Lenders  (after
     consultation with the Borrower) may appoint a successor Agent

c)   If the Majority  Lenders have not appointed a successor Agent in accordance
     with paragraph b) above within thirty (30) days after notice of resignation
     was given, the Agent (after  consultation  with the Borrower) may appoint a
     successor Agent

d)   The retiring Agent shall,  at its own cost, make available to the successor
     Agent such  documents  and  records  and  provide  such  assistance  as the
     successor  Agent may reasonably  request for the purposes of performing its
     functions as Agent under the Finance Documents

e)   The Agent's resignation notice shall only take effect upon appointment of a
     successor

f)   Upon the appointment of a successor, the retiring Agent shall be discharged
     from any further  obligation in respect of the Finance  Documents but shall
     remain  entitled to the benefit of this Clause 25 Its successor and each of
     the other  Parties  shall  have the same  rights  and  obligations  amongst
     themselves  as they would have had if such  successor  had been an original
     Party

g)   After  consultation with the Borrower,  the Majority Lenders may, by notice
     to the Agent, require it to resign in accordance with paragraph b) above In
     this event, the Agent shall resign in accordance with paragraph b) above

25.12  Confidentiality

a)   In acting as agent for the Finance Parties,  the Agent shall be regarded as
     acting  through  its agency  division  which shall be treated as a separate
     entity from any other of its divisions or departments

b)   If information is received by another  division or department of the Agent,
     it may be treated as  confidential  to that division or department  and the
     Agent shall not be deemed to have notice of it

25.13  Credit appraisal by the Lenders

Without affecting the responsibility of the Borrower for information supplied by
it or on its  behalf  in  connection  with any  Finance  Document,  each  Lender
confirms to the Agent and the Arranger  that it has been,  and will  continue to
be,  solely   responsible   for  making  its  own   independent   appraisal  and
investigation  of all risks  arising  under or in  connection  with any  Finance
Document, including (without limitation)

a)   the financial condition, status and nature of the Borrower,

b)   the legality,  validity,  effectiveness,  adequacy or enforceability of any
     Finance Document and any other  agreement,  arrangement or document entered
     into, made or executed in anticipation  of, under or in connection with any
     Finance Document, and

c)   whether  that  Lender  has  recourse,  and the  nature  and  extent of that
     recourse,  against any Party or any of its  respective  assets  under or in
     connection with any Finance Document, the transactions  contemplated by the
     Finance Documents or any other agreement,  arrangement or document, entered
     into, made or executed in anticipation  of, under or in connection with any
     Finance Document

25.14  Conduct of business of the Finance Parties

No provision of this Agreement will

a)   interfere  with the right of any Finance  Party to arrange its affairs (tax
     or otherwise) in whatever manner it thinks fit,

b)   oblige  any  Finance  Party to  investigate  or claim any  credit,  relief,
     remission or repayment available to it or to the extent, order or manner of
     any claim, or

c)   oblige any  Finance  Party to  disclose  any  information  relating  to its
     affairs (tax or otherwise) or any computations in respect of Tax


26   SHARING AMONG THE FINANCE PARTIES

26.1  Payment to Finance Parties

If a Finance  Party (a  "Recovering  Finance  Party")  receives or recovers  any
amount  from the  Borrower  other than in  accordance  with  Clause 27  (Payment
mechanics) and applies that amount to a payment due under the Finance  Documents
then

a)   the  Recovering  Finance  Party shall  promptly,  within three (3) Business
     Days, notify details of the receipt or recovery to the Agent,

b)   the Agent shall  determine  whether the receipt or recovery is in excess of
     the  amount  the  Recovering  Finance  Party  would  have been paid had the
     receipt or recovery been  received by or made by the Agent and  distributed
     in accordance with Clause 27 (Payment mechanics), without taking account of
     Tax  which  would be  imposed  on the  Agent in  relation  to the  receipt,
     recovery or distribution, and

c)   the  Recovering  Finance  Party shall,  within  three (3) Business  Days of
     demand by the Agent,  pay to the Agent an amount  (the  "Sharing  Payment")
     equal  to such  receipt  or  recovery  less  any  amount  which  the  Agent
     determines may be retained by the Recovering  Finance Party as its share of
     any payment to be made, in accordance with Clause 27 5 (Partial payments)

26.2  Redistribution of payments

The Agent shall treat the Sharing Payment as if it had been paid by the Borrower
and distribute it between the Finance Parties (other than the Recovering Finance
Party) in accordance with Clause 27 5 (Partial payments)

26.3  Recovering Finance Party's rights

a)   On a  distribution  by the  Agent  under  Clause  26 2  (Redistribution  of
     payments), the Recovering Finance Party will be subrogated to the rights of
     the Finance Parties which have shared in the redistribution

b)   If and to the extent that the Recovering  Finance Party is not able to rely
     on its rights under paragraph a) above, the Borrower shall be liable to the
     Recovering  Finance Party for a debt equal to the Sharing  Payment which is
     immediately due and payable

26.4  Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance
Party becomes repayable and is repaid by that Recovering Finance Party, then

a)   each  Finance  Party  which has  received a share of the  relevant  Sharing
     Payment pursuant to Clause 26 2  (Redistribution  of payments) shall,  upon
     request of the Agent,  pay to the Agent for the account of that  Recovering
     Finance Party an amount equal to the  appropriate  part of its share of the
     Sharing Payment  (together with an amount as is necessary to reimburse that
     Recovering  Finance Party for its proportion of any interest on the Sharing
     Payment which that Recovering Finance Party is required to pay), and

b)   that  Recovering  Finance  Party's  rights of subrogation in respect of any
     reimbursement  shall be cancelled  and the  Borrower  will be liable to the
     reimbursing Finance Party for the amount so reimbursed

26.5  Exceptions

a)   This  Clause 26 shall not apply to the extent that the  Recovering  Finance
     Party would not, after making any payment  pursuant to this Clause,  have a
     valid and enforceable claim against the Borrower

b)   A Recovering  Finance  Party is not obliged to share with any other Finance
     Party any  amount  which the  Recovering  Finance  Party  has  received  or
     recovered as a result of taking legal proceedings, if

     (i)  it notified that other Finance Party of the legal proceedings, and

     (ii) that other Finance Party had an  opportunity  to  participate in those
          legal  or  arbitration  proceedings  but did  not do so as  reasonably
          practicable  having received notice and did not take separate legal or
          arbitration proceedings


27   PAYMENT MECHANICS

27.1  Payments to the Agent

All payments by the Borrower or a Lender  under the Finance  Documents  shall be
made

a)   to the Agent to its account  with such office or bank as the Agent may from
     time to time  designate  in  writing to the  Borrower  or a Lender for this
     purpose, and

b)   for value on the due date at such  times and in such funds as the Agent may
     specify  to  the  Party  concerned  as  being  customary  at the  time  for
     settlement of transactions in the relevant currency in the place of payment

27.2  Distributions by the Agent

Each payment received by the Agent under the Finance Documents for another Party
shall,  subject  to  Clause  27 3  (Distributions  to  the  Borrower)  and  27 4
(Clawback),  be made available by the Agent as soon as practicable after receipt
to the Party entitled to receive payment in accordance  with this Agreement,  to
such  account  as that  Party may  notify to the Agent by not less than five (5)
Business Days' notice

