Public Offering Registration - TRAILER BRIDGE INC - 5-30-1997

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Public Offering Registration - TRAILER BRIDGE INC - 5-30-1997 Powered By Docstoc
					As filed with the Securities and Exchange Commission on May 30, 1997 Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1
REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 (Exact name of Registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization) 4213 (Primary Standard Industrial Classification Code Number)

Trailer Bridge, Inc.
13-3617986 (I.R.S. Employer Identification No.)

9550 Regency Square Boulevard, Suite 500 Jacksonville, Florida 32225 (904) 724-4400 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Ralph W. Heim President and Chief Operating Officer Trailer Bridge, Inc. 9550 Regency Square Boulevard, Suite 500 Jacksonville, Florida 32225 (904) 724-4400 (Name, address, including zip code, and telephone number, including area code, of agent for service)
William G. Gotimer, Jr., Esq. Trailer Bridge, Inc. 500 Park Avenue Suite 540 New York, New York 10022 (212) 935-9518 Copies to: Linda Y. Kelso, Esq. Foley & Lardner 200 Laura Street Jacksonville, Florida 32202 (904) 359-2000 Bruce E. Macdonough, Esq. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 1221 Brickell Avenue Miami, Florida 33131 (305) 579-0500

____________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[_] If delivery of this prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered Common Stock, $.01 value . . Proposed Maximum Aggregate Offering Price(2) $31,000,000.00 Amount of Registration Fee(1) $9,393.94

(1) Includes _______ shares of Common Stock issuable upon exercise of an over-allotment option granted to the Underwriters. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in

accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Subject to Completion May 30, 1997 __________ Shares TRAILER BRIDGE, INC. Common Stock All of the shares of Common Stock offered hereby are being sold by Trailer Bridge, Inc. ("Trailer Bridge" or the "Company"). Prior to this offering, there has been no public market for the Common Stock of the Company. It is currently estimated that the initial public offering price will be between $_______ and $________ per share. See "Underwriting" for a discussion of the factors to be considered in determining the initial public offering price. The Company has made application for the Common Stock to be quoted on the Nasdaq National Market under the symbol "TRBR."

The Common Stock offered hereby involves a high degree of risk. See "Risk Factors" beginning on page ___.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Public Per Share . . . . . . . . . Total(2) . . . . . . . . . $ $ $ Underwriting Discounts and Commissions $ $ Proceeds to Company(1) $

(1) Before deducting expenses of the offering estimated at $________________. (2) The Company has granted the Underwriters a 30-day option to purchase up to an additional ___________ shares of Common Stock solely to cover over allotments, if any. To the extent that the option is exercised, the Underwriters will offer the additional shares to the public at the Price to Public shown above. If the option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Company will be $__________, $_________ and $_________, respectively. See "Underwriting."

The shares of Common Stock are offered by the several Underwriters, subject to prior sale, when, as and if delivered to and accepted by them, and subject to the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the shares of Common Stock will be made at the offices of Alex. Brown & Sons Incorporated, Baltimore, Maryland, on or about ___________________, 1997. ALEX. BROWN & SONS INCORPORATED The date of this Prospectus is __________________, 1997. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

[Inside front cover pictures; multiple photographs showing sequential movement of freight] CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." The Company intends to furnish its stockholders with annual reports containing audited financial statements and an opinion thereon expressed by independent certified public accountants and with quarterly reports for the first three quarters of each year containing unaudited financial information. PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and the financial statements and notes thereto appearing elsewhere in this Prospectus. Except as otherwise specified, all information in this Prospectus assumes (i) a 20,000-for-one split of the shares of Common Stock and (ii) no exercise of the Underwriters' over- allotment option. See "Underwriting." The Company Trailer Bridge, headquartered in Jacksonville, Florida, is an integrated trucking and marine freight carrier that currently provides truckload freight transportation primarily between the continental U.S. and Puerto Rico. Founded in 1991 by transportation pioneer Malcom P. McLean, the Company combines an efficient and dedicated motor carrier with a low cost barge and tug marine transportation system. Trailer Bridge is the only company to operate marine vessels fully configured to carry 48' and 53' long, 102" wide, "high-cube" trailers. This configuration enables the Company to achieve equipment utilization rates and other operating efficiencies not readily available to traditional ocean carriers that primarily use smaller capacity equipment, such as 40' containers. The Company believes that as a result of these and other efficiencies, its total unit costs per mile are the lowest of any carrier operating between the U.S. and Puerto Rico. Trailer Bridge intends to achieve significant growth by providing the lowest cost freight transportation service to markets well suited to its high-cube integrated truckload and marine freight system. Based on volume and pricing data, the Company believes there are a number of markets in which the Company's unique transportation system can provide superior full load service at a significant cost advantage over existing modes of truckload and rail intermodal transportation. Trailer Bridge's differentiated service quickly gained the acceptance of U.S. to Puerto Rico shippers, leading to rapid growth and high equipment utilization. In 1993, the Company's first full year of operation, Trailer Bridge achieved a 93% outbound (U.S. to Puerto Rico) vessel utilization rate and captured 5% of the U.S. to Puerto Rico marine freight market. In response to the rapid market share gains experienced by Trailer Bridge, in 1996 the Company increased its vessel capacity by 56% by inserting midsections ("mid-bodies") into its two existing barges, increasing the capacity of each barge from 266 to 416 48' equivalent truckload units. Trailer Bridge will increase its vessel capacity by an additional 56% in late 1997 and early 1998 when it takes delivery of two 408' long container carrying barges designed specifically for the Company's integrated truckload marine transportation system and bearing the Company's "Triplestack Box Carrier/TM/" trade name. The Triplestack Box Carriers/TM/ are versatile, low-draft vessels that have a capacity of 213 53' containers, stacked three-high on a single deck. Construction of these two vessels began in March 1997 and, upon their completion, they are expected to be deployed in the Company's existing Puerto Rico freight operation. Trailer Bridge also intends to contract for the construction of three additional Triplestack Box Carriers/TM/ which it intends to deploy in coastwise service between New York and Florida. The Company also intends to investigate other marine markets which are well suited for its unique, cost-efficient transportation service, such as from the continental U.S. to Hawaii or Alaska. Management believes that shippers' ongoing attempts to reduce distribution costs have resulted in a number of trends that provide significant growth opportunities for low-cost freight cargo companies such as Trailer Bridge. These trends include (i) core carrier consolidation in which shippers "partner" with a small base of carriers, (ii) intermodalism, as shippers shift between transport sectors, and (iii) logistics outsourcing. Management believes that the Company's principal competitive strengths are: Significant Operating Cost Advantage. Trailer Bridge believes it is the lowest cost provider of freight transportation between the U.S. and Puerto Rico. Lower overall operating costs are achieved through significantly higher equipment utilization and lower marine linehaul costs than those of traditional ocean carriers. The Company's inland trucking operation achieves significantly higher equipment utilization and lower unit trucking costs by using 48' and 53' high-cube trailers. These trailers provide customers with over 50% more interior capacity than 40' marine containers but with similar inland trucking costs. The Company's marine system uses towed ocean-going barges instead of self-propelled container ships to deliver equivalent units of capacity at significantly lower capital and operating costs. Domestic Truckload Operations. The Company is the only carrier using a fleet of company-owned and leased tractors and high-cube dry van trailers to provide transportation services between the continental U.S. and Puerto Rico. By using high-cube equipment, the mainstay of the domestic truckload industry, and a centralized dispatch system, the Company can more effectively compete for and obtain domestic non-Puerto

Rico truckload freight while repositioning equipment for Puerto Rico shipments. As a result, the Company operates with lower empty miles and higher equipment utilization than its competitors in the Puerto Rico trade. Centralized Operation in Strategic Location. Trailer Bridge operates a centralized truckload operation from its headquarters in Jacksonville. Because approximately 70% of the Company's truckload freight is dispatched through Jacksonville on a regular schedule to meet weekly barge sailings to Puerto Rico, the Company is able to achieve maintenance and other operating efficiencies and higher driver retention. Additionally, the Company's centralized Jacksonville headquarters is strategically located near key southern rail and highway endpoints which connect U.S. cities to Puerto Rico and other Caribbean points. Emphasis on U.S. Domestic Ocean Trade. The Company will continue to concentrate its marine operations in markets protected by the Jones Act. The Jones Act prevents foreign-built or foreign-crewed vessels from competing in ocean trade between ports in the U.S., including the non- contiguous areas of Puerto Rico, Alaska, Hawaii and Guam. Experienced Management Team. The Company's officers and directors have extensive experience in the transportation industry, including an average of over five years with the Company. The scope of management experience at Trailer Bridge is well balanced between both trucking and marine transportation. Trailer Bridge's strategy for continuing its profitable growth includes (i) increasing capacity in its Puerto Rico service by 56% with the addition of two new barges called Triplestack Box Carriers/TM/ designed specifically for the Company to carry 53' containers, (ii) initiating a new coastwise marine transportation system offering twice-weekly service from New York to Florida utilizing three Triplestack Box Carriers/TM/ to be built in 1998, and (iii) initiating marine service to other Jones Act protected markets such as Hawaii and Alaska and other offshore markets. Trailer Bridge was incorporated under the laws of Delaware in August 1991. The Company's headquarters is located at 9550 Regency Square Blvd, Jacksonville, Florida 32225, and its telephone number is (800) 554-1589.
The Offering Common Stock offered hereby . . . . . . . . . . . ____________ shares Common Stock to be outstanding after the offering . . . . . . . . . . . . . . . ____________ shares (1) Use of Proceeds . . . . . . . . . . . . . . . . . To purchase revenue equipment, fund a dividend to existing stockholders, reduce indebtedness and increase working capital. See "Use of Proceeds." Proposed Nasdaq National Market Symbol . . . . . TRBR

(1) Excludes 1,000,000 shares of Common Stock reserved for issuance to employees under the Company's Incentive Stock Plan (of which options to purchase 600,000 shares at the initial public offering price have been granted, subject to consummation of the offering). See "Management - Incentive Stock Plan." Summary Financial and Operating Data (In thousands, except share amounts and operating data)
Three Months Ended March 31, 1996 1997 $14,568 966 (256) -----$16,446 1,748 (264) -------

1992 Statement of Operations Data: Operating revenues . . . . Operating income (loss) . Nonoperating expense (net). Income (loss) before provision and pro forma provision (benefit) for income taxes . . . . . . Provision for income taxes Pro forma provision (benefit) for income taxes(1). . . Pro forma net income (loss)(1) . . . . . . . . Pro forma net income (loss) per common share(1) . . . Weighted average shares outstanding . . . . . . . $ 38,778 (9,309) (864) --------

Year Ended December 31, 1993 1994 1995 $ 67,613 5,094 (944) -------$ 72,192 6,175 (1,805) -------$62,531 8,778 (1,314) -------

1996 $63,148 4,425 (1,015) -------

(10,173) --------(3,860) $ (6,313) ======== $ (.63) ======== 10,000

4,150 9 -------1,615 $ 2,526 ======== $ .25 ======== 10,000

4,370 12 -------2,015 $ 2,343 ======== $ .23 ======== 10,000

7,464 67 ------3,037 $ 4,360 ======= $ .51 ======= 8,512

3,410 39 ------1,298 $ 2,073 $ .24 ======= 8,500 $

710 8 -----259 443

1,484 29 ------546 $ 909

$ .05 ======= 8,500

$ .11 ======= 8,500

Operating Data: Operating ratio(2) . . . . Vessel utilization outbound Vessel utilization inbound. Overall vessel capacity utilization . . . . . . . Tractor loaded mile percentage . . . . . . . Weighted average tractors . Weighted average trailers .

124.0% 60.1% 12.1% 36.1% 77.3% 178 923

92.5% 93.5% 36.6% 65.0% 87.1% 199 1,629

91.4% 90.9% 52.8% 71.8% 86.2% 256 1,605

86.0% 96.0% 51.6% 73.8% 81.0% 187 1,458

93.0% 88.4%(3) 42.0%(3) 65.3%(3) 81.5% 163 1,762

93.4% 96.3% 59.8% 78.1% 83.0% 174 1,400

89.4% 78.1%(3) 33.6%(3) 55.8%(3) 80.5% 154 1,983

Balance Sheet Data: Working capital (deficit) . Net property and equipment . Total assets . . . . . . . Long-term debt, capital lease and due to affiliate . . . Stockholders' equity . . . .

March 31, 1997 As Actual Adjusted(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . obligations, including current portion, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,823) 14,349 26,440 15,242 6,314 $ _______ _______ _______ _______

(1) Since January 1, 1992, the Company has operated as an S Corporation under the Internal Revenue Code and the laws of the states that recognize S Corporation status. As a result, the Company's taxable earnings were taxed directly to the Company's then-existing stockholders. Pro forma net income assumes that the Company was subject to federal and state income taxes and was taxed as a C corporation at the effective tax rates that would have applied for all periods. See Note 1 to the Financial Statements. With the closing of the offering, the Company will become subject to federal and state income taxes. The pro forma statement of operations data do not give effect to a non-cash charge (that would have been approximately $650,000 at March 31, 1997) in recognition of deferred income taxes that will result from the termination of the Company's S Corporation status upon effectiveness of the offering. (2) Operating expenses as a percentage of revenue. (3) Vessel capacity outbound to Puerto Rico and inbound to the U.S. increased in 1996 from 266 to 416 48' trailer equivalents. (4) Adjusted to reflect (i) the sale of _________ shares of Common Stock offered by the Company at an assumed price of $_________ per share and the application of the estimated net proceeds therefrom as described under "Use of Proceeds," and (ii) a non-cash charge (that would have been approximately $650,000 at March 31, 1997) that will result from the termination of the Company's S Corporation status. See "S Corporation Status." RISK FACTORS In addition to the other information in this Prospectus, the following risk factors should be considered carefully in evaluating an investment in the Company's Common Stock. Operations Dependent on Limited Fleet and Special Loading Structures The Company's current operations are dependent upon two vessels and triple deck loading ramps at the Company's port facilities in Jacksonville, Florida and San Juan, Puerto Rico, the loss of any of which could have a material adverse effect on the Company. The operation of any marine vessel involves the risk of catastrophic events due to various perils of sea. In addition, port facilities in Jacksonville and San Juan are vulnerable to the risk of hurricanes. In the event of either a total loss of or major damage to any vessel or ramp, there can be no assurance that the Company could locate a suitable replacement, or if available, that such replacement could be obtained on suitable terms. The Company also would be adversely affected if unexpected maintenance or repairs were required for any vessel or ramp, all of which have been specially configured for the Company. The Company does not maintain business interruption insurance. Accordingly, there can be no assurance that the loss of, damage to or significant required repair to any of the Company's vessels or port facilities in the future would not have a material adverse effect on the Company. Current Reliance on Single Market Most of the Company's present revenue comes from freight moving either to or from Puerto Rico. The Company's current results are therefore affected by economic conditions and business cycles in Puerto Rico that may or may not be similar to those in the U.S. The Company's present reliance on the Puerto Rico market makes it susceptible to changes that it would not otherwise be exposed to if it operated in a more geographically diverse market, including a downturn in the local economy, local economic and competitive factors, changes in government regulations and political changes. The U.S. Congress has passed legislation that establishes a phase-out of Section 936 of the Internal Revenue Code, which allowed for favorable U.S. tax treatment of profits resulting from manufacturing operations in Puerto Rico. This favorable tax provision contributed to economic growth in Puerto Rico in the past by enticing U.S. corporations to establish manufacturing operations in Puerto Rico. Any change in Puerto Rico's political status with the U.S., or the ongoing debate on such status, could affect the economy of Puerto Rico. The ultimate effect of the phase-out of Section 936 or of possible changes in Puerto Rico's governmental and political status is uncertain, but there can be no assurance that such issues will not adversely affect the Company. New Venture Risks

A key element of the Company's strategy for future growth is to expand into new markets, including the domestic coastwise traffic lanes such as New York to Florida, while continuing to build the Company's presence in the Puerto Rico market. In addition, the Company's expansion in both the Puerto Rico and coastwise traffic lanes will be accomplished with its new Triplestack Box Carrier/TM/ vessels which will require the Company's acquisition of containers, chassis units and loading equipment that may not be compatible with the Company's existing vessels and revenue equipment. The planned use of Triplestack Box Carriers/TM/ and expansion into coastal traffic lanes are subject to risks of establishing a new business, including lack of experience, unforeseen design, operating and maintenance problems and lack of market acceptance. In the case of the coastwise traffic lanes, there is presently no comparable marine service and the Company will be competing with the rail intermodal and truckload industries. Many competitors in these industries have substantially greater financial resources, operate more equipment, or carry a larger volume of freight than the Company. Moreover, the expansion in Puerto Rico with the Triplestack Box Carriers/TM/ and the entry into new coastal traffic lanes will require new marketing strategies, additional personnel and a continuing evaluation of management structure. No assurance can be given that Trailer Bridge will be able to attract a sufficient number of customers at freight rates that result in profitable operations in Puerto Rico and the new traffic lanes and markets it expects to expand into in the future. See "Business Growth Strategy." Ship Construction Risks The Company has entered into a fixed price contract for the Company's two Triplestack Box Carriers/TM/, and construction has commenced with the first vessel scheduled for delivery in November 1997 and the second vessel scheduled for delivery two months later. No assurance can be given that there will be no changes in the contract specifications, either as required by various regulatory bodies or as requested by the Company, which result in an increase in construction cost and/or a delay in the delivery of the vessels. Construction of the Triplestack Box Carriers/TM/ also involves the risks associated with any large construction project, such as weather interference, labor shortages, work stoppages and unforeseen engineering problems, which could have the effect of increasing project costs and/or delaying delivery. During the construction of a vessel, as a matter of state law, laborers and others who perform services in connection with such construction may have liens against the vessel under construction. Rapid Growth of Business The Company expects to increase its capacity by approximately 56% between September 30, 1997 and January 31, 1998. This new vessel capacity will result in a need for additional revenue equipment and drivers. There can be no assurance that the Company will be able to attract and retain enough qualified drivers to operate planned additions to the equipment fleet. Further, expected growth, if achieved, may place a significant strain on the Company's management, working capital, and accounting and other operating systems. There is no assurance that such systems will be adequate to handle such growth or that operating margins will not be adversely affected by future changes in and expansion of the Company's business. Finally, the Company may be required to curtail its plans for growth due to changes in economic conditions. Potential Loss of Jones Act Protection The Company's marine operations are conducted in the U.S. domestic trade, which, by virtue of a set of federal laws known as the Jones Act, require that only U.S. built, owned and crewed vessels move freight between ports in the U.S., including the non-contiguous areas of Puerto Rico, Alaska, Hawaii and Guam. There have been repeated attempts to repeal these laws, and efforts to effect such repeal are expected to continue in the future. The Company is already subject to vigorous competition and potential additional competition in its marine operations, including competition by companies with financial resources greater than those of the Company that could be committed to the construction of new vessels in excess of market requirements. Repeal of the Jones Act could result in additional competition from vessels built in lower-cost foreign shipyards and manned by foreign nationals accepting lower wages than U.S. citizens. There is no assurance that such repeal, if it occurs, would not have a material adverse effect on the Company in the domestic trades it now serves or expects to serve in the future. Economic Factors The Company has no control over economic factors such as fuel prices, fuel tax, interest rate fluctuations, recessions, or customers' business cycles. Significant increases in fuel or other operating costs and interest rates, to the extent not offset by increases in freight rates, would adversely affect the Company's operating results. Economic recessions, temporary inventory imbalances, or downturns in customers' business cycles also could have a material adverse effect upon the operating results of the Company. If the resale value of the Company's revenue equipment were to decline, the Company could receive less upon the disposition of equipment or find it necessary to retain its equipment longer, with a resulting increase in operating expenses. The marine and trucking industries are cyclical with corresponding changes in revenue and profits. Changes in the level of economic growth as well as changes in the supply and demand of vessel and trucking capacity can impact both rates and resale values. The amount and timing of new vessel deliveries to competing carriers in the Puerto Rico market and rate reductions from increased capacity, excess capacity or slow market growth could result in rate instability that could have a material adverse effect upon the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Recruitment and Retention of Qualified Drivers Competition for drivers is intense in the trucking industry, and the Company occasionally experiences difficulty attracting and retaining enough qualified drivers. There is, and historically has been, an industry-wide shortage of qualified drivers, and this shortage could affect the quality and reliability of the Company's service, force the Company to significantly increase the compensation it pays to driver employees, curtail the

