MEMORANDUM OF AGREEMENT



           DUPLICATE ORIGINAL



Dated: 18TH JULY 2001



D'AMICO INTERNATIONAL HOLDING SAH, LUXEMBOURG, ON BEHALF OF POTOMAC SHIPPING

COMPANY, LIBERIA, hereinafter called the Sellers, have agreed to sell, and

BUYING COMPANY TO BE NOMINATED AND GUARANTEED BY STELMAR SHIPPING LTD., LIBERIA



Name: THE VESSEL PRESENTLY KNOWN AS HULL NO. 1071 UNDER CONSTRUCTION AT DAEDONG

SHIPPING CO. LTD., KOREA, PURSUANT TO THE TERMS OF A CONTRACT MADE ON 15TH MAY,

2000 BY AND BETWEEN DAEDONG SHIPBUILDING CO. LTD. AS CONTRACTOR AND POTOMAC

SHIPPING COMPANY AS BUYERS (THE CONTRACT).



Classification Society/Class: RINA/AMERICAN BUREAU OF SHIPPING



Built: EXPECTED DELIVERY CURRENTLY 7TH FEBRUARY, 2002 BY: DAEDONG SHIPBUILDING

                                                          CO. LTD.



Flag:  N/A                  Place or Registration: TBA



Call Sign: N/A              Grt/Nrt: APPROX. 25,300



Register Number: N/A



Hereinafter called the Vessel, on the following terms and conditions:



DEFINITIONS



"Banking Days: are days on which banks are open both in the country of the

currency stipulated for the Purchase Price in Clause 1 and in the place of

closing stipulated in Clause 8.



"In writing" or "written" means a letter handed over from the Sellers to the

Buyers or vice versa, a registered letter, telex, telefax or other modern form

of written communication.



"Classification Society" or "Class" means the Society referred to in line 4.



1.    PURCHASE PRICE US$30,750,000.00 (UNITED STATES DOLLARS THIRTY MILLION

      SEVEN HUNDRED AND FIFTY THOUSAND.



2.    DEPOSIT



As security for the correct fulfillment of this Agreement the Buyers shall pay a

deposit of 10% (ten per cent) of the Purchase price within 3 (three) banking

days from the date of exchange of the faxed signed MOA.



This deposit shall be placed with Citibank, New York, Swift Code CITIUS33XX,

Account Number: 109 246 45, Account Name: Credit Agricole Indosuez, Paris, For

further credit:



                                      - 1 -

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Potomac/Stelmar Joint Deposit Account, Account Number: 00 198 468 402, For the

Attention: Sylvie Godet-Couery (+33 1 41 89 12 49).



And held by them in a joint account for the Sellers and the Buyers, to be

released in accordance with joint written instructions of the Sellers and the

Buyers. Interest, if any, to be credited to the Buyers. Any fee charged for

holding the said deposit shall be borne equally by the Sellers and the Buyers.



3.    PAYMENT



The said Purchase Price shall be paid in full free of bank charges to account to

be advised. 2 (two) banking days before the date on which the Vessel shall be

ready for delivery the Buyers shall deposit in Citibank, New York, 90% (ninety

per cent) of the Purchase Price into a bank account belonging to the Buyers.

Upon the signing of the Protocol of Delivery and Acceptance by the Sellers and

the Buyers and the Buyers' receipt of the documents set forth in Clause 8 of the

Memorandum of Agreement the 90% (ninety per cent) together with the 10% (ten per

cent) deposit shall be released and paid to the Sellers.



4.    INSPECTIONS



The Sellers shall provide for inspection of the partly completed Vessel at/in

Daedong Shipbuilding Co. on 13th - 17th July, 2001.



5.    NOTICES, TIME AND PLACE OF DELIVERY



(a)   The Sellers shall keep the Buyers well informed of the Vessel's expected

      delivery date under the Contract and shall provide the buyers with 30, 20,

      and 10 days notice of the estimated time of delivery. 3 (three) banking

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