27.3  Distributions to the Borrower

The Agent may (with the consent of the Borrower or in accordance  with Clause 28
(Set-off)),  apply any  amount  received  by it for the  Borrower  in or towards
payment (on the date and in the currency and funds of receipt) of any amount due
from the Borrower under the Finance  Documents or in or towards  purchase of any
amount of currency to be so applied

27.4  Clawback

a)   Where a sum is to be paid to the Agent  under  the  Finance  Documents  for
     distRIbution to another Party,  the Agent is not obliged to pay that sum to
     that other Party until it has been able to  establish  to its  satisfaction
     that it has actually received that sum

b)   If the Agent pays an amount to  another  Party and it proves to be the case
     that the Agent had not actually  received  that  amount,  then the Party to
     whom that  amount  was paid by the Agent  shall on demand  refund  the same
     amount to the Agent, together with interest on that amount from the date of
     payment to the date of receipt  by the  Agent,  calculated  by the Agent to
     reflect its cost of funds

27.5  Partial payments

If the Agent  receives  a payment  that is  insufficient  to  discharge  all the
amounts then due and payable by the Borrower  under the Finance  Documents,  the
Agent shall apply that payment towards the obligations of the Borrower under the
Finance Documents in the following order

a)   firstly,  in or  towards  payment  pro rata of any unpaid  fees,  costs and
     expenses of the Agent under the Finance Documents,

b)   secondly, in or towards payment pro rata of any accrued interest (including
     default interest), fee or commissions due but unpaid under this Agreement,

c)   thirdly,  in or towards  payment pro rata of any  principal  due but unpaid
     under this Agreement,  and

d)   fourthly,  in or towards  payment  pro rata of any other sum due but unpaid
     under the Finance Documents

27.6  Application following an Event of Default

On either (i) the completion of a sale of a Vessel,  either by forced auction or
private  treaty,  or (ii) the receipt of any monies by the Agent pursuant to the
sale  proceeds of such Vessel (as the case may be), such monies shall be applied
in the following order

a)   firstly,  in  respect  of all costs and  expenses  whatsoever  incurred  in
     connection with or about incidental to the said sale,

b)   secondly, in or towards satisfaction of all prior claims (being any claims,
     liabilities  or debts owed or taking  priority in respect of such  proceeds
     over the Security Interests  constituted by the Security Documents) secured
     on such Vessel,

c)   thirdly,  in or towards  payment  pro rata of all sums owed to the  Finance
     Parties under the Finance Documents, and

d)   fourthly, the balance, if any to the Borrower or to its order

27.7  No set-off by the Borrower

All payments to be made by the  Borrower  under the Finance  Documents  shall be
calculated and be made without (and free and clear of any deduction for) set-off
or counterclaim

27.8  Payment on non-Business Days

a)   Any  payment  which is due to be made on a day that is not a  Business  Day
     shall be made on the next Business Day in the same calendar month (if there
     is one) or the preceding Business Day (if there is not)

b)   During any extension of the due date for payment of any principal or Unpaid
     Sum under this Agreement interest is payable on the principal or Unpaid Sum
     at the rate payable on the original due date

27.9  Currency of account

The Borrower shall pay

a)   any amount payable under this Agreement,  except as otherwise  provided for
     herein, in USD, and

b)   all  payments  of Costs  and Taxes in the  currency  in which the same were
     incurred


28   SET-OFF

A Finance  Party may, to the extent  permitted  by  applicable  law, set off any
matured  obligation  due from the Borrower  under the Finance  Documents (to the
extent beneficially owned by that Finance Party) against any matured obligations
owed by that Finance Party to the Borrower,  regardless of the place of payment,
booking  branch or  currency  of either  obligation  If the  obligations  are in
different  currencies,  the Finance  Party may convert  either  obligation  at a
market rate of exchange in its usual  course of business  for the purpose of the
set-off


29         NOTICES

29.1        Communication in writing

Any  communication to be made under or in connection with the Finance  Documents
shall be made in writing and, unless otherwise stated, may be made by telefax or
letter Any such  notice or  communication  addressed  as provided in Clause 29 2
(Addresses) will be deemed to be given or made as follows

a)   if by letter, when delivered at the address of the relevant Party,

b)   if by telefax, when received

However, a notice given in accordance with the above but received on a day which
is not a Business Day or after 16 00 hours (London time) in the place of receipt
will only be deemed to be given at 9 00 hours (London time) on the next Business
Day in that place

29.2  Addresses

Any communication or document to be made under or in connection with the Finance
Documents  shall be made or delivered to the address and telefax  number of each
Party and marked for the  attention of the  department  or persons set out below
and, in case of any New Lender, to the address notified to the Agent

If to the Agent          DnB NOR Bank ASA
                         Stranden 21
                         N-0250 Oslo, Norway
                         Telefax No +47 22 48 28 94
                         Att Credit Administration Shipping

If to the Borrower       Nordic American Tanker Shipping Limited
                         c/o Scandic American Shipping Ltd (European Branch)
                         P0 Box 56
                         N-3201 Sandefjord, Norway
                         Telefax No + 47 33 42 15 45
                         Att Turid Sorensen

or any  substitute  address  and/or  telefax number and/or marked for such other
attention  as the Party may  notify to the other  Agent (or the Agent may notify
the other  Parties  if a change is made by the  Agent) by not less than five (5)
Business Days' prior notice

29.3  Communication with the Borrower

All  communication  from or to the Borrower shall be sent through the Agent

29.4  Language

Communication  to be given by one Party to another  under the Finance  Documents
shall be given in the English  language or, if not in English and if so required
by the Agent,  be accompanied by a certified  English  translation  and, in this
case, the English  translation  shall prevail unless the document is a statutory
or other official document

30   CALCULATIONS

All sums falling due by way of interest,  fees and commissions under the Finance
Documents  accrue from  day-to-day  and shall be  calculated on the basis of the
actual number of days elapsed and a calendar year of 360 days (or 365 days where
applicable) and for the actual number of days elapsed The  calculations  made by
the Agent of any interest rate or any amount payable  pursuant to this Agreement
shall be conclusive and binding upon the Borrower in the absence of any manifest
error


31   MISCELLANEOUS

31.1  Partial invalidity

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

31.2  Remedies and waivers

No failure to exercise,  nor any delay in  exercising on the part of any Finance
Party,  any right or remedy  under the  Finance  Documents  shall  operate  as a
waiver,  nor shall any single or partial exercise of any right or remedy prevent
any further or other  exercise or the  exercise of any other right or remedy The
rights and remedies  provided in this Agreement are cumulative and not exclusive
of any rights or remedies provided by law

31.3  Amendments and waivers

31 3 1  Required consents

a)   Subject to Clause 31 3 2  (Exceptions),  any term of the Finance  Documents
     may be  amended or waived  only with the  written  consent of the  Majority
     Lenders  and the  Borrower  and any such  amendment  will be binding on all
     Parties

b)   The Agent may effect,  on behalf of any Finance  Party,  any  amendment  or
     waiver permitted by this Clause