Company's growth or otherwise affect the Company's profitability. Difficulty in attracting and retaining qualified drivers would have a material adverse effect upon the Company's operations and ability to grow. See "Business - Driver Recruiting and Retention." Acquisition of Revenue Equipment The Company's strategy for continued growth is dependent on the acquisition and deployment of additional revenue equipment. The Company currently has orders for the purchase of 100 tractors through February 1998 as part of its normal tractor replacement program. The Company also has contracted for the construction of 53' containers and chassis units whose delivery is expected to coincide with the vessel construction schedule for its new Triplestack Box Carriers/TM/. Delays in the availability of equipment could occur due to work stoppages at the manufacturer, equipment or supply shortages or other factors beyond the Company's control. Any delay or interruption in the availability of equipment in the future could have a material adverse effect on the Company. Competition The trucking industry is highly competitive and fragmented and the Puerto Rico freight market is also highly competitive. The Company currently competes with other truckload carriers that provide domestic dry van service, private fleets operated by existing and potential customers, and marine carriers that provide ocean service between the U.S. and Puerto Rico. The Company's planned service in the coastwise traffic lanes will compete with rail intermodal service and trucking companies. Competition for the freight transported by the Company is based primarily on freight rates, and, to a lesser degree, on service and efficiency. Most of the Company's current and future competitors have substantially greater financial resources, operate more equipment, or carry a larger volume of freight than the Company. See "Business Competition." Dependence on Key Personnel The Company's success depends upon key members of management, including John D. McCown. The loss of one or more key members of management could have a material adverse effect on the Company. The Company does not maintain key life insurance policies on any of its officers or management. See "Management." Seasonality The Company's operations are affected by the seasonality of the Puerto Rico freight market where shipments are generally reduced during the first calendar quarter and increased during the fourth calendar quarter of each year in anticipation of Christmas. This seasonality is expected to have a greater impact on the Company when it increases its capacity with the addition of two new Triplestack Box Carriers/TM/. In addition, the Company's operating expenses have historically been higher in the winter months due to decreased fuel efficiency and increased maintenance costs in colder weather. The Company's operating revenue and net income may vary as a result of these factors, and accordingly, results of operations are subject to fluctuation, and results in any period should not be considered indicative of the results to be expected for any future period. Fluctuations in operating results may also result in fluctuations in the price of the Common Stock. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Seasonality." Fuel Price Fluctuations Fuel is one of the Company's largest operating expenses and was 9.5% of total revenue for the three months ended March 31, 1997. The cost and availability of fuel is subject to many economic and political factors. Any increase in fuel taxes or fuel prices, to the extent not offset by freight rate increases, or any interruption in the supply of fuel, could have a material adverse effect on the Company's operating results. The Company has no agreement in place that assures either price or availability and a dramatic increase in the price of fuel or a shortage of fuel could have a material adverse impact on the Company. See "Business - Fuel Availability and Cost." Environmental Matters The Company's operations are subject to various environmental laws and regulations dealing with the transportation, storage, presence, use, disposal, and handling of hazardous materials and hazardous wastes, discharge of storm water, and vessel fuel delivery. The Company does not maintain either aboveground or underground fuel storage tanks on its properties. Contractors under the direction of the tug owner handle the delivery of fuel to ocean-going tugs. The Company is not aware of any fuel spills on land or at sea or hazardous substance contamination on its properties and believes that its operations are in material compliance with existing environmental laws and regulations. However, if any such substances were found on the Company's properties or if the Company were found to be in violation of applicable laws and regulations, the Company could be responsible for clean-up costs, property damage, and fines or other penalties, any one of which could have a material adverse effect on the Company. Claims Exposure and Insurance Costs Trucking and marine transportation companies, including the Company, face multiple claims for personal injury and property damage relating to accidents, cargo damage and workers' compensation. The Company currently maintains a broad range of liability and property insurance covering all aspects of its business. To the extent that the Company experiences a material increase in the frequency or severity of accidents or

workers' compensation claims, or unfavorable developments on existing claims, the Company's operating results and financial condition could be materially adversely affected. Significant increases in the Company's claims and insurance cost, to the extent not offset by rate increases, would reduce the Company's profitability. See "Business - Safety and Insurance." Government Regulation The Company is subject to regulation by various Federal and state agencies, including the Surface Transportation Board, the successor agency to the Interstate Commerce Commission, the United States Department of Transportation, the U.S. Coast Guard and various similar state agencies. These regulatory authorities have broad powers, generally governing activities such as authority to engage in motor carrier operations, operational safety, accounting systems, tariff filings of freight rates, certain mergers, consolidations and acquisitions, and financial reporting. The Company's marine operations are conducted in the U.S. domestic trade, which, by virtue of a set of federal laws known as the Jones Act, require that only U.S. built, owned and crewed vessels move freight between ports in the U.S., including the non-contiguous areas of Puerto Rico, Alaska, Hawaii and Guam. The Company is also subject to regulations promulgated by the Environmental Protection Agency and similar state agencies. Although management believes that its operations are in material compliance with current laws and regulations, there can be no assurance that current regulatory requirements will not change or that currently unforeseen environmental incidents will not occur or that contamination or past non-compliance with environmental laws will not be discovered on properties on which the Company has operated. See "Business - Regulation." Reliance on Significant Customers For the year ended December 31, 1996, the Company's 25 largest customers represented 36.1% of revenue, its ten largest customers represented 23.4% of revenue, and its five largest customers represented 16.7% of revenue. Those same customers represented 27.7%, 19.3% and 14.9%, respectively, of total revenue for the year ended December 31, 1995. Most of the Company's contracts with customers are cancelable on 30 days' notice and the penalties for a shipper for breach of contract are minimal. The loss of any of its major customers could have a material adverse effect on the Company's operating results and profitability. See "Business - Marketing and Customers." Capital Requirements; Leverage The trucking industry and the vessels utilized to move truckload freight require extensive investment in revenue equipment. The Company historically has relied upon vessel charters, debt, capitalized leases, and operating leases to finance revenue equipment, and it has granted its lenders liens on substantially all of its assets. If in the future the Company were unable to borrow sufficient funds, enter into acceptable lease arrangements, sell or trade its used equipment at acceptable prices, or raise additional equity capital, the resulting capital shortage would limit the Company's growth and force the Company to operate its revenue equipment for longer periods, which would be likely to adversely affect the Company's growth and profitability. The Company currently has a long- term debt to total capitalization ratio higher than many of its competitors. Following the offering, the Company will continue to have debt and attendant financial risk and susceptibility to increases in interest rates. See "Use of Proceeds," "Capitalization," and "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." Voting Control of the Company Upon completion of the offering, Malcom P. McLean and Clara L. McLean will beneficially own approximately _____% of all of the outstanding shares of Common Stock. Accordingly, Malcom P. McLean and Clara L. McLean will have the ability to elect the entire Board of Directors of the Company, determine the outcome of all matters involving a stockholder vote, and take certain actions by written consent with notice to the other stockholders. See "Principal Stockholders" and "Description of Capital Stock." Restriction on Foreign Ownership and Possible Required Divestiture of Stock In order to maintain the eligibility of the Company to own and operate vessels in the U.S. domestic trade, 75% of the outstanding capital stock and voting power of the Company is required to be held by U.S. citizens. Although the Company's Certificate of Incorporation contains provisions limiting non-citizenship ownership of its capital stock, the Company could lose its ability to conduct operations in the U.S. domestic trade if such provisions prove unsuccessful in maintaining the required level of citizen ownership. Such loss would have a material adverse effect on the Company. If the Company determines that persons who are not citizens of the U.S. own more than 24.99% of the Company's outstanding capital stock, the Company may redeem such stock or, if redemption is not permitted by applicable law, may require the non-citizens who most recently acquired shares to divest such excess shares to persons who are U.S. citizens in such manner as the Board of Directors directs. The required redemption would be at a price equal to the average closing price during the preceding 30 trading days, which price could be materially different from the current price of the Common Stock. If a non-citizen purchases the Common Stock, there can be no assurance that he will not be required to divest the shares and such divestiture could result in a material loss. See "Description of Capital Stock Foreign Ownership Restrictions." Limitations on Takeovers Certain corporate governance and statutory provisions may inhibit changes in control of the Company. Applicable provisions of Delaware law restrict the ability of certain acquirers to engage in un-approved business combinations with the Company. The Company's Certificate of

Incorporation permits the issuance of additional shares of authorized but un-issued Common Stock and allows the Board of Directors to establish all relevant provisions of, and issue preferred stock without further action by the stockholders. Such preferred stock could be used, for example, in a stockholder rights plan. See "Description of Capital Stock." In addition, Malcom P. McLean and Clara L. McLean beneficially own stock entitled to a majority of the voting power of all of the Company's outstanding Common Stock. The effect of these provisions and the concentration of stock ownership could be to make a takeover more difficult or to discourage a person from attempting a takeover, including a takeover that some stockholders may deem to be in their best interests. Shares Eligible for Future Sale Sales of a substantial number of shares of Common Stock or the availability of such shares for sale in the public market following the offering may adversely affect prevailing market prices for the Common Stock and may make it more difficult for the Company to sell its equity securities in the future on terms it deems acceptable. Upon completion of the offering, the Company will have __________ shares of outstanding Common Stock. All _________ shares of Common Stock offered hereby will be freely tradable without restriction. The remaining 8,500,000 shares owned by existing stockholders will be eligible for sale under Rule 144 of the Securities Act of 1933 (the "Securities Act") beginning 180 days after the date of this Prospectus. Lack of Dividends After the closing of the offering, the Company intends to retain its earnings to finance the growth and development of its business and does not anticipate paying cash dividends. Any payment of cash dividends in the future will depend upon the Company's financial condition, capital requirements, earnings, restrictions under loan agreements, and other factors the Board of Directors may deem relevant. See "Dividend Policy." No Prior Public Market for Common Stock; Determination of Offering Price Prior to the offering, there has been no public market for the Common Stock, and there can be no assurance that an active trading market will develop or, if developed, that such market will be sustained or that the stock will trade at or above the initial public offering price. The initial public offering price of the Common Stock offered hereby will be determined by negotiation between the Company and the Underwriters and may bear no relationship to the price at which the Common Stock will trade after completion of the offering. See "Underwriting" for a discussion of the factors to be considered in determining the initial public offering price. From time to time the stock market experiences price and volume volatility, which may affect the market price of the Common Stock for reasons unrelated to the Company's performance. Dilution Purchasers of Common Stock in the offering will incur immediate and substantial dilution in the net tangible book value of their shares. See "Dilution." S CORPORATION STATUS Since January 1, 1992, the Company has been treated as an S Corporation under the Internal Revenue Code and the laws of the states that recognize S Corporation status. Accordingly, the Company's net income was reported by and taxed directly to the Company's stockholders rather than to the Company. The Company's S Corporation status will terminate with the closing of the offering, and in future periods the Company will be subject to federal and state taxes at applicable rates. The termination of the Company's S Corporation status will result in a one-time, non-cash charge to the Company (that would have been approximately $650,000 at March 31, 1997) in recognition of deferred income taxes. USE OF PROCEEDS The net proceeds to the Company from the sale of the _________ shares of Common Stock offered hereby are estimated to be approximately $___ million (assuming an initial public offering price of $_____ per share), after deducting underwriting discounts, commissions, and estimated expenses of the offering. Approximately $13.2 million of the net proceeds will be used to purchase revenue equipment scheduled for delivery in late 1997 and early 1998. The revenue equipment includes the 53' containers and chassis units that will be utilized with the two Triplestack Box Carriers/TM/ now being constructed to expand the Company's service in the Puerto Rico traffic lane. An additional $6.0 million will be used to fund the payment of dividends to existing stockholders. Approximately $5.8 million of the net proceeds will be used to repay debt due to Kadampanattu Corp., which is wholly owned by Malcom P. McLean, the Company's principal stockholder. The debt to be repaid bears interest at 8.0% per annum and matures on December 31, 1997. Approximately $1.5 million of such debt was incurred in 1997 to fund the Company's 12.5% down payment on the construction of two Triplestack Box Carriers/TM/. Approximately $2.2 million of the net proceeds will be used to fund the required 12.5% down payment on three additional Triplestack Box Carriers/TM/, which is currently expected to be made in the third quarter of 1997. The approximately $___ million of remaining proceeds will be used for working capital and general corporate purposes. Pending application of the net proceeds as described above, the Company intends to invest such proceeds in short-term, investment grade, interest-bearing securities.

DIVIDEND POLICY The Company currently intends to retain its earnings to finance the growth and development of its business and does not anticipate paying cash dividends. Any payment of cash dividends in the future will depend upon the Company's financial condition, capital requirements, earnings, restrictions under loan agreements, and other factors the Board of Directors may deem relevant. As an S Corporation, the Company has paid dividends to its stockholders from time to time in part to partially fund or offset their tax liability with respect to S Corporation earnings. See "S Corporation Status." Since the Company's inception, it has paid aggregate dividends of $2.6 million. The Company also intends to pay a dividend of $6.0 million to its existing stockholders with a portion of the net proceeds of the offering. CAPITALIZATION The following table sets forth the current portion of long-term debt, capital lease obligations, due to affiliate and capitalization of the Company as of March 31, 1997 after giving retroactive effect to the stock split and the related increase in authorized capital stock upon the closing of this offering, and as adjusted to reflect receipt of net proceeds from the sale of the _________ shares of Common Stock pursuant to this offering at an assumed offering price of $_____ per share:
March 31, 1997 Actual As Adjusted (In thousands) Current portion of long-term debt and capital lease obligations . . . . . . . . . . . . Due to affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,902 5,878 ------$ 8,780 ======= $ 6,462 -85 (84) 6,314 ------6,314 ------$12,776 ======= $ 2,902 -------$ 2,902 ======= $ 6,462 --

Long-term debt and capital lease obligations (net of current portion) Stockholders' equity: Preferred stock: $.01 par value, 1,000,000 shares authorized, no shares outstanding . . . . . . . . . . . . . . . Common Stock, $.01 value, 20,000,000 shares authorized; 8,500,000 shares issued and outstanding, __________ shares issued and outstanding as adjusted(1) . . . . . . . . . Additional paid-in capital . . . . . . . . . . . . . . . . . . . . Retained earnings . . . . . . . . . . . . . . . . . . . . . . . .