31 3 2  Exceptions

a)   An amendment to or waiver that has the effect of changing or which  relates
     to

     (i)  the definition of "Majority Lenders",

     (ii) an  extension  of the date of any  payment  of any  amount  under  the
          Finance Documents,

b)   a  reduction  in  Applicable  Margin or a  reduction  in the  amount of any
     payment of principal, interest, fees or commission payable,

c)   an increase in or extension of any Commitment,

d)   a term of the Finance Documents which expressly requires the consent of all
     the Lenders,

e)   a proposed substitution or replacement of the Borrower, or

f)   a  change  of  Clauses  2  2  (Nature  of  a  Finance  party's  rights  and
     obligations),  17 (Security), 22 2 (Insurance), 24 (Changes to the Parties)
     and this Clause 31 3,

shall not be made without the prior written consent of all the Lenders

An amendment or waiver which relates to the rights or  obligations  of the Agent
or the  Arranger  may not be  effected  without  the consent of the Agent or the
Arranger

31.4  Disclosure of information and confidentiality

Each of the Finance Parties may disclose to each other or to their  professional
advisers any kind of information  which the Finance  Parties have acquired under
or in  connection  with any  Finance  Document  The  Parties are obliged to keep
confidential  all  information  in respect of the terms and  conditions  of this
Agreement This  confidentiality  obligation  shall not apply to any  information
which

a)   is publicised by a Party as required by applicable laws and regulations,

b)   has entered  the public  domain or is publicly  known,  provided  that such
     information  is not  made  publicly  known by the  receiving  Party of such
     information, or

c)   was or  becomes,  as  the  Party  is  able  to  demonstrate  by  supporting
     documents, available to the such Party on a non-confidential basis prior to
     the disclosure thereof

31.5  Conflicting provisions

In case of conflict  between this Agreement and the terms of any of the Security
Documents, the terms and conditions of this Agreement shall prevail


32   GOVERNING LAW AND ENFORCEMENT

32.1  Governing law

This Agreement shall be governed by Norwegian law

32.2  Jurisdiction

a)   For the benefit of each Finance Party,  the Borrower agrees that the courts
     of Oslo, Norway, have jurisdiction to settle any disputes arising out of or
     in connection with the Finance Documents  including a dispute regarding the
     existence,  validity or  termination  of this  Agreement,  and the Borrower
     accordingly submits to the non-exclusive  jurisdiction of the Oslo District
     Court (Oslo tingrett)

b)   Nothing in this Clause 32 2 shall limit the right of the Finance Parties to
     commence  proceedings  against the Borrower in any other court of competent
     jurisdiction  To the extent  permitted by law, the Finance Parties may take
     concurrent proceedings in any number of jurisdictions

32.3  Service of process

Without prejudice to any other mode of service, the Borrower

a)   irrevocably appoints Scandic American Shipping Ltd as its agent for service
     of  process in  relation  to any  proceedings  before  Norwegian  courts in
     connection with any Finance Document, and

b)   agrees that  failure by its process  agent to notify it of the process will
     not invalidate the proceedings concerned


                                      * * *
<PAGE>

                                   SCHEDULE 1
                             LENDERS AND COMMITMENTS


- --------------------------------------------------------------------------------
 Lender:                             Commitment                          %
- --------------------------------------------------------------------------------
 DnB NOR Bank ASA                    USD 75,000,000                   25 00%
 Nordea Bank Norge ASA               USD 75,000,000                   25 00%
 Fokus Bank ASA                      USD 75,000,000                   25 00%
 Scotiabank Europe PLC               USD 75,000,000                   25 00%
- --------------------------------------------------------------------------------
 Total:                              USD 300,000,000                 100.00%
- --------------------------------------------------------------------------------
<PAGE>

                                   SCHEDULE 2
                              CONDITIONS PRECEDENT


1    CORPORATE AUTHORISATION

1.1  In respect of the Borrower:

a)   Certificate of Incorporation,

b)   Memorandum and Articles of Association,

c)   Updated Good Standing Certificate,

d)   Resolutions passed at a board meeting of the Borrower evidencing

     (i)  the approval of the terms of, and the  transactions  contemplated  by,
          the  Transaction  Documents  and  the  registration  of  the  relevant
          Mortgages, and

     (ii) the  authorisation  of its  appropriate  officer or  officers or other
          representatives  to execute the  Transaction  Documents  and any other
          documents   necessary  for  the   transactions   contemplated  by  the
          Transaction Documents, on its behalf,

e)   Power of Attorney (notarised and legalised if requested by the Agent), and

f)   Secretary's Certificate (notarised and legalised)


2    AUTHORISATIONS

All approvals,  authorisations  and consents required by any government or other
authorities  for the  Borrower to enter into and perform its  obligations  under
this Agreement and/or any of the Transaction Documents to which it is a party


3    THE VESSELS

In respect of each of the Vessels

a)   The Charterparty (if any),

b)   Evidence (by way of transcript of registry) that the Vessel is, or will be,
     registered  in the  name of the  Borrower  in the  Bahamas,  Isle of Man or
     Norwegian  International  Ship  Registry  (as the case  may  be),  that the
     Mortgage  has  been,  or will in  connection  with the  utilisation  of the
     relevant Loan be,  executed and recorded with its intended  first  priority
     against  the  Vessel  and  that  no  other  encumbrances,  maritime  liens,
     mortgages or debts whatsoever are registered against the Vessel,

c)   An  updated  class  certificate  related to the  Vessel  from the  relevant
     classification  society,  confirming  that the Vessel is  classed  with the
     highest class in accordance with Clause 22 3 (Classification  and repairs),
     free of extensions and overdue recommendations,

d)   Copies of insurance  policies/cover  notes documenting that insurance cover
     has been taken out in respect of the Vessel in accordance  with Clause 22 2
     (Insurance),  and  evidencing  that the  Agent's  (on behalf of the Finance
     Parties)  Security  Interest in the  insurance  policies have been noted in
     accordance  with the  relevant  notices as  required  under the  Assignment
     Agreement,

e)   The Vessel's current SMC,

f)   The Technical Manager's current DOC, and

g)   Evidence  that the  Borrower  has  completed  all  documentation  and forms
     required for the registration of the Vessel in the Bahamas,  Isle of Man or
     Norwegian  International  Ship Registry (as the case may be) in the name of
     the Borrower

In relation to the New Vessels only

a)   the MOA, and

b)   the Protocol of Delivery and Acceptance under the MOA


4    FINANCE DOCUMENTS

a)   The Agreement,

b)   The Assignment Agreement,

c)   Notice  of  Assignment  of  Earnings  and the  Charterers'  acknowledgement
     thereof,

d)   Notice  of  Assignment  of  Insurances  and the  insurers'  acknowledgement
     thereof, and

e)   The Mortgages (including the deeds of covenants)


5    TRANSACTION DOCUMENTS

a)   The Commercial Management Agreement


6    MISCELLANEOUS

a)   The Drawdown  Notice at least three (3) Business Days prior to the Drawdown
     Date,

b)   Evidence that all fees  referred to in Clause 11 (Fees),  as are payable on
     or prior to the first Drawdown Date, have or will be paid on its due date,

c)   A Compliance Certificate confirming that the Borrower is in compliance with
     the financial covenants as set out in Clause 20 (Financial covenants),

d)   Appointment of Scandic American  Shipping Ltd and the acceptance by Scandic
     American  Shipping Ltd as the Borrower's  process agent in Norway under the
     Finance Documents,

e)   The Fee Letters,

f)   The  letter  regarding   effective  interest  duly  counter-signed  by  the
     Borrower,

g)   Evidence of discharge of any existing Security Interests (if any), and

h)   Any other documents as reasonably requested by the Agent


7    LEGAL OPINIONS

a)   A legal  opinion as regards  Isle of Man Law  matters  issued by  Dickinson
     Cruickshank,

b)   A legal opinion as regards Bermuda law matters issued by Appleby Spurting &
     Hunter,

c)   A legal opinion as regards Bahamas law matters issued by Higgs & Johnson,

d)   A legal  opinion as regards  Norwegian  law  matters  issued by  Thommessen
     Krefting Greve Lund AS, and

e)   Any such other favourable legal opinions in form and substance satisfactory
     to the Agent from lawyers appointed by the Agent on matters  concerning all
     relevant jurisdictions
<PAGE>

                                   SCHEDULE 3
                             FORM OF DRAWDOWN NOTICE




To    DnB NOR Bank ASA, as Agent

From  Nordic American Tanker Shipping Limited, as Borrower

Date  [            ]




NORDIC  AMERICAN TANKER SHIPPING  LIMITED -- USD  300,000,000  REVOLVING  CREDIT
FACILITY AGREEMENT DATED 14 SEPTEMBER 2005 (THE "AGREEMENT")

We refer to Clause 5 1 (Delivery of the Drawdown  Notice) of the Agreement Terms
defined in the Agreement  shall have the same meaning when used in this Drawdown
Notice

1    You are  hereby  irrevocably  notified  that we wish to make the  following
     drawdown of a Loan

     Proposed Drawdown Date     [       ]

     Principal Amount           [       ]

     Interest Period            [       ]

     Purpose                    [       ]

2    The  proceeds of the Loan shall be credited to [e] [insert  name and number
     of account]

3    We confirm  that,  as of the date hereof (i) each  condition  specified  in
     Clause 4 (Conditions Precedent) of the Agreement is satisfied, (ii) each of
     the  representations  and warranties set out in Clause 18  (Representations
     and warranties) of the Agreement is true and correct, and (iii) no event or
     circumstances  has  occurred  and is  continuing  which  constitute  or may
     constitute an Event of Default


Yours sincerely
for and on behalf of
NORDIC AMERICAN TANKER SHIPPING LIMITED



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                   SCHEDULE 4
                         FORM OF COMPLIANCE CERTIFICATE

To    DnB NOR Bank ASA, as Agent

From  Nordic American Tanker Shipping Limited, as Borrower

Date  [     ] [To be delivered no later than one hundred and thirty-five  (135)
      days  after each  reporting  date,  or  together  with the  quarterly
      financial statements if requested by the Agent]




NORDIC  AMERICAN  TANKER SHIPPING  LIMITED - USD  300,000,000  REVOLVING  CREDIT
FACILITY AGREEMENT DATED 14 SEPTEMBER 2005 (THE "AGREEMENT")

We refer to the Agreement  Terms  defined in the  Agreement  shall have the same
meaning when used in this Compliance Certificate

With  reference  to  Clauses 19 2  (Compliance  certificate)  and 20  (Financial
covenants)  of  the  Agreement,  we confirm  that  as at [    ] [insert relevant
reporting date)

1    Minimum Equity The Equity of the Borrower was USD [     ]

     The  Borrower  shall at all times  ensure that it has a Equity in a minimum
     amount of USD  150,000,000  The  covenant set out in Clause 20 2 (Financial
     covenants) is thus [not] satisfied

2    Minimum Market Value The Market Value of all of the Vessels pursuant to the
     attached surveys is USD [     ]

     The Borrower  shall at all times ensure that the Market Value of all of the
     Vessels  shall be at least one hundred and thirty per cent (130 00%) or one
     hundred  and  fifty  per cent (150  00(degree)/0)  of the Loans The  amount
     outstanding  under the Loans at the date hereof is USD [ ] Thus, the Market
     Value of the Vessels is [ ] per cent ([ )]%) of the Loans

3    We confirm that, as of the date hereof (i) each of the  representations and
     warranties  set out in Clause 18  (Representations  and  warranties) of the
     Agreement  is true and  correct,  and (ii) no  event or  circumstances  has
     occurred and is continuing  which  constitute or may constitute an Event of
     Default


Yours sincerely
for and on behalf of
NORDIC AMERICAN TANKER SHIPPING LIMITED



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                   SCHEDULE 5
                          FORM OF TRANSFER CERTIFICATE




To    DnB NOR Bank ASA, as Agent

From  [     ] (the "Existing Lender" and [     ] (the "New Lender")

Date  [     ]




NORDIC  AMERICAN TANKER SHIPPING  LIMITED -- USD  300,000,000  REVOLVING  CREDIT
FACILITY AGREEMENT DATED 14 SEPTEMBER 2005 (THE "AGREEMENT")

We refer to the Agreement  Terms defined in the Agreement  have the same meaning
in this Transfer  Certificate  unless given a different meaning in this Transfer
Certificate

With reference to Clause 24 (Changes to the Parties)

1    The  Existing  Lender,  in its  capacity  as Lender  under  the  Agreement,
     confirms that it participates with [ ] per cent of the Total Commitments

2    The Existing Lender hereby  transfers to the New Lender [ ] per cent of the
     Total  Commitments  as  specified  in  the  Schedule  hereto,  and  of  the
     equivalent rights and interest in all Finance Documents, and the New Lender
     hereby  accepts such transfer from the Existing  Lender in accordance  with
     the terms set out herein  and Clause 24  (Changes  to the  Parties)  of the
     Agreement and assumes the same  obligations to the other Finance Parties as
     it would have been under if it was an original Lender

3    The proposed  Transfer Date is [ ], as from which date the Transfer of such
     portion of the Total Commitments shall take full legal effect

4    The New  Lender  confirms  that it has  received  a copy of the  Agreement,
     together with such other  information as it has required in connection with
     this  transaction The New Lender  expressly  acknowledges and agrees to the
     limitations on the Existing Lender's  responsibility set out in Clause 24 3
     (Limitations of responsibility of Existing Lenders) of the Agreement

5    The New Lender hereby  undertakes  to the Existing  Lender and the Borrower
     that it will perform in  accordance  with the terms and  conditions  of the
     Agreement all those  obligations which will be assumed by it upon execution
     of this Transfer Certificate

6    The address,  telefax number and attention details for notices,  as well as
     the account details of the New Lender, are set out in the Schedule

7    This  Transfer  Certificate  is governed by Norwegian  law,  with Oslo City
     Court (Oslo tingrett) as legal venue

                                  The Schedule
              Commitments/rights and obligations to be transferred

I         Existing Lender:                                           [ ]

II        New Lender:                                                [ ]

III       Total Commitments of Existing Lender:                  USD [ ]