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

_____(2) _____(2) $ =======

Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1) Excludes 1,000,000 shares of Common Stock reserved for issuance to employees under the Company's Incentive Stock Plan (of which options to purchase 600,000 shares at the initial public offering price have been granted, subject to consummation of the offering). See "Management - Incentive Stock Plan." (2) Reflects the payment of a $6.0 million dividend to the Company's existing stockholders. Also reflects a non-cash charge (that would have been $650,000 at March 31, 1997) that will result from the termination of the Company's S Corporation status. See Note 11 to the Financial Statements. DILUTION The net tangible book value of the Company's Common Stock as of March 31, 1997 was approximately $5.4 million, or $.63 per share. Net tangible book value per share represents the amount of the Company's stockholders' equity, less intangible assets (consisting of goodwill), divided by 8,500,000 shares of Common Stock outstanding. Net tangible book value dilution per share represents the difference between the amount per share paid by purchasers of shares of Common Stock in the offering made hereby and the pro forma net tangible book value per share of Common Stock immediately after completion of the offering. After giving effect to (i) the sale of _________ shares of Common Stock in the offering at an assumed price of $_____ per share, (ii) the application of the estimated net proceeds therefrom and (iii) the non-cash charge (that would have been $650,000 at March 31, 1997) in recognition of deferred income taxes as described in "S Corporation Status," the pro forma net tangible book value of the Company as of March 31, 1997, would have been $_____ million or $_____ per share. This represents an immediate increase in net tangible book value of $____ per share to existing stockholders and an immediate dilution in pro forma net tangible book value of $_____ per share to purchasers of shares of Common Stock in the offering, as illustrated in the following table:
Assumed public offering price per share . . . . . . . Net tangible book value per share at March 31, 1997 Pro forma non-cash adjustment to recognize deferred income taxes . . . . . . . . . . . . . . . . . . Increase per share attributable to new investors . Pro forma net tangible book value per share after the offering . . . . . . . . . . . . . . . . . . . Net tangible book value dilution per share to new investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .63 (.08) ______ $ ====== $

The following table sets forth as of March 31, 1997 the difference between existing stockholders and the purchasers of shares in the offering (at an assumed offering price of $____ per share) with respect to the number of shares purchased from the Company, the total consideration paid, and the average price per share paid:
Number Existing stockholders . . . New investors . . . . . . . Total . . . . . . . . . 8,500,000 _________ ========= Shares Purchased Percent _____% _____% 100.0% ====== Amount Total Consideration Percent _____% _____ 100.0% ====== Average Price Per Share $________

$ 425 _____________ $ =============

SELECTED FINANCIAL AND OPERATING DATA The selected financial data set forth below has been derived from the financial statements of the Company. The financial statements as of December 31, 1995 and 1996 and for the three years ended December 31, 1996 have been audited by Deloitte & Touche LLP, independent auditors, and such financial statements and the report thereon are included in this Prospectus. The financial statements as of December 31, 1992, 1993 and 1994 and for the two years ended 1993 have also been audited and are not included herein. The financial statements as of March 31, 1996 and 1997 and for the three months then ended are unaudited. However, in the opinion of management, all adjustments of a normal recurring nature which are necessary to present a fair statement of the results for the interim periods have been made. The unaudited results of operations for the interim periods are not necessarily indicative of the results for the full year. The selected financial information set forth below should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the financial statements appearing elsewhere in this Prospectus, including the notes thereto.
Year Ended December 31, 1992 1993 1994 1995 1996 (In thousands, except share amounts and operating data) Statement of Operations Data: Operating revenues . . . . $ 38,778 Operating expenses: Salaries, wages, and benefits . . . . . . . . 10,443 Rent and purchased transportation . . . . . 17,320 Fuel . . . . . . . . . . 3,440 Operations and maintenance 7,512 Taxes and licenses . . . 392 Insurance and claims . . 1,331 Communications and utilities. . . . . . . . 631 Depreciation and amortization 1,418 Other operating expenses. 5,600 -------Total operating expenses 48,087 -------Operating income (loss) . . (9,309) Interest expense, net . . (864) Gain (loss) on sale of equipment . . . . . . . . --------Total nonoperating expense, net (864) -------Income (loss) before provision and pro forma provision (benefit) for income taxes . . . . (10,173) Provision for income taxes. --------Income (loss) before pro forma provision (benefit) for income taxes . . . . (10,173) Pro forma provision (benefit) for income taxes(1) . . . . . . . . . Pro forma net income (loss)(1). . . . . . . . . Pro forma net income (loss) per common share(1). . . . Weighted average shares outstanding(1) . . . . . . Operating Data: Operating ratio(2) . . . . Vessel utilization outbound Vessel utilization inbound. Overall vessel capacity utilization . . . . . . . Tractor loaded mile percentage . . . . . . . . Weighted average tractors . Weighted average trailers . Balance Sheet Data (at end of period): $ 67,613 15,831 23,398 4,240 9,192 989 2,051 824 1,370 4,624 -------62,519 -------5,094 (1,384) 440 -------(944) -------$ 72,192 19,307 19,616 5,429 11,781 960 2,202 834 2,647 3,241 -------66,017 -------6,175 (1,817) 12 -------(1,805) -------$ 62,531 14,592 14,497 5,256 10,553 589 1,861 621 2,761 3,023 -------53,753 -------8,778 (1,362) 48 -------(1,314) -------$ 63,148 13,289 16,231 5,883 14,211 455 2,121 608 2,944 2,981 -------58,723 -------4,425 (1,082) 67 -------(1,015) -------Three Months Ended March 31, 1996 1997

$ 14,568 3,435 3,430 1,468 3,046 138 514 143 701 727 -------13,602 -------966 (247) (9) -------(256) --------

$ 16,446 3,404 4,211 1,557 3,206 156 522 134 689 819 -------14,698 -------1,748 (264) --------(264) --------

4,150 9 -------4,141

4,370 12 -------4,358

7,464 67 -------7,397

3,410 39 -------3,371

710 8 -------702

1,484 29 -------1,455

(3,860) $ (6,313) ======== $ (.63) ======== 10,000 124.0% 60.1% 12.1% 36.1% 77.3% 178 923

1,615 $ 2,526 ======== $ .25 ======== 10,000 92.5% 93.5% 36.6% 65.0% 87.1% 199 1,629

2,015 $ 2,343 ======== $ .23 ======== 10,000 91.4% 90.9% 52.8% 71.8% 86.2% 256 1,605

3,037 $ 4,360 ======== $ .51 ======== 8,512 86.0% 96.0% 51.6% 73.8% 81.0% 187 1,458

1,298 $ 2,073 ======= $ .24 ======= 8,500 93.0% 88.4%(3) 42.0%(3) 65.3%(3) 81.5% 163 1,762

259 $ 443 ======== $ .05 ======== 8,500 93.4% 96.3% 59.8% 78.1% 83.0% 174 1,400

546 $ 909 ======== $ .11 ======== 8,500 89.4% 78.1%(3) 33.6%(3) 55.8%(3) 80.5% 154 1,983

Working capital (deficit) . Net property and equipment Total assets . . . . . . Long-term debt, capitalized leases, including current portion, and due to affiliate . . . . . . . . Stockholders' equity (deficit) . . . . . . . .

$(16,867) 3,366 13,816

$(13,174) 9,428 20,688

$(10,188) 11,118 23,521

$ (4,697) 8,851 20,226

$(1,719) 12,512 24,764

$(3,712) 8,189 18,557

$ (2,823) 14,349 26,440

15,322 (11,356)

22,771 (7,214)

20,776 (2,856)

13,461 2,673

13,879 6,045

11,085 3,376

15,242 6,314

(1) Since January 1, 1992, the Company has operated as an S Corporation under the Internal Revenue Code and the laws of the states that recognize S Corporation status. As a result, the Company's taxable earnings were taxed directly to the Company's then-existing stockholders. Pro forma net income assumes that the Company was subject to federal and state income taxes and was taxed as a C corporation at the effective tax rates that would have applied for all periods. See Note 1 to the Financial Statements. With the closing of the offering, the Company will become subject to federal and state income taxes. The pro forma statement of operations data do not give effect to a non-cash charge (that would have been approximately $650,000 at March 31, 1997) in recognition of deferred income taxes that will result from the termination of the Company's S Corporation status upon effectiveness of the offering. (2) Operating expenses as a percentage of revenue. (3) Vessel capacity outbound to Puerto Rico and inbound to the U.S. increased in 1996 from 266 to 416 48' trailer equivalents. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Trailer Bridge was incorporated in 1991. In February 1992, the Company commenced integrated truckload and marine services between the U.S. and Puerto Rico utilizing high-cube truckload equipment and two ocean-going barges. In April 1992, Trailer Bridge acquired a Midwestern truckload carrier with significant non-Puerto Rico related domestic revenue, primarily to increase the size of the Company's truckload fleet. Starting in late 1994, Trailer Bridge began to increase its focus on serving marine related markets by reducing inland truckload service in traffic lanes which were not complementary to lanes serving Puerto Rico freight customers. The table below reflects Puerto Rico revenue, non-Puerto Rico revenue and total revenue for the three years ended December 31, 1996 and the three months ended March 31, 1996 and 1997:
Puerto Rico . . . Non-Puerto Rico . Total . . . . . . $50,829 21,363 ------$72,192 ======= 70.4% 29.6% ----100.0% ====== $53,167 9,364 ------$62,531 ======= 85.0% 15.0% ----100.0% ====== $56,347 6,801 -----$63,148 ======= 89.2% 10.8% ----100.0% ====== $12,638 1,930 ------$14,568 ======= 86.8% 13.2% ----100.0% ====== $15,378 1,068 -----$16,446 ======= 93.5% 6.5% ---100.0% ======

During 1996, each of the Company's barge vessels was increased in size through a mid-body expansion program that resulted in a 56% increase in vessel capacity and was accomplished over a six-month period. During that period, only one of the Company's vessels was in service at a time. To maintain weekly service frequency, a smaller substitute vessel was utilized, resulting in both reduced revenue and additional costs. For these reasons, management believes that overall 1996 results are not indicative of the results that would be expected had both of the Company's vessels remained in service throughout the year. On May 21, 1997, the majority stockholder of the Company granted to the Company's Chairman and Chief Executive Officer, an option to purchase up to 1,200,000 shares of common stock (adjusted for the 20,000-for-1 stock split) owned by him at $.74 per share or an aggregate price of $891,330 for all shares. These options are immediately exercisable and have a term of 10 years. In connection with this option, the Company expects to record a nonrecurring, noncash charge for compensation expense and a credit to paid-in capital of approximately $11 million in the second quarter of 1997, representing the difference between the exercise price and the deemed fair market value of the common stock at the date of grant. This option does not involve the issuance of additional shares of common stock by the Company and therefore, any subsequent purchase of shares under the option will not have a dilutive effect on the Company's book value or earnings per share amounts. Results of Operations The following table sets forth the percentage relationship of certain items to operating revenue for the periods indicated:

Year Ended December 31, 1994 1995 1996 Operating revenue . . . . . . . . Operating expenses: Salaries, wages, and benefits . Rent and purchased transportation . . . . . . . Fuel . . . . . . . . . . . . . 100.0% 26.7 27.2 7.5 100.0% 23.3 23.2 8.4 100.0% 21.0 25.7 9.3

Three Months Ended March 31, 1996 1997 100.0% 23.6 23.6 10.1 100.0% 20.7 25.6 9.5

Operations and maintenance . Taxes and licenses . . . . . Insurance and claims . . . . Communications and utilities Depreciation and amortization Other operating expenses . .

. . . . . .

Total operating expenses . . Operating income . . . . . . . . Interest expense, net . . . . . . Gain (loss) on sale of equipment. Total nonoperating expense, net Income before provision and pro forma provision for income taxes. . . . . . . . Provision for income taxes . . . Income before pro forma for income taxes . . . Pro forma provision for taxes . . . . . . . . Pro forma net income provision . . . . . income . . . . .

16.3 1.3 3.1 1.2 3.7 4.4 ----91.4 ----8.6 (2.5) 0.0 ----(2.5) 6.1 0.1 ----6.0 2.8 ----3.2% =====

17.0 0.9 3.0 1.0 4.4 4.8 ----86.0 ----14.0 (2.2) 0.1 ----(2.1) 11.9 0.1 ----11.8 4.8 ----7.0% =====

22.5 0.7 3.4 1.0 4.7 4.7 ----93.0 ----7.0 (1.7) 0.1 ----(1.6) 5.4 0.1 ----5.3 2.0 ----3.3% =====

20.9 0.9 3.5 1.0 4.8 5.0 ----93.4 ----6.6 (1.7) (0.0) ----(1.7) 4.9 0.1 ----4.8 1.8 ----3.0% =====

19.5 0.9 3.2 0.8 4.2 5.0 ----89.4 ----10.6 (1.6) 0.0 ----(1.6) 9.0 0.2 ----8.8 3.3 ----5.5% =====

. . . . . .

Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996 Operating revenue increased $1.8 million, or 12.9%, to $16.4 million during the three months ended March 31, 1997 from $14.6 million during the year earlier period. This increase was due to a $2.7 million (21.7%) increase in Puerto Rico revenue through the utilization of a portion of the additional capacity resulting from the mid-body project, partially offset by a $862,000 (44.7%) decrease in non-Puerto Rico revenue as available tractor capacity was targeted further towards Puerto Rico revenue. Vessel capacity utilization on the core U.S. to Puerto Rico traffic lane was 78.1% during the three months ended March 31, 1997, compared to 96.3% during the year earlier period during which a smaller substitute vessel was utilized. Salaries, wages, and benefits were $3.4 million for the three months ended March 31, 1997, a decrease of $31,000 from the year earlier period due to a reduction in drivers. As a percentage of revenue, salaries, wages and benefits decreased to 20.7% during the three months ended March 31, 1997 from 23.6% for the year earlier period. This decrease was attributable to the increased relative proportion of Puerto Rico revenue, which is not as labor intensive as non-Puerto Rico revenue. Rent and purchased transportation increased $781,000 from the year earlier period due to increased charter fees for the expanded vessels, partially offset by a reduction in rolling stock rental costs as the Company increased its concentration of owned equipment. Rent and purchased transportation increased to 25.6% of revenue during the three months ended March 31, 1997 compared to 23.6% of revenue during the year earlier period as a result of the increased charter fees. Fuel expense as a percentage of revenue was 9.5% during the three months ended March 31, 1997 compared to 10.1% during the year earlier period. This decrease was primarily due to additional Puerto Rico revenue that generally has a lower fuel cost compared to non-Puerto Rico revenue, partially offset by an increase in average fuel prices. Operations and maintenance (which includes marine terminal rental and cargo-handling costs) was $3.2 million for the three months ended March 31, 1997, up from $3.0 million for the year earlier period. As a percentage of revenue, operations and maintenance decreased to 19.5% from 20.9% during the year earlier period. The improvement resulted from the elimination of temporary inefficiencies and increased per unit handling costs associated with the use of a smaller substitute vessel during the 1996 mid-body expansion program, partially offset by the higher operating costs associated with the Company's expanded Puerto Rico operations. Insurance and claims decreased to 3.2% of revenue during the three months ended March 31, 1997 from 3.5% of revenue during the year earlier period. This decrease was attributable to additional Puerto Rico revenue that generally has a lower payroll insurance cost compared to non-Puerto Rico revenue. Communications and utilities decreased to 0.8% of revenue during the three months ended March 31, 1997 from 1.0% of revenue during the year earlier period. This decrease was attributable to additional Puerto Rico revenue, which generally requires less communication and therefore has a lower communication cost compared to non-Puerto Rico revenue. Depreciation and amortization decreased to 4.2% of revenue during the three months ended March 31, 1997 from 4.8% of revenue during the year earlier period. This decrease was attributable to the increased relative significance of Puerto Rico revenue, which to date has not required the same proportionate investment in depreciable equipment compared to non- Puerto Rico revenue. Unlike the present vessels, the Triplestack Box Carriers/TM/ being built in 1997 will be owned by the Company and will be depreciated by the Company. Other operating expense (which includes office building rent and general supplies) was $819,000 during the three months ended March 31, 1997, compared to $727,000 for the year earlier period. As a percentage of revenue, other operating expense remained constant at 5.0%.

The Company's operating ratio improved to 89.4% during the first quarter of 1997 from 93.4% during the year earlier period primarily as a result of the increased Puerto Rico revenue that resulted from the Company's 1996 mid-body expansion program, as well as a related increase in the Company's ability to use available trucking capacity for its more profitable core Puerto Rico traffic. Interest expense (net) decreased slightly to 1.6% of revenue during the three months ended March 31, 1997 due to reductions in average outstanding balances, primarily amounts owed to an affiliate. As a result of the factors described above, pro forma net income more than doubled to $909,000 (5.5% of revenue) during the three months ending March 31, 1997 from $443,000 (3.0% of revenue) during the year earlier period. Year ended December 31, 1996 Compared to Year ended December 31, 1995 During 1996, the Company embarked upon an expansion program that increased the capacity of its vessels by 56% through the insertion of a mid-body in both of its vessels. Throughout the six-month construction period, only one of the Company's vessels was in service along with, first, a substitute vessel one-third smaller, followed by a substitute vessel more than two-thirds smaller than the Company's pre-modified vessels. Although weekly service was maintained, the Company was challenged by both the limited capacity of the smaller vessels and the subsequent need to fill the increased capacity of the modified mid-body vessels. Those fluctuations in vessel capacity led to inefficiencies, temporary loss of business and increased costs in all cost categories, most notably in the marine cargo handling area. Operating revenue increased $617,000 (1.0%) to $63.1 million during 1996 from $62.5 million during 1995. This reflects a $3.2 million (6.0%) increase in Puerto Rico revenue, substantially offset by a $2.6 million (27.4%) decrease in non-Puerto Rico revenue. The decrease in non-Puerto Rico revenue resulted from the Company's shift in focus away from domestic traffic lanes which were not complementary to Puerto Rico traffic lanes and a decrease in the average length of domestic hauls. Salaries, wages, and benefits decreased slightly to $13.3 million during 1996 from $14.6 million for 1995, and decreased as a percentage of revenue to 21.0% during 1996 from 23.3% during 1995. This decrease as a percentage of revenues was attributable to a decision to shift away from various domestic traffic lanes which were not complementary to Puerto Rico traffic lanes, resulting in a reduction in the number of truck drivers employed by the Company. Rent and purchased transportation increased $1.7 million to $16.2 million due to increased charter on the enlarged vessels, partially offset by reduced leasing. As a percentage of revenue, rent and purchased transportation increased to 25.7% during 1996 compared to 23.2% during 1995. Included in this category is the tug time-charter and vessel charter paid by the Company as well as expenses related to leasing trailers. The increase as a percentage of revenue in the most recent period was primarily due to (i) inability to generate corresponding revenue because of the smaller substitute vessels and (ii) continued payment of pre-modification charter rates while using the smaller vessels. Fuel expense increased $627,000 to $5.9 million and increased to 9.3% of revenue during 1996 from 8.4% of revenue during 1995, primarily due to an increase in average fuel prices. Operations and maintenance increased $3.6 million to $14.2 million in 1996 from $10.6 million in 1995. Operations and maintenance increased as a percentage of revenue to 22.5% during 1996 from 17.0% during 1995. These increases were attributable to an increase in cargo handling costs related to the complexity of loading substitute vessels during the mid- body modification project. Taxes and licenses decreased to .7% of revenue during all of 1996 compared to .9% of revenue during all of 1995. This decrease resulted from a reduction in non-Puerto Rico revenue which has a higher tax and license cost (primarily highway taxes and local taxes and licenses) compared to Puerto Rico revenue. Insurance and claims increased to 3.4% of revenue during 1996 from 3.0% of revenue during 1995. This increase was attributable to increased cargo claims due to the use of smaller substitute vessels during the mid-body modification project and increased insurance levels related to additional owned equipment and the enlarged vessels. Depreciation and amortization increased to $2.9 million, or 4.7% of revenue, during 1996 from $2.8 million, or 4.4% of revenue, during 1995. This increase resulted from increases in owned trailers, some of which replaced trailers utilized under operating leases, partially offset by a reduction in owned tractors which were previously utilized in the non- Puerto Rico traffic lanes. Other operating expenses remained stable at $3.0 million during 1995 and 1996. There was a slight decrease in other operating expenses as a percentage of revenue to 4.7% for 1996 from 4.8% for 1995. The Company's operating ratio increased to 93.0% during 1996 from 86.0% during 1995 primarily as a result of the mid-body expansion project and inefficiencies related to the substitute vessels, including increased labor and cargo handling fees and use of specialized equipment, temporary loss of business, and increased charter fees for the expanded vessels. Interest expense (net) decreased to $1.1 million, or 1.7% of revenue, during 1996 from $1.4 million, or 2.2% of revenue, during 1995 due to reductions in average outstanding balances, primarily amounts owed to an affiliate.