IV        Aggregate amount transferred:                          USD [ ]

V         Total Commitments of New Lender:                       USD [ ]

VI        Transfer Date:                                             [ ]


           Administrative Details / Payment Instructions of New Lender

Notices to New Lender

            [                                                       ]
            [                                                       ]
            Att          [                                          ]
            Telefax no            + [               ]

[Insert  relevant  office  address,  telefax  number and  attention  details for
notices and payments to the New Lender]

Account  details  of New  Lender  [Insert  relevant  account  details of the New
Lender]




Existing Lender                         New Lender
[      ]                                [      ]



By                                      By
  -------------------------------         -------------------------------
Name                                    Name
Title                                   Title

This Transfer  Certificate is accepted and agreed by the Agent (on behalf of the
Majority Lenders) and the Borrower and the Transfer Date is confirmed as [     ]

Agent:                                  Borrower
DnB NOR Bank ASA                        Nordic American Tanker Shipping Limited



By                                      By
  -------------------------------         -------------------------------
Name                                    Name
Title                                   Title
<PAGE>

                                   SCHEDULE 6
                          FORM OF ASSIGNMENT AGREEMENT




THIS ASSIGNMENT  AGREEMENT (the "Assignment  Agreement") is made on 14 September
2005 between

(1)  Nordic  American  Tanker  Shipping  Limited,  Reid House, 31 Church Street,
     Hamilton HM12, Bermuda, as borrower (the "Borrower"), and

(2)  DnB NOR Bank ASA of Stranden 21, N-0250 Oslo, Norway,  organisation  number
     984 851 006 as agent on behalf of the  Finance  Parties  (as defined in the
     Agreement as referred to below) (the "Agent")

Background

(A)  Pursuant to the terms and conditions of a loan agreement dated 14 September
     2005 (the  "Agreement")  between the  Borrower as  borrower,  the banks and
     financial  institutions  listed in  schedule  1  thereto  as  lenders  (the
     "Lenders")  and DnB NOR Bank ASA as agent for the Lenders (the "Agent") and
     mandated lead arranger  (the  "Arranger"),  the Lenders have agreed to make
     available  to the  Borrower a revolving  credit  facility in the  aggregate
     amount of up to USD 300,000,000 (the "Loans"), and

(B)  it is a condition  precedent to the Lenders  making the Loans  available to
     the Borrower  that the Borrower  executes and  delivers,  inter alia,  this
     Assignment  Agreement  and grants the Security  Interests set out herein as
     security  for  its  obligations  towards  the  Finance  Parties  under  the
     Agreement

NOW THEREFORE


1    INTERPRETATION

1.1  Definitions

In this Assignment Agreement,  including the preamble hereto (unless the context
otherwise  requires),  any term or expression defined in the preamble shall have
the  meanings  ascribed to it therein In  addition,  terms and  expressions  not
defined  herein but whose  meanings are defined in the Agreement  shall have the
meanings set out therein

1.2  Construction

In this Assignment Agreement, unless the context otherwise requires

a)   reference to Clauses or  Appendices  are to be construed as  references  to
     clauses or appendices of this Assignment Agreement unless otherwise stated,

b)   references to (or to any specified provision of) this Assignment  Agreement
     or any other document  shall be construed as references to this  Assignment
     Agreement,  that  provision or that  document as from time to time amended,
     and

c)   words importing the plural shall include the singular and vice versa


2    ASSIGNMENT OF EARNINGS AND INSURANCES

2.1  Assignment

To secure the payment and the discharge of the Borrower's  obligations under the
Finance Documents and the payment of all sums which from time to time may become
due  thereunder,  and to secure the performance and observance of and compliance
with all the covenants, terms and conditions contained in the Finance Documents,
the Borrower  hereby assigns to the Agent (on behalf of the Finance  Parties) on
first priority

a)   the Earnings, and

b)   the Insurances

2.2  Notice and acknowledgement, etc.

a)   The Borrower  undertakes  promptly to give notice of the  assignment of the
     Earnings to the Charterers under any  Charterparties  with a charter period
     exceeding  eighteen (18) months and in any event upon the  occurrence of an
     Event of Default,  in the form set out in Appendix 1 (A) hereto and procure
     that any recipient of such notice acknowledges receipt of the notice as set
     out therein in the form of Appendix 1 (B) hereto

b)   The Borrower  undertakes  to insure and keep the Vessels  fully  insured in
     accordance with Clause 22 2 (Insurance) of the Agreement, and

     (i)  in the event that the Insurances,  or any one of them, have been taken
          out on conditions  other than the Norwegian  Marine  Insurance Plan of
          1996,  version  2003 (as amended from time to time) (the  "Plan"),  to
          give all the  relevant  insurers  notice in the form of Appendix 2 (A)
          hereto, and procure that the said insurers acknowledge receipt of such
          notice in the form of Appendix 2 (B) hereto or give such other form of
          notice and  procure  such other form of  acknowledgement  as the Agent
          shall require in writing to the Borrower, and

     (ii) in the event that the Insurances,  or any one of them, have been taken
          out according to the Plan, to procure written  statements from all the
          relevant  insurers and/or approved  brokers  confirming that the Agent
          (on  behalf  of the  Finance  Parties)  has been  duly  registered  as
          co-insured  first priority  mortgagee on all such  insurance  policies
          taken out for the Vessels and that  notice  according  to the Plan has
          been duly received by all the relevant insurers

2.3  Loss Payable

Claims  related to the  Insurances  in respect of an actual or  constructive  or
agreed or arranged or compromised  total loss or requisition  for title or other
compulsory  acquisition of any of the Vessels and claims payable in respect of a
major casualty,  that is to say any claim (or the aggregate of which)  exceeding
USD 500,000,  shall be payable to the Agent  Subject  thereto all other  claims,
unless and until the insurers have received notice from the Agent of an Event of
Default which is unremedied  under the Agreement in which event all claims shall
be payable directly to the Agent up to the Lenders' mortgage interest,  shall be
released  directly for the repair,  salvage or other charges  involved or to the
Borrower as  reimbursement  if it has fully  repaired the damage and paid all of
the salvage or other charges or otherwise in respect of Borrower's  actual costs
in connection with repair,  salvage and/or other charges Any amounts paid to the
Borrower directly shall be paid to the Earnings Account


3    PERFECTION

The  Borrower  agrees  that at any time and from time to time  upon the  written
request of the Agent, it will promptly and duly execute and deliver to the Agent
any and all such further  instruments  and  documents as the Agent (on behalf of
the Finance Parties) may reasonably deem necessary or desirable to register this
Assignment Agreement in any applicable registry,  and to maintain and/or perfect
the Security  Interest  created by this Assignment  Agreement and the rights and
powers herein granted


4    ASSIGNMENT

The Agent may assign or transfer its rights  hereunder to any person to whom the
rights and  obligations  of the Agent and the Lenders  under the  Agreement  are
wholly or  partially  assigned  in  accordance  with  Clause 24  (Changes to the
Parties) of the Agreement


5    NO FURTHER ASSIGNMENT OR PLEDGE

The Borrower shall not,  unless prior written consent has been obtained from the
Agent,  be  entitled  to  further  assign  or pledge  the  Earnings  and/or  the
Insurances