As a result of the factors described above, pro forma net income decreased 52.5% to $2.1 million (3.3% of revenue) during 1996 from $4.4 million (7.0% of revenue) during 1995. Year ended December 31, 1995 Compared to Year ended December 31, 1994 During 1995, the Company continued to tailor its non-Puerto Rico revenue services to its core Puerto Rico traffic lanes. As a result, many of the traffic lanes previously served by a truckload carrier acquired in 1992 which did not complement the Company's U.S. to Puerto Rico traffic lanes were eliminated, and non-Puerto Rico trucking revenue decreased 56.2% to $9.4 million from $21.4 million. Operating revenue decreased 13.4% to $62.5 million during 1995 from $72.2 million during 1994 as a direct result of a $12.0 million, or 56.2%, reduction in non-Puerto Rico revenue, partially offset by a $2.3 million increase in Puerto Rico revenue. Overall, Puerto Rico revenue increased 4.6% in 1995 compared to 1994. Salaries, wages, and benefits decreased $4.7 million to $14.6 million, or 23.3% of revenue, during 1995 from $19.3 million or 26.7% of revenue, during 1994. This decrease was primarily attributable to the reduction in non-Puerto Rico revenue and the related reduction in the number of drivers employed by the Company, primarily owner-operators. Rent and purchased transportation was $14.5 million, or 23.2% of revenue, during 1995 compared to $19.6 million, or 27.2% of revenue, during 1994. This decrease resulted from a reduction in the number of owner-operator tractors due to the decision to discontinue certain traffic lanes that did not complement Puerto Rico traffic lanes. Although fuel expense decreased slightly to $5.3 million in 1995 from $5.4 million in 1994, it increased to 8.4% of revenue in 1995 compared to 7.5% of revenue in 1994 due to the reduction in the number of owner- operator tractors, whose fuel cost is included in rent and purchased transportation. Operations and maintenance increased to 17.0% of revenue during 1995 compared to 16.3% of revenue for 1994, although decreasing to $10.6 million in 1995 from $11.8 million in 1994. This decrease reflected a higher proportion of Puerto Rico revenue and its related cargo handling expense offset by a smaller number of owner-operators. Taxes and licenses decreased to .9% of revenue during 1995 from 1.3% of revenue during 1994. This decrease was attributable to a reduction in non- Puerto Rico revenue, which generally has a higher tax and license cost, primarily highway taxes and licenses, compared to Puerto Rico revenue. Insurance and claims decreased to 3.0% of revenue during 1995 from 3.1% of revenue during 1994. This decrease was attributable to a reduction in non-Puerto Rico revenue that generally has a higher insurance cost compared to Puerto Rico revenue. Communications and utilities decreased to 1.0% of revenue during 1995 from 1.2% during 1994. This decrease was attributable to a lower level of non-Puerto Rico revenue that generally requires more communication and therefore has a higher communication cost compared to Puerto Rico revenue. Depreciation and amortization increased to $2.8 million, or 4.4% of revenue, during 1995 from $2.6 million, or 3.7% of revenue, during 1994 as a result of purchases of both tractor and trailer equipment and a reduction in non-Puerto Rico revenue. Other operating expenses increased to 4.8% of revenue in 1995 from 4.4% of revenue in 1994 due to a non-recurring expense for the off-hire of equipment utilized in domestic traffic lanes which were not complementary to Puerto Rico traffic lanes. The Company's operating ratio improved to 86.0% in 1995 from 91.4% during 1994 primarily as a result of elimination of non-Puerto Rico traffic lanes and increase in Puerto Rico revenue. Interest expense (net) decreased to $1.4 million, or 2.2% of revenue, during 1995 from $1.8 million, or 2.5% of revenue, during 1994 due to reductions in outstanding average balances, primarily amounts owed to an affiliate. As a result of the factors described above, pro forma net income increased 86.1% to $4.4 million (7.0% of revenue) in 1995 versus $2.3 million (3.2% of revenue) during 1994. Liquidity and Capital Resources The growth of the Company's business has required significant investment in revenue equipment that the Company historically has financed with charters, borrowings under installment notes payable to commercial lending institutions, equipment leases from third-party lessors and cash flow from operations. The Company's primary sources of liquidity historically have been funds provided by operations, borrowings, leases with financial institutions and financial support from an affiliate. At March 31, 1997, working capital was negative $2.8 million, which reflects $5.8 million due to an affiliate that will be repaid from the net proceeds of the offering. The Company expects that in future years it will continue to finance substantially all revenue equipment additions

through borrowing or leasing transactions. The Company also expects that the offering and its effect on capitalization will enable Trailer Bridge to finance revenue equipment on more favorable terms than those obtained in the past. The Company currently has a line of credit from a financial institution for up to $7.1 million to fund the replacement of 125 tractors. At March 31, 1997, approximately $1.1 million was utilized under this line of credit, which is secured by the purchased tractors. The interest rate on amounts currently outstanding under the line of credit is 1.40% above the financial institution's three-year cost of funds in effect from time to time (7.98% at March 31, 1997). The Company may elect different interest accrual options for future borrowings under the line of credit (see Note 7 to the Financial Statements). The Company had outstanding long-term debt, capitalized lease obligations and due to affiliate (including current portions) of approximately $15.2 million at March 31, 1997, most of which comprised obligations for the purchase of revenue equipment. See Notes 6 and 7 to the Financial Statements. Net cash provided by operating activities was $7.2 million in 1996, compared to $8.1 million in 1995. The difference between the Company's 1996 cash flow and its $3.4 million in net income was primarily attributable to $3.0 million of depreciation, a $674,000 provision for bad debt and a $659,000 increase in payables. Net cash used in investing activities was $9.5 million in 1996 compared to $5.0 million in 1995. The Company's 1996 cash flow reflects $6.7 million of capital expenditures and $3.2 million of repayments of debt to an affiliate. Net cash provided by financing activities was $3.4 million in 1996, compared to $4.5 million of net cash used in financing activities in 1995. The Company's 1996 cash flow reflects increased borrowings to finance the Company's capital expenditure program. The Company paid approximately $1.2 million in dividends during the three months ended March 31, 1997. The Company expects vessel and equipment purchases to total approximately $32.3 million in 1997, of which $12.0 million will be used for new vessel purchases, $13.2 million for related container and chassis equipment additions and $7.1 million for replacement tractors. The Company's projected capital expenditures for its new Triplestack Box Carriers/TM/ have been funded with a 12.5% down-payment ($1.5 million) from working capital advanced by the Company's affiliate and to be repaid out of the proceeds of this offering. The 87.5% remaining balance will be funded from the escrowed proceeds of a Title XI bond offering in June 1997. The Title XI bonds require equal semi-annual principal payments over a 25 year term and bear interest at ________%. The approximately $13.2 million in 53' container and chassis equipment for the new vessels will be funded from the net proceeds of this offering. See "Use of Proceeds." The Company's $7.1 million tractor replacement program will be funded through the sale of used tractors and the line of credit described above. During 1997, the Company will complete the construction of a new office building adjacent to its Jacksonville truck terminal that will centralize all Jacksonville administrative personnel. The remaining cost of the office building will be funded with escrowed proceeds from a mortgage and cash flows from operations. The Company has a pending application with the U.S. Maritime Administration for a Title XI guaranty commitment to finance 87.5% of the construction costs of an additional three Triplestack Box Carriers/TM/ which the Company intends to utilize in the coastwise traffic lanes. The required $2.2 million down payment, which is expected to be funded in the third quarter of 1997, will be funded from the net proceeds of this offering. The Company anticipates that, subsequent to this offering, it will obtain a formal Title XI commitment from the U.S. Maritime Administration similar to that obtained in connection with the first two Triplestack Box Carriers/TM/. Construction of those vessels will then commence immediately under the Company's fixed-priced contract with Halter Marine Group, Inc. The initial vessel is expected to be delivered seven months after construction commences, with additional vessels to follow in two month increments. Trailer Bridge intends to finance the approximately $19 million in container and chassis equipment needed in 1998 for these three Triplestack Box Carriers/TM/ under existing proposals it has received from financial institutions. The Company utilizes tugs, terminals, office space, certain trailers and miscellaneous equipment under a number of operating leases, some of which include labor and other cost items. The minimum expected payment under all of these operating leases is $16.1 million in 1997, including $7.6 million due an affiliate for charter of existing vessels. The Company also expects to enter into operating leases for additional miscellaneous equipment related to its Triplestack Box Carriers/TM/, including reacher-stacker lift trucks used in cargo operations. Management believes that available borrowings under the line of credit, equipment financings, cash flow generated from operations and the net proceeds of this offering will allow the Company to meet its working capital requirements, anticipated capital expenditures and other obligations at least through calendar 1998. Inflation Inflation has had a minimal effect upon the Company's profitability in recent years. Most of the Company's operating expenses are inflationsensitive, with inflation generally producing increased costs of operation. The Company expects that inflation will affect its costs no more than it affects those of other truckload and marine carriers. Seasonality The Company's present marine operations are affected by the seasonality of the Puerto Rico freight market where shipments are generally reduced during the first calendar quarter and increased during the fourth calendar quarter of each year in anticipation of Christmas. This

seasonality is expected to have a greater impact on the Company when it increases its capacity with the addition of two new Triplestack Box Carriers/TM/. The Company's over-the-road truckload operation also experiences some seasonal fluctuations in freight volume, as shipments have historically decreased during the first calendar quarter. In addition, the Company's operating expenses historically have been higher in the winter months due to decreased fuel efficiency and increased maintenance costs in colder weather. Moreover, the Company's quarterly operating revenue and net income may continue to fluctuate due to the timing of changes in capacity and other factors. Accordingly, results of operations are subject to fluctuation, and results in any period should not be considered indicative of the results to be expected for any future period. The following table sets forth certain unaudited financial information for the Company for each of the last nine quarters (dollars in thousands except per share amounts):
Operating revenues . . . Operating income (loss). Pro forma net income (loss) . . . . . . . . Pro forma net income per common share (loss) $15,257 2,097 1,039 $ .12 $ $15,832 2,537 1,254 .15 $ $15,430 1,790 841 .10 $ $16,012 2,354 1,226 .14 $ $14,568 966 443 .05 $ $14,274 $16,288 (187) 1,331 (199) (.02) $ 636 .07 $ $18,018 2,315 1,193 .14 $ $16,446 1,748 909 .11

INDUSTRY OVERVIEW Trailer Bridge currently operates in the full-load dry van segment of the U.S. to Puerto Rico freight market and to a lesser degree in the truckload segment of the domestic trucking industry. The Company also intends to initiate integrated truckload and marine service between interior points along the east coast of the U.S. which will compete primarily with truckload and rail intermodal service in north-south traffic lanes. Management is investigating a number of other potential markets in which the Company could replicate its unique integrated service model. The ocean freight market between the U.S. and Puerto Rico is approximately an $800 million market and is currently estimated to consist of approximately 310,000 loads per year. The market is unbalanced with more than three times as much cargo moving to Puerto Rico from the U.S. as is moving in the opposite direction. North-south freight flow imbalances result in equipment imbalances at interior U.S. points and significantly lower rates for inbound U.S. cargo compared to outbound U.S. cargo. Puerto Rico shippers select carriers based primarily upon price. To a lesser extent, criteria such as frequency, transit time, consistency, billing accuracy and claims experience are considered. Freight moving between the U.S. and Puerto Rico is primarily carried via truck over the inland segment of the freight shipment and via ship or barge over the marine segment. Most traditional ocean carriers in the Puerto Rico trade use standard containerized freight systems, employing 20' and 40' marine containers which for over-the-water shipment are carried on container ships and for over-the-road shipment are placed on chassis and pulled by conventional tractors. Ocean carriers generally provide motor carriage of containers through independent contractors, hired on an as-needed basis. Trailer Bridge is the only operator serving the Puerto Rico market that has a significant trucking operation and engages in significant inland domestic freight operations. As customers realized the cost benefits of consolidating more freight in a single movement and federal and state governments eased restrictions on equipment sizes, the prevailing standard trailer size in the domestic inland truckload industry has progressively increased to today's high capacity 53' long, 102" wide dry van trailer. By contrast, the capacity of freight containers used by shipping companies has not progressively increased over the past 25 years due to, among other reasons, the significant capital expenditures required to reconfigure existing ships. Despite the trend of motor carriers toward more efficient high-cube trailers, the ocean liner trade has retained the use of 20' and 40' ISO containers as the standard unit of containerized marine freight capacity. Today, no major truckload motor carrier in the U.S. operates 40' trailers. The Company plans to be the first to provide integrated truckload and marine service between U.S. domestic coastwise points along the eastern seaboard such as New York and Florida, utilizing high-cube 53' equipment. The Company will target such service primarily at long-haul, pricesensitive domestic freight which is currently moving on rail intermodal. The railroad movement of trailers and containers on flatcars has rapidly grown into a $5.8 billion industry in recent years, primarily due to the per mile linehaul cost advantage of rail intermodal over comparable truckload rates on longer hauls. The Company's planned integrated coastwise truckload and marine freight service is designed to take further advantage of shippers' proven willingness to move from one mode of transport to another to reduce distribution costs. Accordingly, the Company will primarily compete with truckload and rail intermodal service on the basis of price. Based on studies by an independent consultant, the Company believes that the eastern domestic long-haul, north-to-south full load market is in excess of $3.0 billion per year. BUSINESS Overview Trailer Bridge, headquartered in Jacksonville, Florida, is an integrated trucking and marine freight carrier that currently provides truckload freight transportation primarily between the continental U.S. and Puerto Rico. Founded in 1991 by transportation pioneer Malcom P. McLean, the Company combines an efficient domestic truckload motor carrier with a low cost barge and tug marine transportation system to provide seamless truckload freight service between Puerto Rico and points throughout North America. Trailer Bridge is the only company to operate marine vessels fully configured to carry 48' and 53' long, 102" wide, high-cube trailers, which enable the Company to achieve a high level of

equipment utilization rates and other operating efficiencies not readily available to traditional ocean carriers that primarily use smaller capacity equipment, such as 40' containers. The Company believes that, as a result of these efficiencies, its total unit costs per mile are the lowest of any carrier operating between the U.S. and Puerto Rico. Trailer Bridge intends to achieve significant growth by providing the lowest cost freight transportation service to markets well suited to freight service utilizing a marine movement. Based on volume and pricing data, the Company believes there are a number of markets in which the Company's integrated high-cube truckload and marine transportation system can provide superior full load service at a significant cost advantage over existing modes of truckload and rail intermodal transportation. Trailer Bridge's differentiated service quickly gained the acceptance of U.S. to Puerto Rico shippers, leading to rapid growth and high equipment utilization. In 1993, the Company's first full year of operation, Trailer Bridge achieved a 94% outbound (U.S. to Puerto Rico) vessel utilization rate and captured 5% of the U.S. to Puerto Rico marine freight market. In response to the rapid market share gains experienced by Trailer Bridge, the Company, in 1966, increased its vessel capacity by 56% by inserting midsections ("mid-bodies") into its two existing barges, increasing the capacity of each barge from 266 to 416 48' equivalent truckload units. For the six months in 1996 during which the vessels were being lengthened, Trailer Bridge chartered smaller substitute vessels, resulting in a reduction in 1996 profits. Upon the return to service of both expanded vessels, revenue and profit levels immediately showed favorable comparisons to the Company's pre-expansion results. Trailer Bridge will increase its vessel capacity by an additional 56% in late 1997 and early 1998, when it takes delivery of two 408' long container carrying barges ("Triplestack Box Carriers/TM/") designed specifically for the Company's integrated truckload marine system. The Triplestack Box Carriers/TM/ are versatile, low-draft vessels that have a capacity of 213 53' containers, stacked three-high on a single deck. Construction of these two vessels began in March 1997 and, upon their completion, they are expected to be deployed in the Company's existing Puerto Rico freight operation. Trailer Bridge also intends to contract for the construction of three additional Triplestack Box Carriers/TM/ which it intends to deploy in coastwise service between New York and Florida. The Company also intends to investigate other marine markets which are well suited for its unique, cost-efficient transportation service, such as from the continental U.S. to Hawaii or Alaska. Competitive Strengths Management believes that the Company's principal competitive strengths are: * Significant Operating Cost Advantage. Trailer Bridge believes it is the lowest cost provider of freight transportation between the U.S. and Puerto Rico. Lower overall operating costs are achieved through significantly higher equipment utilization and lower marine linehaul costs than those of traditional ocean carriers. The Company's inland trucking operation achieves significantly higher equipment utilization and lower unit trucking costs by using 48' and 53' high-cube trailers. This system provides customers with over 50% more interior capacity than 40' marine containers but with similar inland trucking costs. The Company's marine system uses towed ocean-going barges instead of self propelled container ships to deliver equivalent units of capacity at significantly lower capital and operating costs. Barges are less complex and equipment intensive and therefore can be acquired or built at lower costs per unit of capacity than container ships. Furthermore, towed barge systems can be operated with lower per unit personnel and fuel costs due to the less restrictive Coast Guard manning requirements and lower maximum speed of ocean going tugs. Other components of the Company's low-cost operating structure include Trailer Bridge's use of uniform, modern fleet equipment to maximize utilization and flexibility and minimize operating costs, as well as an emphasis on hiring and retaining qualified and reliable drivers to reduce the costs of insurance, recruiting, fuel and maintenance. * Domestic Truckload Operations. The Company is the only carrier using a fleet of company-owned and leased tractors and high-cube dry van trailers to provide transportation services between the continental U.S. and Puerto Rico. By using high-cube equipment, the mainstay of the domestic truckload industry, and a centralized dispatch system, the Company can more effectively compete for and obtain domestic non-Puerto Rico truckload freight while repositioning equipment for Puerto Rico shipments. As a result, the Company operates with lower empty miles and higher equipment utilization than its competitors in the Puerto Rico trade. The Company is also able to provide more reliable and consistent service with a company-operated truckload fleet than traditional ocean carriers generally provide using a variety of smaller independent contractors. * Centralized Operation in Strategic Location. Trailer Bridge operates a centralized truckload operation from its headquarters in Jacksonville. Because approximately 70% of the Company's truckload freight is dispatched through Jacksonville on a regular schedule to meet weekly barge sailings to Puerto Rico, the Company is able to purchase a large portion of its fuel locally at favorable bulk rates and can schedule and perform routine maintenance at the Company's terminal facilities at lower cost and with minimal interruption to tractor dispatch efficiency. Regular truck routing through Jacksonville also enables the Company to offer its drivers a more routine schedule with more frequent stops at home, leading to higher driver retention. Additionally, the Company's centralized Jacksonville headquarters is also strategically located near key southern rail and highway endpoints, connecting cities in the continental U.S. to Puerto Rico and other Caribbean points. * Emphasis on U.S. Domestic Ocean Trade. The Company will continue to concentrate its marine operations in markets protected by the Jones Act. The Jones Act prevents foreign-built or foreign-crewed vessels from competing in ocean trade between ports in the U.S., including the non-contiguous areas of Puerto Rico, Alaska, Hawaii and Guam. Although the Company believes that its costs are competitive with those of foreign flagged carriers, it has initially focused on Jones Act protected markets to take advantage of the larger differential between its costs and

the costs of other Jones Act protected U.S. flag carriers. Furthermore, two of the largest carriers in the Puerto Rico trade have agreed with the U.S. Maritime Administration to certain restrictions on adding capacity in the Jones Act trades, including their respective Puerto Rico services. * Experienced Management Team. The Company's officers and directors have extensive experience in the transportation industry, including an average of over five years with the Company. The scope of management experience at Trailer Bridge is well-balanced between both trucking and marine transportation. The Company's Chief Executive Officer and President have been involved in maritime trade for 19 and 26 years, respectively, and the Company's Vice President of Sales has over 25 years of experience in the trucking industry. The Company believes that the diverse skills of its management team have permitted Trailer Bridge to conceive, implement and expand a unique integrated transportation system that applies the best practices of this country's cost-efficient truckload business to the marine sector. Growth Strategy The following are the key elements of the Company's growth strategy: * Increased Market Share of Puerto Rico Market. Trailer Bridge plans to increase the capacity of its Puerto Rico service by adding two new barges, to be known as Triplestack Box Carriers/TM/, designed specifically for the Company to carry 53' containers. The addition of two Triplestack Box Carriers/TM/ will increase the Company's overall capacity by 56% and allow the Company to increase its frequency of service to Puerto Rico to two sailings per week from the current weekly service. Management believes that the Company's lack of available capacity and its limited service frequency have, to date, limited its volume of business with certain existing customers and precluded other customers from utilizing the Company's services. The Triplestack Box Carriers/TM/ are designed specifically to carry high capacity 53' containers, which the Company believes are preferred by customers and will therefore increase demand for its services. Added vessel capacity and frequency will also allow the Company to pursue additional backhaul revenue opportunities and seek high equipment utilization because of the more balanced availability of trucking capacity. * Initiation of Coastwise Service. Following its planned expansion of Puerto Rico service, the Company intends to commence a twice-weekly New York to Florida coastwise service utilizing three additional Triplestack Box Carriers/TM/. These vessels, combined with the Company's trucking capabilities and expertise in operating an integrated system, are expected to provide equivalent service with superior linehaul costs compared to truckload and a typical rail doublestack train. This will in turn allow the Company to compete effectively with truckload and rail intermodal carriers on the basis of price. The Company believes the New York to Florida traffic lane is the most attractive market in which to initiate its coastwise service but believes there are numerous other coastwise traffic lanes (including Gulf coast and West coast lanes) in which the Company can provide a more cost efficient freight service for shippers. * Service to Other Jones Act and Offshore Markets. The freight markets between the continental U.S. and points in Hawaii and Alaska are similar in overall size to the Puerto Rico market and are served by traditional marine carriers that do not utilize 48' or 53' conveyance units. The lack of appropriate and available port facilities in Hawaii and Alaska acts as a barrier to entry in those markets. However, the design and loading requirements of the Company's Triplestack Box Carrier/TM/ should allow the Company to serve these and other new markets from waterfront sites that do not require the traditional infrastructure investments associated with port facilities. Additionally, the Company believes there are other potential non-Jones Act Caribbean markets where the Triplestack Box Carrier/TM/ system could be quickly implemented with minimal investment in port facilities. * Capacity and Environmental Constraints on Other Modes. On a longer-term basis, the Company believes that its planned coastwise service will benefit from a growing capacity constraint in both the rail and highway systems. Management also believes that the coastwise service will be more environmentally attractive compared to the rail and truck transport sectors, as it emits lower fuel emissions and operates at greater distances from densely populated areas. Finally, the increasing publicity attendant to train and truck accidents, particularly those involving passenger automobiles, should offer an attractive political environment for expansion of the Company's maritime service. Operations Trailer Bridge operates a fleet of 154 tractors and 1,937 high-cube trailers which transport truckload freight between the Company's Jacksonville port facility and inland points in the U.S. The Company also provides full truckload service between interior points within the continental U.S., primarily to increase equipment utilization, minimize empty miles and maximize revenue while repositioning equipment to carry Puerto Rico bound freight. The Company maintains a centralized dispatch and customer service operation at its Jacksonville headquarters to schedule pickup and delivery of customer freight. The operations center features a fully integrated computerized dispatch, customer service network. Customer service representatives solicit and accept freight, quote freight rates, and serve as the primary contact with customers. Dispatch and customer service personnel work together to coordinate Puerto Rico and non-Puerto Rico freight to achieve the most optimum load balance and minimize empty miles within the Company's truckload operation. Trailer Bridge currently operates two 736' triple-deck, roll-on/roll- off ocean-going barges. Loading of the barges is performed using small maneuverable yard tractors by stevedores hired by an outside contractor. Once per week, the Company's two barge vessels sail between San Juan and Jacksonville, one in each direction. One vessel is scheduled to arrive in Jacksonville on Tuesday at 8:00 a.m. and depart on Thursday at 2:00 p.m., while the other vessel is scheduled to arrive in San Juan on Wednesday at 6:00 a.m. and depart on Wednesday at 8:00 p.m. Each barge is towed at approximately 9 knots by one 8,000 horsepower diesel-powered tug. The tugs are time-chartered and are manned by employees of the unaffiliated tug owner. Compared to a self-propelled vessel, a towed barge has reduced Coast Guard manning requirements

and higher fuel efficiency. Similarly, the large number of U.S. tugs available for charter provides the Company with a reliable source for towing services. Marketing and Customers The Company's sales and marketing function is led by senior management and sales professionals based in Jacksonville, San Juan and other key strategic U.S. cities. These sales personnel aggressively market Trailer Bridge to shippers as a customer-oriented provider of value-priced, dependable, consistent service. The efforts of sales personnel are augmented by customer service personnel. The Company targets major shippers with high volume, repetitive shipments whose freight lends itself to integrated trucking and marine service. The Company develops its pricing proposals based upon a systematic analysis of its own costs. When comparing its prices to other carriers, Trailer Bridge seeks to demonstrate the superior value its system offers on a per cubic foot or per product shipped basis. Management believes that the Company's tightly controlled and continuously reviewed pricing model, although more typical in the truckload industry, positively differentiates Trailer Bridge from traditional marine carriers. The Company believes that price is the primary determinant in the freight lanes in which it is involved. Nonetheless, the Company also believes that Trailer Bridge has a competitive advantage through its ability to provide better service that results from its single company control of the entire freight movement over land and water. This service frees the customer from the operational complexities of coordinating the interface between over-the-road and marine service. The Company's customer service philosophy has generated increasing demand from existing customers for additional equipment and sailings and has led to ongoing relationships with customers such as Chrysler, General Motors, K Mart, General Electric and DuPont. Management believes the Company's growth with existing customers evidences customer satisfaction. From 1995 to 1996, the Company's revenue from its current top 5, 10, and 25 customers has grown by 13.0%, 21.5% and 31.2%, respectively, as the Company has capitalized on its reputation for value and consistent service. Trailer Bridge's philosophy is consistent with the trend among shippers toward establishing core carrier relationships with truckload carriers. The Company has a diversified customer base. Typical shipments to Puerto Rico include furniture, consumer goods, toys, new and used cars and apparel. Typical shipments from Puerto Rico include health products, electronics, shoes and scrap aluminum. Management intends to continue developing business with existing customers as well as attempting to add new core carrier relationships. The Company's top 5, 10, and 25 customers accounted for 16.7%, 23.2% and 36.1% of revenue, respectively, in 1996. The Company has written contracts with substantially all of its customers. These contracts generally specify service standards and rates, eliminating the need for negotiating the rate for individual shipments. Although a contract typically runs for a specified term of at least one year, it generally may be terminated by either party upon 30 days' notice. The penalties for a shipper for breach of contract are minimal. Existing and Planned Vessels The Company's present vessels are 736' by 104' triple-deck roll- on/roll-off barges. Each deck has ten lanes which are accessed from the stern of the vessel via ramp structures in Jacksonville and San Juan that have been built to the Company's specifications. Four lanes on each vessel have been converted to carry new and used automobiles on car decks that allow approximately 11 cars to fit in the space previously used for one 48' trailer. The trailers are secured on the vessel by attachment to pullman stands which are engaged and disengaged with specially configured yard tractors used to back the trailers into position on the vessel. The present vessels can be fully discharged and re-loaded within one eight hour shift, although the Company generally makes use of additional available slack time in Jacksonville to schedule cargo activity over periods that will minimize total cost. The two Triplestack Box Carriers/TM/ to be used in the Puerto Rico traffic lane are single deck barges. These 408' by 100' vessels are being built at Halter Marine Group, Inc.'s Pearlington, Mississippi shipyard under fixed-priced contracts which call for delivery of the first vessel in November 1997 and the second vessel in January 1998. In the Puerto Rico service, the two Triplestack Box Carriers/TM/ are expected to achieve the scheduled service speed of 9 knots with a tug in the 6,500 horsepower range, with larger tugs attaining tow speeds of approximately 11 knots. These vessels will utilize the same port facilities as the present vessels. See "Business - Port Facilities." Wheeled vehicles known as reacher-stackers will carry and load the containers. These highly maneuverable vehicles are currently used by railroads to load containers. Similarly, the reacher-stackers are significantly less expensive than the cranes required for loading and unloading containers from the holds of ships and will instead directly access the deck of the vessel via simple and movable linear ramps. The Company believes that the total cargo handling cost per unit of the Triplestack Box Carriers/TM/ in the Puerto Rico traffic lane will be similar to that experienced with its present roll-on/roll-off vessels. The Company intends to acquire three additional Triplestack Box Carriers/TM/ in 1998 to use in the coastwise traffic lanes as a cost-efficient alternative to truckload and rail intermodal. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and "Business - Growth Strategy." Revenue Equipment Trailer Bridge's equipment strategy is to operate modern tractors and trailers in order to (i) reduce fuel, maintenance and parts costs, (ii) promote the reliable service customers demand from core carriers and (iii) help attract and retain drivers. At March 31, 1997, the Company had

154 tractors. The Company's practice is to trade or replace its tractors on a 450,000-mile cycle which generally occurs during the fourth year. Management anticipates that the Company's ongoing fleet upgrade program will significantly decrease its maintenance, repair and parts expenses. In addition, the new tractors, in combination with a fuel consumption incentive program for the drivers, are expected to generate better fuel mileage than the tractors to be traded. All of the new power units are conventional tractors (engine-forward) that are preferred by drivers. These units include, among other amenities, the large "condo" sleeper compartment with full standing room. At March 31, 1997, the Company operated 1,937 dry trailers, 1,772 of which were 48' x 102" models and 165 of which were 53' x 102" models. The Company's current practice is to trade or replace owned trailers on a seven-year cycle and replace leased trailers with owned trailers as leases expire. Since the trailers spend a significant amount of time on the Company's vessels and in Puerto Rico, the Company's trailers incur less miles in a year than those used by a typical truckload carrier. For instance, in 1996 the Company averaged approximately 10,500 highway miles per trailer compared to approximately 50,000 miles per year averaged by typical domestic truckload carriers. For this reason, the Company believes that its trailers have a longer effective life despite the corrosive ocean environment encountered on the vessels. Trailer Bridge has scheduled deliveries of approximately 75 new tractors during the remainder of 1997 and 25 new tractors during 1998. After the planned trade-in or sale during 1997 of all its model year 1993 tractors, the Company will have a fleet of approximately 145 owned tractors with an average age of nine months. The Company also has scheduled deliveries of approximately 850 new containers during late 1997 and early 1998, all of which are 53' models that will be utilized by the two new Triplestack Box Carriers/TM/ to be deployed in the Puerto Rico traffic lane. These containers are being built to the Company's specifications and are similar to the 53' containers utilized on the most efficient rail doublestack operation. The Company has also contracted to purchase 550 new chassis units which will be utilized in combination with the 53' containers. Under its fixed-price contract with a large container manufacturer, Trailer Bridge has an option to increase its order by up to 250 additional 53' container and chassis units. The Company performs light preventative maintenance on equipment at its Jacksonville operations center, with major maintenance and repairs handled by outside contractors. Driver Recruiting and Retention Trailer Bridge emphasizes driver satisfaction and has made significant investments to improve its drivers' employment experience. The Company offers competitive compensation and full health care benefits differentiating it from many truckload operators. Management believes it has promoted driver loyalty by assigning drivers to a single dispatcher, regardless of geographic area, awarding dedicated routes and offering more predictable home time due to the consistency that results from Jacksonville as a central hub of operations. Despite driver shortage in the industry and vigorous competition for drivers during the past several years, the Company believes its driver turnover is well below that typically reported by other truckload carriers. In recent periods the Company has significantly reduced the number of owner-operators in connection with its decision to decrease domestic truckload business not tailored to Puerto Rico movements. At March 31, 1997, the Company had only 13 owner-operators. Nevertheless, owner- operators provide the Company with flexibility to address driver and equipment needs in the future. The Company compensates owner-operators as employees who receive the same benefits as regular Company drivers. In addition, owner-operators receive a flat rate per mile to cover equipment costs, fuel and maintenance. Fuel Availability and Cost The Company actively manages its fuel costs by requiring drivers to fuel in Jacksonville at an offsite fuel facility where the Company has established a bulk purchasing arrangement. Whenever possible enroute, drivers are required to fuel at truck stops and service centers with which the Company has established volume purchasing arrangements. The Company offers fuel-conservation bonuses to its drivers based on miles per gallon thresholds. Although the Company pays for the marine fuel used by the large tugs it charters, the actual fuel loading is controlled by tug crew personnel employed by the tug owner. The fuel is loaded in Jacksonville at a nearby fuel facility while cargo operations are occurring. By negotiating directly with fuel vendors and offering volume contracts related to its marine fuel needs, the Company has obtained better prices than it would have otherwise been able to attain. The Company has never experienced an inability to obtain fuel at market driven rates. Trailer Bridge does not engage in any fuel hedging activities. The Company historically has been able to pass through most increases in fuel prices and tires to customers in the form of higher rates, although there can be no assurance that this will continue in the future. See "Risk Factors - Fuel Price Fluctuations." Safety and Insurance Trailer Bridge emphasizes safety in all aspects of its operations. The Company maintains its own strict standards for recruiting drivers, including a minimum of five years of verifiable commercial driving experience, a safe driving history, and a successful physical examination,

including drug and alcohol testing. Its ongoing driver safety program includes an initial orientation for all new drivers, 100% log monitoring and strong adherence to all speed and weight regulations. The Company bids annually for both marine and land insurance policies. Major coverages include hull and protection indemnity ($36.7 million and $1 million limits with $50,000 and $5,000 deductibles), pollution, excess liability (umbrella up to $30 million), marine cargo, truckers liability, workers compensation ($1 million with no deductible) and commercial property (including fair market value property coverage on tractors and trailers subject to $5,000 and $1,000 deductibles, respectively). The Company has been successful in reducing premium levels, and management believes existing coverages are adequate to cover reasonably anticipated claims. However, there can be no assurance that premium levels will not increase or that coverage will be adequate in the future. See "Risk Factors - Claims Exposure and Insurance Costs." Technology The Company utilizes an IBM AS-400 computer system to handle its accounting and operations requirements. The computer system links Company headquarters, the truck operations center, the San Juan office and the marine terminals in Jacksonville and San Juan. The system enhances the Company's operating efficiency by providing cost effective access to detailed information concerning available equipment, loads, shipment status and specific customer requirements, and permits the Company to respond promptly and accurately to customer requests. The Company's electronic data interchange ("EDI") capability allows customers to tender loads, receive load confirmation, check load status, and receive billing information via computer. The Company's EDI system also is designed to accelerate receivables collection. The Company's largest customers require EDI service from their core carriers. Management believes that advanced technology will be required by an increasing number of large shippers as they reduce the number of carriers they use in favor of core carriers. The Company believes that the open structure of the internet will replace many of the traditional EDI functions and intends to expand its website (www.trailerbridge.com) to accommodate such technology. Properties Trailer Bridge is headquartered in Jacksonville, Florida, where it is completing construction of a 16,000 square foot office building adjacent to its owned truck operations center. Upon completion in mid-1997, this facility will centralize 75 Jacksonville personnel in one location. The new office building has also been designed so that additions can be constructed to serve the Company's foreseeable future needs. The truck operations center property was purchased in 1996 and consists of 17.8 acres near Interstate 95, approximately 2 miles from the Company's marine terminal on Blount Island. In addition to the new office building, the property includes a 11,400 square foot tractor maintenance shop where oil changes and light preventative maintenance are performed, a trailer washing facility, a drivers lounge and parking space for tractors and trailers. The Company believes that additional acreage contiguous to its truck operations center can be purchased to accommodate future expansion. The Company maintains small sales office facilities in Georgia, North Carolina, Illinois, Ohio and New Jersey which are utilized by sales personnel. The Company also rents a 2,600 square foot office in San Juan where 11 Puerto Rico administrative and sales personnel are based. Port Facilities The Company utilizes port facilities in Jacksonville and San Juan where its vessels are loaded and freight is stored awaiting further movement by either vessel or truck. Trailer Bridge's terminal in Jacksonville is located on Blount Island and consists of a berthing area and 17 acres leased from the Jacksonville Port Authority. The lease, which expires in 2002, allows the Company to use the berthing area on a preferential, although non-exclusive, basis and the land area on an exclusive basis. The Company pays the Jacksonville Port Authority a monthly rental payment plus a wharfage payment based upon total cargo volume. The Company's marine terminal in San Juan consists of a berthing area and 31 acres that the Company utilizes on a preferential basis under a stevedoring services agreement with the contractor who provides cargo handing services. This agreement, which expires in 2006, calls for the Company to make fixed payments as well as payments based upon total cargo volume and the prevailing wharfage rates of the Puerto Rico Ports Authority. Both of the present port facilities have been improved with triple-deck ramp structures, part of which float to allow the sterns of the present vessels to be mated with the ramps for loading operations. These ramp facilities were built by the present vessel owner and are included in the charter payments Trailer Bridge makes to its affiliate. The new Triplestack Box Carriers/TM/ will not need to utilize the existing ramps but will instead be accessed from simple, movable ramps that will typically bridge less than 10' compared to the 55' difference bridged in the existing operation. Trailer Bridge believes that its present marine terminals in Jacksonville and Puerto Rico are sufficient to accommodate the expected growth from the introduction of the two new vessels. The Company's expansion into coastwise traffic lanes will require new port facilities. Due to their shallow draft, relatively small overall size and ability to unload and load without significant shore-side ramp facilities or cranes, Triplestack Box Carriers/TM/ can be accommodated at port facilities that would not be appropriate for the present vessels or for other similar-sized vessels. These facilities include private sites that have not previously been utilized for cargo operations. Trailer Bridge believes that it will be able to find sufficient marine sites that lend themselves to the low-cost unloading and loading operation it envisions for the Triplestack Box Carriers/TM/ to be deployed in the coastwise traffic lanes.