6    ADDITIONAL AND CONTINUING SECURITY

The Security  Interest  contemplated  by this  Assignment  Agreement shall be in
addition  to  any  other  Security  Interest  granted  in  accordance  with  the
Agreement,  and shall be a continuing  security in full force and effect as long
as any obligations are outstanding under the Agreement


7    NOTICES

Any notice,  demand or other  communication to be made or delivered by any party
pursuant to this  Assignment  Agreement  shall (unless the addressee has by five
(5) Business Days' written notice to that party  specified  another  address) be
made or delivered as set out in Clause 29 (Notices) of the Agreement


8    GOVERNING LAW - JURISDICTION

This Assignment  Agreement shall be governed by and construed in accordance with
the laws of Norway

The Borrower and the Finance  Parties accept Oslo City Court (Oslo  tingrett) as
non-exclusive  venue,  but this choice shall not prevent the Agent (on behalf of
the Finance Parties) to enforce any of the Finance  Documents against any of the
Vessels or other assets of the Borrower wherever they may be found




Borrower                                    Agent
Nordic American Tanker Shipping Limited     DnB NOR Bank ASA



By                                          By
  -------------------------------             -------------------------------
Name                                        Name
Title                                       Title
<PAGE>

                                                                  Appendix 1 (A)

                          FORM OF NOTICE OF ASSIGNMENT

                            (Assignment of Earnings)


To    [      ]


MT "[ ]"

We refer to the charter party dated [ ], (the  "Charterparty")  made between you
and us,  whereby we agreed to let and you agreed to take on [ ] charter  for the
period  and  upon the  terms  and  conditions  therein  mentioned  MT "[ ]" (the
"Vessel")

We hereby give you notice that

1    by an agreement dated 14 September 2005 (the  "Assignment  Agreement") made
     between us and DnB NOR Bank ASA, Stranden 21, N-0250 Oslo, Norway acting as
     agent on behalf of certain  other  banks (the  "Agent"),  related to a loan
     agreement of even date (the "Agreement"),  we have assigned  absolutely and
     have  agreed  to  assign  absolutely  to and in favour of the Agent all our
     rights, title and interest,  present and future, to all payments to be made
     to us under the  Charterparty,  including  in  respect of any breach by you
     thereunder,

2    you are hereby  irrevocably  authorised and instructed to make all payments
     under the  Charterparty  to our account  with the Agent  account no 7093 04
     41587 (free of any set-off or other deduction) until such time as the Agent
     shall  direct to the contrary  whereupon  all  instructions  or demands for
     actions  shall be made by the Agent and payments are due to the Agent or as
     it may direct, and

3    the  Agreement  includes  provisions  that no  amendments,  termination  or
     cancellation  shall be made to the Charterparty  (nor shall you be released
     from any of your obligations  thereunder  without the prior written consent
     of the  Agent)  and  that  we  shall  remain  liable  to  perform  all  our
     obligations  under the  Charterparty  and that the Agent  shall be under no
     obligations of any kind whatsoever in respect thereof

The authority and  instructions  herein contained cannot be revoked or varied by
us without the written  consent of the Agent The provisions of this notice shall
be governed by Norwegian law

[Place and date ] [      ], [      ]

Yours sincerely
for and on behalf of
Nordic American Tanker Shipping Limited



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                                                  Appendix I (B)

                             FORM OF ACKNOWLEDGEMENT

                            (Assignment of Earnings)



To    DnB NOR Bank ASA
      Stranden 21
      N-0250 Oslo
      Norway
      Attn [      ]


We acknowledge  receipt of the above Notice of Assignment  dated [ ] from Nordic
American  Tanker Shipping  Limited  relating to MT "[ ]" Terms used herein shall
have the same meaning as defined therein

We agree to the  assignment  set out  therein and  undertake  to be bound by the
terms  thereof  We  confirm  that we have  received  no notice  of any  previous
assignment  or  pledge  of all or any part of the  charter  hire and any  monies
payable thereunder

We further  confirm  that all  written  statements  containing  instructions  or
demanding  actions or payments under the  Charterparty  may until further notice
from the  Agent to the  contrary  be made by [ ] and  after  such  notice  these
instructions shall be given or demands shall be made by the Agent

This acknowledgement and confirmation shall be governed by Norwegian law

Place and date [     ]

Yours sincerely
for and on behalf of
[ ]



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                                                  Appendix 2 (A)

                          FORM OF NOTICE OF ASSIGNMENT

                           (Assignment of Insurances)

To The Insurers

MT "[ ]"

Nordic American  Tanker  Shipping  Limited as owner (the "Owner") of MT [ ] (the
"Vessel")  hereby  gives  you  notice  that all  payments  due to us from you in
respect of the Vessel  have been (by way of  security)  assigned to DnB NOR Bank
ASA,  Stranden 21,  N-0250 Oslo,  Norway,  as Agent for certain other banks (the
"Mortgagee")  according to an Assignment  Agreement dated 14 September 2005 (the
"Assignment   Agreement")  related  to  a  loan  agreement  of  even  date  (the
"Agreement"),  and  that all  payments  due to us under  our  policy(ies)  with
yourselves must be made in accordance with the  instruction,  from time to time,
of the Mortgagee

Please  note that all  claims  related  to the  insurances  in respect of claims
payable  in  respect  of a major  casualty,  that is to say  any  claim  (or the
aggregate of which) exceeding USD 500,000, shall be payable to the Mortgagee and
be  applied  by the  Mortgagee  in  accordance  with the terms of the  Agreement
Subject  thereto all other  claims,  unless and until the insurers have received
notice from the Mortgagee of a default  which is unremedied  under the Agreement
in which event all claims shall be payable directly to the Mortgagee up to their
mortgage  interest,  shall be released  directly for the repair or other charges
involved or to the Owner as  reimbursement  if it has fully  repaired the damage
and paid all of the charges or otherwise in respect of the Owner's  actual costs
in  connection  with repair  and/or other  charges Any amounts paid to the Owner
directly  shall be paid to the Earnings  Account,  account no 7093 04 41587 with
the Mortgagee

Please  note  that this  instruction  may not be  varied  except  with the prior
written consent of the Mortgagee

Please  confirm your  acknowledgement  of the terms of this notice by completing
the  Acknowledgement   attached  hereto  Please  return  the  signed  and  dated
Acknowledgement to the Mortgagee at the address set out above

Place and date [      ], [      ]

Yours sincerely
for and on behalf of
Nordic American Tanker Shipping Limited



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                                                  Appendix 2 (B)



                             FORM OF ACKNOWLEDGEMENT

                           (Assignment of Insurances)



To    DnB NOR Bank ASA
      Stranden 21
      N-0250 Oslo
      Norway
      Att [       ]



We hereby  acknowledge  receipt of a Notice of Assignment  (the  "Notice")  from
Nordic  American  Shipping  Limited (the "Owner")  dated [ ] related to [ ] (the
"Vessel")