Competition The Company currently competes with four carriers for freight moving between the U.S. and Puerto Rico. The current operators in the Puerto Rico trade are Navieras de Puerto Rico ("NPR"), Sea-Land Service, Inc., Crowley American Transport, Sea-Barge Marine and Trailer Bridge. Based on available industry data for the first quarter of 1997, NPR, which was purchased from the Puerto Rico government in a leveraged buyout in 1995, has approximately 32% of the market share and operates five container vessels configured to carry primarily 40' marine containers. Sea-Land Service, Inc., a subsidiary of CSX Corporation, has approximately 24% of the market share and operates five container vessels that also carry mainly 40' containers. Crowley American Transport, a subsidiary of privately held Crowley Maritime Corp., has approximately 30% of the market share and operates nine roll-on/roll-off barges in various services between the U.S. and Puerto Rico. Although Crowley now uses some 48' trailers, its main equipment size is 45' by 96" wide trailers. Sea Barge Marine has approximately 7% of the market share with four container barges that primarily carry 40' marine containers. Trailer Bridge also has approximately 7% of the market share with its present two roll-on/roll-off vessels. Puerto Rico shippers select carriers based primarily upon price. To a lesser extent, criteria such as frequency, transit time, consistency, billing accuracy and claims experience are considered. The Company faces vigorous price competition from competitors in the Puerto Rico market, two of which are part of larger transportation organizations that possess greater financial resources than the Company. While the Company believes it is the lowest cost per unit operator in the Puerto Rico traffic lane, it does not always offer the lowest effective price as certain operators at times engage in a practice of freight rate reduction that the Company believes to be inconsistent with their own cost structure. The Company's planned coastwise service is expected to compete primarily with large railroads that move intermodal freight and, to a lesser extent, trucking companies. Many of these competitors are significantly larger and possess substantially greater financial resources than the Company. The Company intends to compete by offering customers value-based pricing derived from its lower linehaul cost per unit. The Company will target customers with less time sensitive-freight whose priority is reducing freight costs rather than obtaining the shortest possible transit times. The truckload segment of the trucking industry is highly competitive and fragmented, and no carrier or group of carriers dominates the market. The Company's non-Puerto Rico traffic lanes, which are used primarily to balance its core Puerto Rico traffic lanes, compete with a number of trucking companies as well as private truck fleets used by shippers to transport their own products. Truckload carriers compete primarily on the basis of price. The Company's truck freight service also competes to a limited extent with rail and rail-truck intermodal service, but attempts to limit this competition by seeking more time and service-sensitive freight. There are other trucking companies, including diversified carriers with larger fleets, possessing substantially greater financial resources and operating more equipment than the Company. Regulation As a common and contract motor carrier, the Company is regulated by the Surface Transportation Board (the successor federal agency to the Interstate Commerce Commission) and various state agencies. The Company's drivers, including owner-operators, also must comply with the safety and fitness regulations promulgated by the Department of Transportation, including those relating to drug testing and hours of service. For routes in Canadian provinces, the Company must comply with certain customs and border crossing requirements and other Canadian regulations, none of which have a material effect on the Company. The Company's operations are subject to various federal, state, and local environmental laws and regulations, implemented principally by the Environmental Protection Agency and similar state regulatory agencies. These regulations govern the management of hazardous wastes, discharge of pollutants into the air, surface and underground waters, and the disposal of certain substances. Management is not aware of any water or land fuel spills or hazardous substance contamination on its properties and believes that its operations are in material compliance with current laws and regulations. The Company's marine operations are conducted in the U.S. domestic trade. A set of federal laws known as the Jones Act requires that only U.S. built, owned and crewed vessels move freight between ports in the U.S., including the non-contiguous areas of Puerto Rico, Alaska, Hawaii and Guam. These marine operations are subject to regulation by various federal agencies, including the Surface Transportation Board, the U.S. Maritime Administration and the U.S. Coast Guard. These regulatory authorities have broad powers governing activities such as operational safety, tariff filings of freight rates, certain mergers, contraband and environmental contamination and financial reporting. Management believes that its operations are in material compliance with current laws and regulations, but there can be no assurance that current regulatory requirements will not change. See "Risk Factors - Potential Loss of Jones Act Protection." Employees At March 31, 1997, Trailer Bridge had 244 employees, 140 of which were drivers. Management believes that its computerized operation and efficient workforce will permit significant fleet expansion without a corresponding increase in the number of non-driver employees. The Company's employees have never been represented by or attempted to organize a union, and management believes it has a good relationship with the Company's employees. Legal Proceedings

The Company from time to time is a party to litigation arising in the ordinary course of its business, substantially all of which involves claims for personal injury and property damage incurred in the transportation of freight. The Company presently is not a party to any legal proceeding other than litigation arising from vehicle accidents or cargo damage, and management is not aware of any claims or threatened claims that reasonably would be expected to exceed insurance limits or have a materially adverse effect upon the Company's operations or financial position. MANAGEMENT Executive Officers and Directors The table below sets forth information concerning the Company's executive officers, directors, and director nominees:
Name Malcom P. McLean . . John D. McCown(2) . . Ralph W. Heim . . Wayne Hodges . . J. Edward Morley Mark A. Tanner . . . . . . . . . Age 83 42 51 47 49 45 51 38 Position(1) Director Chairman of the Board, Chief Executive Officer & Director President and Chief Operating Officer Vice President of Sales Vice President of Operations Vice President of Administration and Chief Financial Officer Vice President of Pricing Secretary and General Counsel

Robert van Dijk . . . William G. Gotimer, Jr.

(1) Directors are elected annually. Executive officers serve at the pleasure of the Board of Directors. (2) Will become a member of the Audit Committee upon the closing of the offering. Mr. McLean, a director since April 1991, is the founder and principal stockholder of Trailer Bridge. His principal business activity during the past five years has related to developing Trailer Bridge. He served as President from June 1991 to July 1992 and from January 1995 to November 1995. Mr. McLean is a pioneer in transportation who is responsible for a number of innovations in both trucking and shipping and who is best known as the founder of container shipping. He built McLean Trucking Company into the second largest and most profitable trucking company in the U.S., where it was the first major user of diesel engines in its tractors. In the mid-1950's, he purchased two steamship companies which were combined to form Sea-Land Service, Inc. which introduced and developed container shipping. Following the sale of Sea-Land in 1968, Mr. McLean went on to found McLean Industries whose principal subsidiary, U.S. Lines, became the largest container shipping company in the world. His business accomplishments led to his induction in the Fortune Magazine Business Hall of Fame, and he was referred to by a leading business magazine as "one of the few men who changed the world." Mr. McCown, a director since April 1991, has served as the Chairman and non-employee Chief Executive Officer since November 1995. From July 1992 to November 1995, Mr. McCown was Vice President of the Company. In addition to his role at Trailer Bridge, he is President and CEO of Kadampanattu Corp., an affiliate of Trailer Bridge that owns the two vessels now utilized by Trailer Bridge in its present Puerto Rico service. Mr. McCown has worked for Malcom P. McLean in various capacities since 1980. Mr. McCown is a graduate of Harvard Business School (MBA, 1980) and Louisiana State University (BBA, 1975). Prior to joining McLean Industries in 1980, Mr. McCown worked at U.S. Lines, a subsidiary of McLean Industries, and at National Bank of North America as a corporate loan officer. Commencing with this offering, Mr. McCown will become a full-time employee of the Company. See "Certain Transactions." Mr. Heim has served as President since November 1995 and Chief Operating Officer since January 1992. From May 1991 until November 1995, Mr. Heim served as Vice President of the Company. Prior to joining Trailer Bridge in 1991, Mr. Heim worked at Crowley Maritime Corporation for five years in various operating capacities primarily related to its Puerto Rico service. His other transportation experience includes more than 15 years with Sea-Land Service, Puerto Rico Marine Management and U.S. Lines in diverse domestic and international assignments. Mr. Heim graduated from Jacksonville University with a B.S. in Business Management. Mr. Hodges has served as Vice President - Sales since November 1995. Prior to joining Trailer Bridge in September 1995, he served as General Sales Manager for M.S. Carriers, a major nationwide truckload carrier based in Memphis. Mr. Hodges was that company's first salesman, beginning in 1982. Prior to his association with M.S. Carriers, Mr. Hodges' trucking experience included terminal manager positions at Mistletoe Express and United Parcel Service as well as a branch manager position at a trailer sales dealer. Mr. Morley has served as Vice President - Operations since July 1992 and is responsible for marine and terminal operations. Prior to joining Trailer Bridge in 1991, Mr. Morley was with Sea-Land Service where he was responsible for operations in Puerto Rico from 1990 to 1991. Mr. Morley's overall transportation experience spans over 25 years with major container transportation companies. Mr. Tanner, a CPA, has served as Vice President of Administration and Chief Financial Officer since January 1992. Mr. Tanner joined Trailer Bridge in 1991 from Crowley Maritime where he was Manager of Analysis and Statistics for four years. His prior experience includes three years as Manager of Corporate Planning for The Charter Company, which was a Jacksonville based $5 billion publicly-held company and five years in public accounting.

Mr. van Dijk has served as Vice President - Pricing since July 1992 and directs all pricing related activities. Prior to joining Trailer Bridge in 1991, Mr. van Dijk worked for Crowley Maritime, where he directed pricing for the Puerto Rico service. Mr. van Dijk's pricing related experience includes over 30 years with American Transport, U.S. Lines, Weyerhauser Shipping, Sea-Land Service and Holland America Lines. Mr. Gotimer has served as non-employee General Counsel since 1991. Mr. Gotimer also acts as legal counsel for Malcom P. McLean, including General Counsel for Kadampanattu Corp. His previous experience includes legal counsel with British Airways, Plc., Pan American World Airways and McLean Industries. Mr. Gotimer has an LL. M. degree in Taxation from New York University School of Law and both a JD and BS degree in accounting from St. John's University. Following completion of the offering, the Company intends to add two independent directors to its Board. Committees Following completion of the offering, the Board of Directors intends to establish an Audit Committee comprised initially of John D. McCown and the Company's two independent directors and a Compensation Committee comprised of the Company's two independent directors. The Audit Committee will have responsibility for reviewing audit plans and discussing audit work, internal controls and related matters with the Company's independent public accountants, reviewing the audit report and any accompanying recommendations, and nominating independent public accountants to perform the annual audit. The Compensation Committee will have responsibility for reviewing the compensation of the Company's executive officers, making recommendations to the Board of Directors, and administering the Company's Incentive Stock Plan. See "Management - Incentive Stock Plan." Executive Compensation The following table summarizes the compensation paid or accrued by the Company, for services rendered during 1996, to the Company's Chief Executive Officer and its other five most highly compensated executive officers: SUMMARY COMPENSATION TABLE
Name and Principal Position John D. McCown . . . . Chairman and Chief Executive Officer Ralph W. Heim . . . . . President and Chief Operating Officer J. Edward Morley . . . Vice President of Operations Robert van Dijk . . . . Vice President of Pricing Mark A. Tanner . . . . Vice President of Administration and Chief Financial Officer Wayne Hodges . . . . . Vice President of Sales . . . . . . . . . . . . . . . Year 1996 1996 1996 1996 1996 Annual Compensation Salary Bonus $235,864(2) 154,904 112,070 108,724 104,635 $37,311 64,446 37,311 37,311 37,311 All Other Compensation(1) -$7,625 6,459 6,923 3,523

. . .

1996

104,183

37,311

3,707

________________________________ (1) Consists of amounts contributed by the Company for the account of the named executive under the Company's 401(k) plan and excess group term life insurance premiums, respectively, as follows: Mr. Heim, $4,500 and $1,613; Mr. Morley, $3,344 and $606; Mr. van Dijk, $3,523 and $965; Mr. Tanner, $3,400 and $578; and Mr. Hodges, $3,125 and $582. In 1996 and prior years, Mr. McCown provided services to the Company in connection with the Company's vessel charter from its affiliate, Kadampanattu Corp. The amount shown as salary on the above table was paid by the affiliate. Commencing with the closing of the offering, all of Mr. McCown's compensation will be paid directly by the Company, and the charter payments will be reduced. See "Certain Transactions."

(2)

Cash Bonus Plan The Company has historically paid bonuses to employees from an overall bonus pool equivalent to 10% of pretax income. Partial bonuses equal to one-half of the expected amount are distributed on a cumulative quarterly basis, with the final payment made based on audited annual results. The distribution to individual employees is determined based on a point system which includes approximately one-half of the Company's non-driver employees. Incentive Stock Plan The Company's Board of Directors and stockholders have adopted an Incentive Stock Plan designed to attract and retain employees and outside directors and motivate them through incentives that are aligned with the Company's goals of increased profitability and stockholder value. The Incentive Stock Plan is intended to afford the Company wide discretion in

making awards. Awards under the Incentive Stock Plan will be made by the Compensation Committee of the Board of Directors, which, upon consummation of the offering, will be comprised solely of persons who qualify as "nonemployee directors," as such term is used in Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and "outside directors" as defined under Section 162(m) of the Internal Revenue Code (the "Code"). Awards may be in the form of incentive options or non-qualified options. An employee who exercises an incentive option will not be required to recognize taxable income (and the Company will not be entitled to a tax deduction) if the employee holds the shares issued on exercise for the requisite holding period. By contrast, an employee who exercises a nonqualified option will be required to recognize taxable income on the date of exercise equal to the spread between the fair market value of the underlying shares on the date of exercise and the exercise price, and the Company will be entitled to a corresponding tax deduction. Incentive options will be designed to comply with applicable provisions of the Code, including a requirement that exercise prices be equal to at least 100% of the fair market value of the Common Stock on the date of grant and a tenyear restriction on the option term. Options for more than 300,000 shares may not be awarded to any individual during any 12-month period. The Company has reserved 1,000,000 shares of Common Stock for issuance pursuant to the Incentive Stock Plan, and has awarded non-qualified options to executives covering an aggregate of 500,000 shares at an exercise price equal to the initial public offering price of the Common Stock, as follows: Mr. McCown, 150,000 shares; Mr. Heim, 100,000 shares; and Messrs. Hodges, Morley, Tanner, van Dijk and Gotimer, 50,000 shares each. Such options become exercisable at the rate of 20% per year beginning on the first anniversary date of the offering. The Compensation Committee has granted non-qualified options to purchase 100,000 additional shares to 48 other employees, subject to consummation of the offering, at an exercise price equal to the initial public offering price. Options that expire unexercised or are forfeited become available again for issuance under the Incentive Stock Plan. Unvested options will become exercisable in full upon a "change of control," as defined in the award agreements. The Compensation Committee may determine when and in what amounts future awards vest and options become exercisable. Terms of awards need not be the same for all participants. The price payable upon exercise of an option may be satisfied in cash or, in the Committee's discretion, with previously acquired shares of Common Stock. 401(k) Profit Sharing Plan The Company maintains a defined contribution plan (the "401(k) Plan"), which is intended to satisfy the tax qualification requirements of the Code. All Company personnel age 21 or older are eligible to participate in the 401(k) Plan after one year of service with the Company. The 401(k) Plan permits participants to contribute up to 15% of their annual compensation from the Company, subject to the limit imposed by the Internal Revenue Code. All amounts deferred under the 401(k) Plan by a participant fully vest immediately. The 401(k) Plan provides for matching contributions by the Company at a rate not in excess of 3.0% of compensation and also permits discretionary contributions. The Company contributed $142,994 to the 401(k) Plan in 1996. Amounts contributed by the Company vest 20% each year from the second through the sixth year after contribution. The Company has no defined benefit or actuarial plans. Compensation Committee Interlocks and Insider Participation Following the completion of the offering, the Company's Compensation Committee will be comprised of the Company's two independent directors. Prior to the offering, Malcom P. McLean and John D. McCown made all decisions concerning executive officer compensation. Mr. McLean is the sole stockholder and Mr. McCown is the President and CEO of Kadampanattu Corp., which charters the two mid-body vessels to the Company. See "Certain Transactions." Directors' Compensation After this offering, each non-employee director will receive an annual retainer of $5,000 and $1,000 for each meeting of the Board of Directors or committee of the Board of Directors attended by such director (if such committee meeting is held other than on the day of a Board meeting), plus reimbursement of expenses incurred in attending such meetings. CERTAIN TRANSACTIONS The Company charters two roll-on/roll-off barge vessels and the right to use related ramp structures in Jacksonville, Florida and San Juan, Puerto Rico to service the barges from Kadampanattu Corp. ("K Corp"), which is wholly owned by Malcom P. McLean, the Company's founder, controlling stockholder and a director. The charters currently provide for a per vessel payment to K Corp of $10,500 per day and also require the Company to maintain and repair the vessels and ramps. The charters expire at the later of September 1, 2010 or the repayment of all obligations under K Corp's construction loan for the 1996 mid-body expansion program, which payment has been guaranteed by the Company. Such obligations are scheduled to be repaid in quarterly installments ending June 30, 2003. Upon the expiration of the charters, the Company has the option to extend the charters for an additional eight years at $11,000 per day per vessel, or may purchase the vessels at their then fair market value. Total expense under these charters from K Corp was $3.6 million, $3.6 million and $5.9 million in 1994, 1995 and 1996, respectively. The charter payments were increased from $5,000 per day per vessel in 1996 following completion of the mid-body expansion. In the opinion of the Board of Directors, the terms of the charters are at last as favorable as those that could be obtained from unaffiliated third parties.