We have duly noted and do accept that our payments  due to the Owner,  under the
insurance  policy(-ies) taken out for the Vessel as an Owners' Entry pursuant to
our rules,  shall be made in  accordance  with the  instructions  set out in the
Notice,  including  the Loss  Payable  clause  therein,  and  payment due to the
mortgagees  will be made to such account as from time to time  instructed by DnB
NOR Bank ASA, Stranden 21, N-0250 Oslo,  Norway,  which bank has been duly noted
by  ourselves  as the first  priority  mortgagee  of the said  Vessel on its own
behalf and on behalf of certain other banks as agent therefore

Place and date [     ]

Yours sincerely
for and on behalf of
[INSURERS]



By
  -------------------------------
Name
Title [authorised officer]
<PAGE>

                                   SCHEDULE 7
                             MANDATORY COST FORMULA


1    The  Mandatory  Cost is an  addition  to the  interest  rate to  compensate
     Lenders for the cost of compliance with (a) the requirements of the Bank of
     England  and/or the Financial  Services  Authority (or, in either case, any
     other  authority  which  replaces all or any of its  functions)  or (b) the
     requirements of the European Central Bank


2    On  the  first  day  of  each  Interest  Period  (or as  soon  as  possible
     thereafter) the Agent shall  calculate,  as a percentage  rate, a rate (the
     "Additional Cost Rate") for each Lender,  in accordance with the paragraphs
     set out  below The  Mandatory  Cost  will be  calculated  by the Agent as a
     weighted  average  of the  Lenders'  Additional  Cost  Rates  (weighted  in
     proportion to the percentage  participation  of each Lender in the relevant
     Loan) and will be expressed as a percentage rate per annum


3    The Additional Cost Rate for any Lender lending from a Facility Office in a
     Participating  Member State will be the percentage  notified by that Lender
     to the Agent This percentage will be certified by that Lender in its notice
     to the Agent to be its reasonable determination of the cost (expressed as a
     percentage  of that  Lender's  participation  in all  Loans  made from that
     Facility Office) of complying with the minimum reserve  requirements of the
     European Central Bank in respect of loans made from that Facility Office


4    The Additional  Cost Rate for any Lender lending from a Facility  Office in
     the United Kingdom will be calculated by the Agent as follows

     a)   in relation to a sterling Loan

                  AB + C(B - D)+ E x 0 01
                  -----------------------     per cent per annum
                       100 - (A + C)

     b)   in relation to a Loan in any currency other than sterling

                  E x 0 01
                  --------     per cent per annum
                    300

Where

A    is the percentage of Eligible  Liabilities  (assuming these to be in excess
     of any stated  minimum)  which that Lender is from time to time required to
     maintain as an interest free cash ratio deposit with the Bank of England to
     comply with cash ratio requirements

B    is the percentage rate of interest  (excluding the Margin and the Mandatory
     Cost and, if the Loan is an Unpaid  Sum,  the  additional  rate of interest
     specified in paragraph  (a) of Clause 8 4 (Default  interest))  payable for
     the relevant Interest Period on the Loan

C    is the  percentage  (if any) of Eligible  Liabilities  which that Lender is
     required from time to time to maintain as interest bearing Special Deposits
     with the Bank of England

D    is the  percentage  rate per annum  payable  by the Bank of  England to the
     Agent on interest bearing Special Deposits

E    is designed to compensate  Lenders for amounts payable under the Fees Rules
     and is  calculated  by the Agent as being the  average  of the most  recent
     rates of charge  supplied by the Reference  Banks to the Agent  pursuant to
     paragraph 7 below and expressed in pounds per (pound)1,000,000


5    For the purposes of this Schedule

     a)   "Eligible  Liabilities" and "Special Deposits" have the meanings given
          to them from time to time under or pursuant to the Bank of England Act
          1998 or (as may be appropriate) by the Bank of England,

     b)   "Fees  Rules"  means the rules on periodic  fees  contained in the FSA
          Supervision  Manual or such other law or regulation as may be in force
          from time to time in respect of the payment of fees for the acceptance
          of deposits,

     c)   "Fee Tariffs" means the fee tariffs  specified in the Fees Rules under
          the activity group A 1 Deposit acceptors  (ignoring any minimum fee or
          zero rated fee  required  pursuant  to the Fees Rules but taking  into
          account any applicable discount rate),

     d)   "Facility  Office" means the office or offices notified by a Lender to
          the Agent in writing  on or before  the date it becomes a Lender  (or,
          following  that date, by not less than five (5) Business Days' written
          notice) as the office or offices  through  which it will  perform  its
          obligations under the Agreement,

     e)   "Participating  Member  State"  means any member state of the European
          Communities that adopts or has adopted the euro as its lawful currency
          in accordance with legislation of the European  Community  relating to
          Economic and Monetary Union,

     f)   "Reference Banks" means, in relation to LIBOR and Mandatory Cost, such
          banks  as may be  appointed  by the  Agent  in  consultation  with the
          Company from time to time, and

     g)   "Tariff  Base" has the meaning  given to it in, and will be calculated
          in accordance with, the Fees Rules


6    In application of the above formulae, A, B, C and D will be included in the
     formulae as  percentages (ie 5 per cent will be included in the formula as
     5 and not as 0 05) A negative result obtained by subtracting D from B shall
     be taken as zero The  resulting  figures  shall be rounded to four  decimal
     places


7    If  requested  by  the  Agent,  each  Reference  Bank  shall,  as  soon  as
     practicable after publication by the Financial Services  Authority,  supply
     to the  Agent,  the rate of charge  payable by that  Reference  Bank to the
     Financial  Services  Authority pursuant to the Fees Rules in respect of the
     relevant financial year of the Financial Services Authority (calculated for
     this purpose by that Reference Bank as being the average of the Fee Tariffs
     applicable to that Reference Bank for that financial year) and expressed in
     pounds per (pound)1,000,000 of the Tariff Base of that Reference Bank


8    Each  Lender  shall  supply any  information  required by the Agent for the
     purpose of calculating its Additional Cost Rate In particular,  but without
     limitation,  each Lender shall supply the following information on or prior
     to the date on which it becomes a Lender

     a)   the jurisdiction of its Facility Office, and

     b)   any  other  information  that the  Agent may  reasonably  require  for
          such purpose

     Each  Lender  shall  promptly  notify  the  Agent  of  any  change  to  the
     information provided by it pursuant to this paragraph


9    The  percentages  of each  Lender for the  purpose of A and C above and the
     rates of charge of each  Reference Bank for the purpose of E above shall be
     determined by the Agent based upon the information  supplied to it pursuant
     to  paragraphs 7 and 8 above and on the  assumption  that,  unless a Lender
     notifies the Agent to the contrary,  each Lender's  obligations in relation
     to cash ratio  deposits  and  Special  Deposits  are the same as those of a
     typical bank from its jurisdiction of incorporation  with a Facility Office
     in the same jurisdiction as its Facility Office


10   The Agent  shall  have no  liability  to any  person if such  determination
     results in an  Additional  Cost Rate which  over or under  compensates  any
     Lender and shall be entitled to assume that the information provided by any
     Lender or Reference  Bank  pursuant to  paragraphs 3, 7 and 8 above is true
     and correct in all respects