K Corp has also provided the Company with the services of Messrs. McCown and Gotimer pursuant to the charter arrangements and, accordingly, K Corp has borne the entire salary expense attributable to such officers' services. See "Management - Executive Compensation." Effective with the offering, Mr. McCown will become a full-time employee of the Company, and the daily charter fee payable by the Company will be reduced from $10,500 to $10,050 per vessel. In addition, the Company has agreed to pay Mr. Gotimer an annual salary of $50,000 for his legal services. During 1991, 1992 and early 1993, K Corp advanced funds to the Company. K Corp also agreed to defer receipt of certain charter-hire due for 1992. The advances were used by the Company to fund various construction projects and general and administration expenses. The advances are represented by a promissory note, which bears interest at 8% and is due on December 31, 1997 (the "Note"). The highest outstanding principal balance on the Note during 1994, 1995 and 1996 was $15.4 million, $12.4 million and $7.8 million respectively, and the total outstanding principal balance at December 31, 1994, 1995 and 1996 was $12.4 million, $7.8 million and $4.6 million, respectively. The 1996 amount also reflects a credit of $1.7 million for substitute vessel costs paid by the Company while the K Corp vessels were undergoing renovations as part of the mid-body insertion project. In 1997, the Note was increased by $1.5 million to reflect an advance made by K Corp to fund the Company's down payment on the two Triplestack Box Carriers/TM/. Approximately $5.8 million of the net proceeds of the offering will be used to repay the Note in full. See "Use of Proceeds." The Company has guaranteed a $26.5 million term loan obtained by K Corp for the 1996 mid-body expansion of the vessels chartered to the Company. The lender has indicated its intention to release the Company from this guarantee contingent upon the offering. Such loan is scheduled to be repaid in quarterly installments ending June 30, 2003. The current outstanding amount of the loan is $24.2 million. The loan is also secured by a mortgage on K Corp's vessels and a lien on the related ramp structures. The aggregate of the latest appraised values of the vessels and related ramps that secure this indebtedness is $63 million. The Company has long term debt arrangements and lease obligations which are guaranteed by K Corp and which contain financial covenants that require the Company and K Corp, on a combined basis, to maintain certain financial ratios which are calculated as of the end of each fiscal quarter. The Company and K Corp were in compliance with such covenants at March 31, 1997. The lender referred to above has indicated its intention to release K Corp's guarantee on $1.6 million at December 31, 1996 contingent upon this offering. The aggregate amount of such obligations guaranteed by K Corp at December 31, 1996 was $9.2 million. See Note 7 to the Financial Statements. The Company intends to seek release of such guaranties from other lenders contingent upon this offering. The Company will continue a policy that any transactions with affiliated persons or entities will be on terms no less favorable to the Company than those that could have been obtained on an arms-length basis from unaffiliated third parties. Any such future transactions must be approved by a majority of the disinterested directors. PRINCIPAL STOCKHOLDERS The following table sets forth information regarding the beneficial ownership of Common Stock as of the date of this Prospectus, and as adjusted to reflect the sale of the shares of Common Stock offered hereby, by each person known by the Company to beneficially own more than 5% of the outstanding shares of Common Stock; each of the Company's directors, director nominees, and executive officers identified in the Summary Compensation Table who beneficially owns any Common Stock; and all directors and executive officers as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned. The Company has two stockholders of record at the date of this Prospectus.
Percent Before After Offering Offering(1) 80.0% 20.0% 20.0% 80.0% _____% _____% _____% _____%

Name Malcom P. McLean . . . 500 Park Avenue, 5th New York, NY 10022 Clara L. McLean . . . . 500 Park Avenue, 5th New York, NY 10022 John D. McCown . . . . . . . . . . . . . . . . . . . . . Floor . . . . . . . . . . . . . . . . . Floor . . . . . . . . . . . . . . . . .

Number of Shares 6,800,000 1,700,000 1,700,000(2) 6,800,000

All directors and executive officers as a group (8) persons)(2) . . . . . . . . . . . . . . . . . . . .

(1) Excludes shares subject to options granted to executive officers under the Company's Incentive Stock Plan which become exercisable 20% per year beginning on the first anniversary date of the offering. (2) Consists of shares subject to immediately exercisable options granted by Malcom P. McLean to Mr. McCown in February 1994 and May 1997. The February 1994 options cover 500,000 shares with an exercise price of $.001 per share and the May 1997 options cover 1,200,000 shares with an exercise price of $.74 per share. DESCRIPTION OF CAPITAL STOCK

General The Company is authorized to issue up to 20,000,000 shares of Common Stock, $.01 value per share, and 1,000,000 shares of preferred stock, $.01 par value per share. At the date of this Prospectus 8,500,000 shares of Common Stock, and no shares of preferred stock were issued and outstanding. The Common Stock is held by two stockholders of record, including Malcom P. McLean. All of the outstanding Common Stock is, and the shares of Common Stock offered by the Company hereby when issued and paid for will be, fully paid and non-assessable. Common Stock Voting. Holders of Common Stock are entitled to one vote per share. All actions submitted to a vote of stockholders are voted on by holders of Common Stock voting together as a single class. Holders of Common Stock are not entitled to cumulative voting in the election of directors. Dividends. Holders of Common Stock are entitled to receive dividends payable in cash or property other than Common Stock on an equal basis, if and when such dividends are declared by the Board of Directors from funds legally available, subject to any preference in favor of outstanding shares of preferred stock, if any. Liquidation. In the event of liquidation, holders of Common Stock participate on a ratable basis in the net assets of the Company available for distribution after payment or provision for liabilities of the Company and payment of the liquidation preference, if any, on any outstanding shares of preferred stock. Other Terms. Holders of Common Stock are not entitled to preemptive rights and the Common Stock is not subject to redemption. The rights, preferences, and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which the Company may designate and issue in the future. Preferred Stock The Board of Directors is authorized to issue, from time to time, without approval of the stockholders, up to 1,000,000 shares of preferred stock in one or more series. The Board of Directors may fix for each series: the distinctive serial designation and number of shares of the series; the voting powers and the right, if any, to elect a director or directors (and the terms of office of any such directors); the dividend rights, if any; the terms of redemption, and the amount of and provisions regarding any sinking fund for the purchase or redemption thereof; the liquidation preferences and the amounts payable on dissolution or liquidation; the terms and conditions under which shares of the series may or shall be converted into any other series or class of stock or debt of the Company; and any other terms or provisions which the Board of Directors is legally authorized to fix or alter. It is not possible to state the actual effect of the authorization of the preferred stock upon the rights of holders of the Common Stock until the Board determines the specific rights of the holders of any series of preferred stock. Depending upon the rights granted to any series of preferred stock, issuance thereof could adversely affect the voting power, liquidation rights, or other rights of the holders of Common Stock or other preferred stock. The Board's authority to issue shares of preferred stock provides a potential vehicle for use in possible acquisitions and other corporate purposes, but its issuance, for example in connection with a stockholder rights plan, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, control of the Company. The Company has no present plans to issue any shares of preferred stock. Foreign Ownership Restrictions The Certificate of Incorporation (i) contains provisions limiting the aggregate percentage ownership by Non-Citizens of each class of the Company's capital stock (including the Common Stock) to 24.99% of the outstanding shares of each such class (the "Permitted Percentage") to ensure that such foreign ownership will not exceed the maximum percentage permitted by applicable federal law (presently 25.0%); (ii) requires institution of a dual stock certificate system to help determine such ownership, and (iii) permits the Board of Directors to make such determinations as may reasonably be necessary to ascertain such ownership and implement such limitations. These provisions are intended to protect the Company's ability to operate its vessels in the U.S. domestic trade governed by the Jones Act. The ability of the Company to so operate is necessary to avoid default under certain of the Company's financings, may enhance the Company's ability to incur additional debt, and may have other effects upon the Company. See "Risk Factors - Restriction on Foreign Ownership." To provide a method to enable the Company reasonably to determine stock ownership by Non-Citizens, the Certificate of Incorporation requires the Company to institute (and to implement through the transfer agent for the Common Stock) a dual stock certificate system, pursuant to which certificates representing shares of Common Stock will bear legends that designate such certificates as either "citizen" or "non-citizen," depending on the citizenship of the owner. Accordingly, stock certificates are denominated as "citizen" (blue) in respect of Common Stock owned by Citizens and as "non-citizen" (red) in respect of Common Stock owned by Non-Citizens. The Company may also issue non-certificated shares through depositories if the Company determines such depositories have established procedures that allow the Company to monitor the ownership of Common Stock by Non-Citizens.

For purposes of the dual stock certificate system, a "Non-Citizen" is defined as any person other than a Citizen, and a "Citizen" is defined as: (i) any individual who is a citizen of the U.S. by birth, naturalization, or as otherwise authorized by law; (ii) any corporation (a) organized under the laws of the U.S., or a state, territory, district, or possession thereof, (b) of which title to not less than 75% of its stock is beneficially owned by and vested in Citizens, free from any trust or fiduciary obligation in favor of Non-Citizens, (c) of which not less than 75% of the voting power is vested in Citizens, free from any contract or understanding through which it is arranged that such voting power may be exercised directly or indirectly in behalf of Non-Citizens, (d) of which there are no other means by which control is conferred upon or permitted to be exercised by Non-Citizens, (e) whose president or chief executive officer, chairman of the board of directors and all officers authorized to act in their absence or disability are Citizens, and (f) of which more than 50% of that number of its directors necessary to constitute a quorum are Citizens; (iii) any partnership (a) organized under the laws of the U.S., or a state, territory, district, or possession thereof, (b) all general partners of which are Citizens, and (c) of which not less than a 75% interest is beneficially owned and controlled by, and vested in, Citizens, free and clear of any trust or fiduciary obligation in favor of Non-Citizens; (iv) any association (a) organized under the laws of the U.S., or a state, territory, district, or possession thereof, (b) of which 100% of the members are Citizens, (c) whose president, chief executive officer, or equivalent position, chairman of the board of directors, or equivalent committee or body, and all persons authorized to act in their absence or disability are Citizens, (d) of which not less than 75% of the voting power is beneficially owned by Citizens, free and clear of any trust or fiduciary obligation in favor of Non-Citizens, and (e) of which more than 50% of that number of its directors or equivalent persons necessary to constitute a quorum are Citizens; (v) any limited liability company (a) organized under the laws of the U.S., or a state, territory, district or possession thereof, (b) of which not less than 75% of the membership interests are beneficially owned by and vested in Citizens, free from any trust or fiduciary obligation in favor of Non-Citizens, and the remaining membership interests are beneficially owned by and vested in persons meeting the requirements of 46 U.S.C. Sec. 12102 (a), (c) of which not less than 75% of the voting power is vested in Citizens, free from any contract or understanding through which it is arranged that such voting power may be exercised directly or indirectly in behalf of Non-Citizens, (d) of which there are no other means by which control is conferred upon or permitted to be exercised by Non-Citizens, (e) whose president or other chief executive officer or equivalent position, chairman of the board of directors or equivalent committee or body, managing members (or equivalent), if any, and all persons authorized to act in their absence or disability are citizens, free and clear of any trust or fiduciary obligation in favor of any Non-Citizens, and (f) of which more than 50% of that number of its directors or equivalent persons necessary to constitute a quorum are Citizens; (vi) any joint venture, if not an association, corporation, partnership, or limited liability company (a) organized under the laws of the U.S., or a state, territory, district, or possession thereof, and (b) of which 100% of the equity is beneficially owned and vested in Citizens, free and clear of any trust or fiduciary obligation in favor of any Non-Citizens; and (vii) any trust (a) domiciled in and existing under the laws of the U.S., or a state, territory, district, or possession thereof, (b) the trustee of which is a Citizen, and (c) of which not less than a 75% interest is held for the benefit of Citizens, free and clear of any trust or fiduciary obligation in favor of any Non- Citizens; and (viii) any other entity not specifically listed above which the Board of Directors reasonably determines is a "Citizen" consistent with the foregoing definitions and the Jones Act. The foregoing definition is applicable at all tiers of ownership and in both form and substance at each tier of ownership. The Board of Directors is specifically authorized to make reasonable determinations and interpretations of terms used in the Certificate in defining a "Citizen" to assure compliance with the Jones Act in accordance with applicable law and the Certificate. Shares of Common Stock are transferable to Citizens at any time and are transferable to Non-Citizens if, at the time of such transfer, the transfer would not increase the aggregate ownership by Non-Citizens of that particular class of Common Stock above the Permitted Percentage in relation to the total outstanding shares of that particular class of Common Stock. Non-Citizen certificates may be converted to Citizen certificates upon a showing, satisfactory to the Company, that the holder is a Citizen. Any purported transfer to Non-Citizens of shares or of an interest in shares of the Company represented by a Citizen certificate in excess of the Permitted Percentage will be ineffective as against the Company for all purposes (including for purposes of voting, dividends, and any other distribution, upon liquidation or otherwise). In addition, the shares may not be transferred on the books of the Company, and the Company, whether or not such stock certificate is validly issued, may refuse to recognize the holder thereof as a stockholder of the Company except to the extent necessary to effect any remedy available to the Company. Subject to the foregoing limitations, upon surrender of any stock certificate for transfer, the transferee will receive citizen (blue) certificates or non-citizen (red) certificates, as applicable. The Certificate of Incorporation establishes procedures with respect to the transfer of shares to enforce the limitations referred to above and authorize the Board of Directors to implement such procedures, The Board of Directors may take other actions or make interpretations of the Company's foreign ownership policy as it deems necessary in order to implement the policy. Pursuant to the procedures established in the Certificate of Incorporation, as a condition precedent to each issuance and/or transfer of stock certificates representing shares of Common Stock (including the shares of Common Stock being sold in the offering), a citizenship certificate may be required from all transferees (and from any recipient upon original issuance) of Common Stock and, with respect to the beneficial owner of the Common Stock being transferred, if the transferee (or the original recipient) is acting as a fiduciary or nominee for such beneficial owner. The registration of the transfer (or original issuance) will be denied upon refusal to furnish such citizenship certificate, which must provide information about the purported transferee's or beneficial owner's citizenship. Furthermore, as part of the dual stock certificate system, depositories holding shares of the Company's Common Stock will be required to maintain separate accounts for "Citizen" and "Non-Citizen" shares. When the beneficial ownership of such shares is transferred, the depositories' participants will be required to advise such depositories as to which account the transferred shares should be held. In addition, to the extent necessary to enable the Company to determine the number of shares owned by Non-Citizens, the Company may from time to time require record holders and beneficial owners of shares of Common Stock to confirm their citizenship status and may, in the discretion of the Board of Directors, temporarily withhold dividends payable to, and deny voting rights to, any such record holder or beneficial owner until confirmation of citizenship is received.