11   The Agent shall  distribute the additional  amounts received as a result of
     the Mandatory Cost to the Lenders on the basis of the Additional  Cost Rate
     for each Lender based on the  information  provided by each Lender and each
     Reference Bank pursuant to paragraphs 3, 7 and 8 above


12   Any  determination  by the Agent pursuant to this Schedule in relation to a
     formula,  the Mandatory Cost, an Additional Cost Rate or any amount payable
     to a Lender shall,  in the absence of manifest  error,  be  conclusive  and
     binding on all Parties


13   The Agent may from time to time,  after  consultation  with the Company and
     the Lenders,  determine and notify to all Parties any amendments  which are
     required to be made to this  Schedule in order to comply with any change in
     law,  regulation or any requirements  from time to time imposed by the Bank
     of England,  the Financial  Services Authority or the European Central Bank
     (or, in any case,  any other  authority  which  replaces  all or any of its
     functions)  and any such  determination  shall,  in the absence of manifest
     error, be conclusive and binding on all Parties

<PAGE>

                                   SIGNATORIES




Borrower
Nordic American Tanker Shipping Limited



By /s/ Herbjorn Hansson
  -------------------------------
Name    HERBJORN HANSSON
Title   ATTORNEY-IN-FACT


Lenders
DnB NOR Bank ASA



By /s/ Peter Behncke
  -------------------------------
Name    PETER BEHNCKE
Title   ATTORNEY-IN-FACT


Nordea Bank Norge ASA



By /s/ Jan Clavedge
  -------------------------------
Name    JAN CLAVEDGE
Title   ATTORNEY-IN-FACT


Fokus Bank ASA



By /s/ Morten Bjornsen
  -------------------------------
Name    MORTEN BJORNSEN
Title   ATTORNEY-IN-FACT


Scotiabank Europe PLC



By /s/ Peter Behncke
  -------------------------------
Name    PETER BEHNCKE
Title   ATTORNEY-IN-FACT


Agent
DnB NOR Bank ASA



By /s/ Peter Behncke
  -------------------------------
Name    PETER BEHNCKE
Title   ATTORNEY-IN-FACT


Arranger
DnB NOR Bank ASA



By /s/ Peter Behncke
  -------------------------------
Name    PETER BEHNCKE
Title   ATTORNEY-IN-FACT
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>3
<FILENAME>d681624_ex12-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
Exhibit 12.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

I, Herbjorn Hansson, certify that:

1. I have  reviewed this annual  report on Form 20-F of Nordic  American  Tanker
Shipping Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition,  results of operations and cash flows of the Company as of,
and for, the periods presented in this report;

4.  The  Company's  other  certifying  officer(s)  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Company, including its consolidated subsidiaries,  is made known to us
          by others  within those  entities,  particularly  during the period in
          which this report is being prepared;

     b)   evaluated the effectiveness of the Company's  disclosure  controls and
          procedures  and  presented  in this report our  conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   disclosed  in this  report  any  change in the  registrant's  internal
          control  over  financial  reporting  that  occurred  during the period
          covered by this annual  report  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting.

5. The Company's other  certifying  officers and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
Company's  auditors  and  the  audit  committee  of the  registrant's  board  of
directors (or persons performing the equivalent function):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably likely to adversely affect the Company's ability to record,
          process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees  who  have a  significant  role  in the  Company's  internal
          control over financial reporting.

Date: June 29, 2006

/s/ Herbjorn Hansson
- -------------------------------
Herbjorn Hansson
Chief Executive Officer

SK 01318 0002 681624
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.2
<SEQUENCE>4
<FILENAME>d681624_ex12-2.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
Exhibit 12.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

I, Turid Sorensen, certify that:

1. I have  reviewed this annual  report on Form 20-F of Nordic  American  Tanker
Shipping Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition,  results of operations and cash flows of the Company as of,
and for, the periods presented in this report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have:

     a)   designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          Company, including its consolidated subsidiaries,  is made known to us
          by others  within those  entities,  particularly  during the period in
          which this report is being prepared;

     b)   evaluated the effectiveness of the Company's  disclosure  controls and
          procedures  and  presented  in this report our  conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c)   disclosed  in this  report  any  change in the  registrant's  internal
          control  over  financial  reporting  that  occurred  during the period
          covered by this annual  report  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting.

5. The Company's other  certifying  officers and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
Company's  auditors and the audit  committee of the Company's board of directors
(or persons performing the equivalent function):

     a)   all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably likely to adversely affect the Company's ability to record,
          process, summarize and report financial information; and

     b)   any fraud, whether or not material,  that involves management or other
          employees  who  have a  significant  role  in the  Company's  internal
          control over financial reporting.

Date: June 29, 2006

/s/ Turid Sorensen
- ---------------------
Turid Sorensen
Chief Financial Officer

SK 01318 0002 681624
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.1
<SEQUENCE>5
<FILENAME>d681624_ex13-1.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
Exhibit 13.1

                      CHIEF EXECUTIVE OFFICER CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350

        In connection with this Annual Report of Nordic American Tanker Shipping
Limited  (the  "Company")  on Form 20-F for the year ended  December 31, 2005 as
filed with the  Securities and Exchange  Commission  (the "SEC") on or about the
date hereof (the "Report"),  I, Herbjorn Hansson, Chief Executive Officer of the
Company,  certify,  pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

     A signed  original  of this  written  statement  has been  provided  to the
Company and will be retained  by the  Company  and  furnished  to the SEC or its
staff upon request.

Date: June 29, 2006

/s/ Herbjorn Hansson
- -----------------------
Herbjorn Hansson
Chief Executive Officer


SK 01318 0002 681624
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13.2
<SEQUENCE>6
<FILENAME>d681624_ex13-2.txt
<DESCRIPTION>CERTIFICATION
<TEXT>
Exhibit 13.2

                      CHIEF FINANCIAL OFFICER CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350

        In connection  with the Annual Report of Nordic American Tanker Shipping
Limited  (the  "Company")  on Form 20-F for the year ended  December 31, 2005 as
filed with the  Securities and Exchange  Commission  (the "SEC") on or about the
date hereof (the "Report"),  I, Turid Sorenson,  Chief Financial  Officer of the
Company,  certify,  pursuant to 18 U.S.C.  Section 1350, as adopted  pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.

     A signed  original  of this  written  statement  has been  provided  to the
Company and will be retained  by the  Company  and  furnished  to the SEC or its
staff upon request.

Date: June 29, 2006

/s/ Turid Sorensen
- --------------------
Turid Sorensen
Chief Financial Officer


SK 01318 0002 681624
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>d675261_23-1.txt
<DESCRIPTION>CONSENT
<TEXT>
Exhibit 23.1



            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the  incorporation by reference in the Registration  Statement No.
333-118128  on Form  F-3 of our  report  dated  May  18,  2006,  related  to the
financial  statements of Nordic American  Tanker  Shipping  Limited for the year
ended December 31, 2005,  appearing in this Annual Report on Form 20-F of Nordic
American Tanker Shipping Limited for the year ended December 31, 2005.



/s/  Deloitte Statsautoriserte Revisorer AS
- ----------------------------------------------
     Deloitte Statsautoriserte Revisorer AS


Oslo, Norway
June 30, 2006
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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