Should the Company (or its transfer agent for the Common Stock) become aware that the ownership by Non-Citizens of Common Stock at any time exceeds the Permitted Percentage (the "Excess Shares"), the Board of Directors is authorized to withhold dividends and other distributions temporarily on the Excess Shares, pending the transfer of such shares to a Citizen or the reduction in the percentage of shares owned by Non-Citizens to or below the Permitted Percentage, and to deny voting rights with respect to the Excess Shares. If dividends and distributions are to be withheld, they will be set aside for the account of the Excess Shares. At such time as such shares are transferred to a Citizen or the ownership of such shares by Non-Citizens will not result in aggregate ownership by Non- Citizens in excess of the Permitted Percentage, the dividends withheld shall be paid to the then record holders of the related shares. Excess Shares shall, so long as the excess exists, not be deemed to be outstanding for purposes of determining the vote required on any matter brought before the stockholders for a vote. The Certificate of Incorporation provides that the Board of Directors has the power, in its reasonable discretion and based upon the records maintained by the Company's transfer agent, to determine those shares of Common Stock that constitute the Excess Shares. Such determination will be made by reference to the date or dates on which such shares were purchased by Non- Citizens, starting with the most recent acquisition of shares by a Non- Citizen and including, in reverse chronological order, all other acquisitions of shares by Non-Citizens from and after the acquisition that first caused the Permitted Percentage to be exceeded; provided that Excess Shares resulting from a determination that a record holder or beneficial owner is no longer a Citizen will be deemed to have been acquired as of the date of such determination. To satisfy the Permitted Percentage described above, the Certificate of Incorporation authorizes the Board of Directors, in its discretion, to redeem (upon written notice) Excess Shares in order to reduce the aggregate ownership by Non-Citizens to the Permitted Percentage. As long as the shares of Common Stock offered hereby continue to be authorized for quotation on the Nasdaq National Market, the redemption price will be the average of the closing sale price of the shares (as reported by the Nasdaq National Market) during the 30 trading days next preceding the date of the notice of redemption. The redemption price for Excess Shares will be payable in cash. In the event the Company is not permitted by applicable law to make such redemption or the Board of Directors, in its discretion, elects not to make such redemption, the Company may direct the holder of Excess Shares to sell all such Excess Shares for cash in such manner as the Board of Directors directs. Certain Provisions of Certificate and Bylaws Provisions with Anti-Takeover Implications. Certain provisions of the Company's Certificate of Incorporation ("Certificate") and Bylaws deal with matters of corporate governance and the rights of stockholders. Under the Company's Certificate, the Board of Directors may issue shares of preferred stock and set the voting rights, preferences, and other terms thereof. The Certificate provides that a special meeting of stockholders may be called only by the Chairman of the Board or a majority of the directors. Such provisions could be deemed to have an anti-takeover effect and discourage takeover attempts not first approved by the Board of Directors (including takeovers which certain stockholders may deem to be in their best interest). Any such discouraging effect upon takeover attempts could potentially depress the market price of the Common Stock or inhibit temporary fluctuations in the market price of the Common Stock that otherwise could result from actual or rumored takeover attempts. Indemnification and Limitation of Liability. Under its Certificate and Bylaws, the Company may indemnify its officers and directors against all liabilities and expenses reasonably incurred in connection with service for or on behalf of the Company to the full extent permitted by Delaware law. The Company also is authorized to advance expenses, purchase insurance, enter into indemnification agreements, and otherwise grant broader indemnification rights. The Company intends to enter into indemnification agreements with its executive officers and directors and purchase directors' and officers' liability insurance coverage on their behalf. The Certificate also eliminates the liability of directors and officers to the Company or its stockholders for monetary damages for breach of fiduciary duty except to the extent such exemption from liability or limitation thereof is not permitted under applicable law. This provision does not eliminate the duty of care and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director continues to be subject to liability for monetary damages for acts or omissions involving intentional misconduct, fraud, knowing violations of law, and unlawful distributions. The Company believes that these provisions of its Certificate and Bylaws are necessary to attract and retain qualified persons as directors and officers. Delaware Business Combination Statute Section 203 of the Delaware General Corporation Law ("Section 203") provides that, subject to certain exceptions specified therein, an interested stockholder of a Delaware corporation shall not engage in any business combination with the corporation for a three-year period following the date that such stockholder becomes an interested stockholder unless (i) prior to such date, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding certain shares) or (iii) on or subsequent to such date, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66-2/3% of the outstanding voting stock which is not owned by the interested stockholder. Except as otherwise specified in Section 203, an interested stockholder is defined to include (x) any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is an affiliate or associate of the corporation, and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within three years immediately prior to the relevant date and (y) the affiliates and associates of any such person. Under certain circumstances, Section 203 makes it more difficult for a person who would be an interested stockholder to effect various business combinations with a corporation for a three-year period, although the stockholders may elect to exclude a corporation from the restrictions imposed thereunder. The Certificate of Incorporation does not exclude the Company from the restrictions imposed under Section 203. The

provisions of Section 203 may encourage companies interested in acquiring the Company to negotiate in advance with the Board of Directors since the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction which results in the stockholder becoming an interested stockholder. Such provisions also may have the effect of preventing changes in the management of the Company. It is possible that such provisions could make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests. Transfer Agent and Registrar BankBoston, N.A. will be the Transfer Agent and Registrar for the Common Stock. The address of the Transfer Agent and Registrar is BankBoston, N.A., c/o Boston EquiServe, Blue Hills Office Park, 150 Royall Street, Canton, Massachusetts 02021, and the phone number is (617) 575- 2000. SHARES ELIGIBLE FOR FUTURE SALE Upon completion of the offering, the Company will have __________ shares outstanding. Of these shares, all _________ shares sold in the offering will be freely transferable by persons other than "affiliates" of the Company, without further restriction under the Securities Act. The Company and all current stockholders have agreed not to offer, sell or otherwise dispose of any shares of Common Stock owned (or in the case of the Company, owned or issuable) by them for 180 days from the commencement of the offering without the prior written consent of Alex. Brown & Sons Incorporated. Commencing with the expiration of the 180-day period, the 8,500,000 shares of Common Stock held by current stockholders of the Company will be eligible for sale without registration in the public market, subject to Rule 144. In general, Rule 144 provides that, subject to its provisions and other applicable federal and state securities law requirements, any person (or persons whose shares are aggregated), including any person who may be deemed an "affiliate" as defined under the Securities Act, who has beneficially owned shares for at least one year is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of (i) the average weekly trading volume of the same class of securities during the four calendar weeks preceding the filing of notice of the sale with the Securities and Exchange Commission; or (ii) 1% of the same class of securities then outstanding, subject in each case to certain manner-of-sale provisions, notice requirements, and the availability of current information concerning the Company. A person who is not deemed an "affiliate" of the Company and who has beneficially owned shares for at least two years is entitled to sell shares under Rule 144 without regard to the volume limitations and current public information, manner of sale, and notice requirements described above. Restricted shares will also be eligible for sale to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act, without regard to the volume limitations contained in Rule 144. Prior to the offering, there has been no public market for the Common Stock and no determination can be made as to the effect, if any, that the sale or availability for sale of additional shares of the Common Stock will have on the market price of the Common Stock prevailing from time to time. Nevertheless, sales of substantial amounts of the shares in the public market could adversely affect the market price of the Common Stock and could impair the Company's ability to raise capital through sale of its equity securities. The Company intends to file a registration statement under the Securities Act to register shares of Common Stock reserved for issuance under its Incentive Stock Plan, thus permitting the resale of such shares by non-affiliates in the public market without restriction under the Securities Act. A total of 1,000,000 shares (including approximately 600,000 shares subject to outstanding options) are reserved for issuance under the Incentive Stock Plan. UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Underwriters named below (the "Underwriters"), through their Representative, Alex. Brown & Sons Incorporated, have severally agreed to purchase from the Company the following respective numbers of shares of Common Stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus:
Underwriter Number of Shares

Alex. Brown & Sons Incorporated. . . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . .

The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all shares of the Common Stock offered hereby if any of such shares are purchased.

The Company has been advised by the Representative of the Underwriters that the Underwriters propose to offer the shares of Common Stock to the public at the initial public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of $___________ per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $______________ per share to certain other dealers. After the initial public offering, the offering price and other selling terms may be changed by the Representative of the Underwriters. The Company has granted to the Underwriters an option, exercisable not later than 30 days after the date of this Prospectus, to purchase up to _______ additional shares of Common Stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of shares of Common Stock to be purchased by it shown in the above table bears to _________, and the Company will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of Common Stock offered hereby. If purchased, the Underwriters will offer such additional shares on the same terms as those on which the _________ shares are being offered. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. In connection with the offering, certain Underwriters and selling group members and their respective affiliates may engage in transactions that stabilize, maintain or otherwise affect the market price of the Common Stock. Such transactions may include stabilization transactions effected in accordance with Rule 104 of Regulation M, pursuant to which such persons may bid for or purchase Common Stock for the purpose of stabilizing its market price. The Underwriters also may create a short position for the account of the Underwriters by selling more Common Stock in connection with the offering than they are committed to purchase from the Company, and in such case may purchase Common Stock in the open market following completion of the offering to cover all or a portion of such short position. The Underwriters may also cover all or a portion of such short position, up to _______ shares, by exercising the Underwriters' over-allotment option referred to above. The Representative, on behalf of the Underwriters, may impose "penalty bids" under contractual arrangements with the Underwriters whereby it may reclaim from an Underwriter (or dealer participating in the offering), for the account of the other Underwriters, the selling concession with respect to the Common Stock that is distributed in the offering but subsequently purchased for the account of the Underwriters in the open market. Any of the transactions described in this paragraph may result in the maintenance of the price of the Common Stock at a level above that which might otherwise prevail in the open market. None of these transactions described in this paragraph is required, and, if undertaken, they may be discontinued at any time. Stockholders of the Company, holding in the aggregate 8,500,000 shares of Common Stock, have agreed not to offer, sell or otherwise dispose of any of such Common Stock for a period of 180 days after the date of this Prospectus without the prior consent of the Representatives of the Underwriters. See "Shares Eligible for Future Sale." The Representative of the Underwriters has advised the Company that the Underwriters do not intend to confirm sales to any account over which they exercise discretionary authority. Prior to this offering, there has been no public market for the Common Stock of the Company. Consequently, the initial public offering price for the Common Stock will be determined by negotiation between the Company and the Representative of the Underwriters. Among the factors to be considered in such negotiations are prevailing market conditions, the results of operations of the Company in recent periods, the history of and prospects for the Company's business and the industry in which it competes, current market valuations of publicly traded corporations that are comparable to the Company, an assessment of the Company's management, and other factors deemed relevant. LEGAL MATTERS The validity of the shares of Common Stock offered hereby will be passed upon for the Company by Foley & Lardner, Jacksonville, Florida. Certain legal matters in connection with the offering are being passed upon for the Underwriters by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Miami, Florida. EXPERTS The financial statements as of December 31, 1995 and 1996 and for each of the three years in the period ended December 31, 1996 included in this Prospectus and the related financial statement schedule included elsewhere in the Registration Statement have been audited by Deloitte & Touche LLP, independent auditors, as indicated in their reports appearing herein and elsewhere in the Registration Statement, and have been so included herein in reliance upon the reports of said firm given upon their authority as experts in accounting and auditing. ADDITIONAL INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-1 (the "Registration Statement") under the Securities Act with respect to the Common Stock offered hereby. This Prospectus, which is part of the Registration Statement, does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto, certain items of which are omitted in accordance with the rules and regulations of the Commission. For further information with respect to the

Company and the Common Stock, reference is hereby made to the Registration Statement and such exhibits and schedules filed as a part thereof, which may be inspected, without charge, at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the Commission located at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of all or any portion of the Registration Statement may be obtained from the Public Reference Section of the Commission, upon payment of prescribed fees. The Commission also maintains a Web site that contains reports, proxy and information statements and other information regarding Registrants, including the Company, that file electronically with the Commission. The address of such Web site is http://www.sec.gov. Statements contained in this Prospectus as to the content of any contract, agreement, or other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of such contract, agreement, or document filed as an exhibit to the Registration Statement, each such statement being qualified in its entirety by such reference.

TRAILER BRIDGE, INC. INDEX TO FINANCIAL STATEMENTS
Page Independent Auditors' Report Balance Sheets . . . . . . . . . . . . . . . . . . . . F-2 F-3 F-4 F-5 F-6 F-7

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

Statements of Operations

Statements of Changes in Common Stockholders' Equity (Deficit) Statements of Cash Flows

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

Notes to Financial Statements

INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Trailer Bridge, Inc. Jacksonville, Florida

We have audited the accompanying balance sheets of Trailer Bridge, Inc. as of December 31, 1995 and 1996, and the related statements of operations, common stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. 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 generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Trailer Bridge, Inc. as of December 31, 1995 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. Deloitte & Touche LLP Jacksonville, Florida February 28, 1997 (May __, 1997 as to Note 11)

The accompanying financial statements reflect the recapitalization of the Company as described in Note 11 to the financial statements. The above report is in the form which will be signed by Deloitte & Touche LLP upon completion of such recapitalization.

TRAILER BRIDGE, INC. BALANCE SHEETS
1995 December 31, 1996 March 31, 1997 (Unaudited) $ 2,246,206

ASSETS CURRENT ASSETS: Cash and cash equivalents Trade receivables, less allowance for doubtful accounts of $655,440, $905,581 and $1,178,737 Prepaid expenses Total current assets PROPERTY AND EQUIPMENT, net GOODWILL, less accumulated amortization of $170,984, $217,763 and $229,458 OTHER ASSETS TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable Other accrued liabilities Current portion of notes payable Current portion of capital lease obligations Unearned revenue Due to affiliate Total current liabilities NOTES PAYABLE, less current portion CAPITAL LEASE OBLIGATIONS, less current portion TOTAL LIABILITIES $ $

498,328

$

1,658,921

8,909,418 611,229 ------------10,018,975 ------------8,851,225 997,958 357,375 ------------$ 20,225,533 =============

8,305,872 964,971 -----------10,929,764 -----------12,512,130 951,179 370,592 -----------$ 24,763,665 ============

8,252,435 343,003 -----------10,841,644 -----------14,348,862 939,484 310,280 -----------$ 26,440,270 ============

1,322,044 2,489,555 2,677,870 122,435 278,898 7,825,136 ------------14,715,938 2,836,425 ------------17,552,363 -------------

$

1,981,421 2,635,099 3,117,069 38,197 223,627 4,653,192 -----------12,648,605 5,909,072 161,444 -----------18,719,121 ------------

$

1,359,062 3,225,631 2,865,326 36,365 299,881 5,878,364 -----------13,664,629 6,312,977 149,077 -----------20,126,683 ------------

COMMITMENTS (Notes 5, 8 and 10) STOCKHOLDERS' EQUITY (Note 11): Preferred stock, $.01 par value, 1,000,000 shares, authorized; no shares issued or outstanding Common stock, $.01 par value, 20,000,000 shares authorized; 8,500,000 shares issued and outstanding Additional paid-in capital Retained earnings Total stockholders' equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

85,000 (84,575) 2,672,745 ------------2,673,170 ------------$ 20,225,533 =============

85,000 (84,575) 6,044,119 -----------6,044,544 -----------$ 24,763,665 ============

85,000 (84,575) 6,313,162 ------------6,313,587 ------------$ 26,440,270 =============

See notes to financial statements.

TRAILER BRIDGE, INC. STATEMENTS OF OPERATIONS
1994 OPERATING REVENUES OPERATING EXPENSES: Salaries, wages and benefits Rent and purchased transportation: Related party Other Fuel Operating and maintenance (exclusive of depreciation shown separately below) Taxes and licenses Insurance and claims Communications and utilities Depreciation and amortization Other operating expenses $ Years Ended December 31, 1995 $ 62,531,365 14,591,795 3,650,000 10,847,200 5,255,979 10,553,364 588,565 1,860,997 620,815 2,761,139 3,023,161 -----------53,753,015 -----------8,778,350 1996 Three Months Ended March 31, 1996 1997 (Unaudited) $ 14,568,079 3,434,673 910,000 2,520,047 1,468,256 3,045,731 138,263 514,040 143,284 701,283 726,751 -----------13,602,328 -----------965,751 $ 16,446,066 3,404,267 1,890,000 2,320,837 1,557,433 3,205,616 156,237 521,612 134,448 689,016 818,701 -----------14,698,167 -----------1,747,899

72,192,336 19,307,773 3,650,000 15,966,059 5,426,143

$ 63,148,218 13,288,633 5,900,000 10,331,461 5,883,378 14,210,787 455,407 2,121,039 607,833 2,944,069 2,981,104 -----------58,723,711 -----------4,424,507

11,781,830 960,781 2,202,489 833,840 2,646,573 3,241,356 ------------66,016,844 ------------6,175,492

OPERATING INCOME NONOPERATING INCOME (EXPENSE): Interest expense, net: Related party Other Gain (loss) on sale of equipment, net

(1,159,702) (657,775) 12,143 ------------(1,805,334) 4,370,158 (11,859) 4,358,299 (2,015,594) ------------$ 2,342,705 ============= $ 0.23 ============= 10,000,000 =============

(822,558) (539,554) 47,834 -----------(1,314,278) 7,464,072 (67,316) 7,396,756 (3,037,048) -----------$ 4,359,708 ============ $ 0.51 ============ 8,512,329 ============

(457,743) (623,332) 66,523 -----------(1,014,552) 3,409,955 (38,581) 3,371,374 (1,298,442) -----------$ 2,072,932 ============ $ 0.24 ============ 8,500,000 ============

(143,182) (103,627) (9,173) -----------(255,982) 709,769 (7,301) 702,468 (259,647) -----------$ 442,821 ============ $ 0.05 ============ 8,500,000 ============

(91,400) (172,016) -----------(263,416) 1,484,483 (29,690) 1,454,793 (545,530) -----------$ 909,263 ============ $ 0.11 ============ 8,500,000 ============

INCOME BEFORE PROVISION AND PRO FORMA PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES NET INCOME BEFORE PRO FORMA PROVISION FOR INCOME TAXES PRO FORMA PROVISION FOR INCOME TAXES (Note 3) PRO FORMA NET INCOME (Note 3) PRO FORMA NET INCOME PER SHARE (Note 3) WEIGHTED AVERAGE SHARES OUTSTANDING

See notes to financial statements.

TRAILER BRIDGE, INC. STATEMENTS OF CHANGES IN COMMON STOCKHOLDERS' EQUITY (DEFICIT) YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1997
Common Stock Shares Amount BALANCE AT DECEMBER 31, 1993 Net income BALANCE AT DECEMBER 31, 1994 Repurchase and retirement of 1,500,000 shares of common stock Cash dividends ($.16 per share) Net income BALANCE AT DECEMBER 31, 1995 Net income BALANCE AT DECEMBER 31, 1996 Cash dividends ($.14 per share) (unaudited) Net income (unaudited) BALANCE AT MARCH 31, 1997 (UNAUDITED) ----------8,500,000 =========== -------$ 85,000 ======== -------$(84,575) ======== ----------8,500,000 ----------8,500,000 -------85,000 -------85,000 -------(84,575) -------(84,575) 10,000,000 ----------10,000,000 (1,500,000) $100,000 -------100,000 (15,000) Additional Paid-in Capital $(99,500) -------(99,500) 14,925 Retained Earnings (Accumulated Deficit) $(7,214,813) 4,358,299 ----------(2,856,514) (517,195) (1,350,302) 7,396,756 ----------2,672,745 3,371,374 ----------6,044,119 (1,185,750) 1,454,793 ----------$ 6,313,162 ===========

Total $(7,214,313) 4,358,299 ----------(2,856,014) (517,270) (1,350,302) 7,396,756 ----------2,673,170 3,371,374 ----------6,044,544 (1,185,750) 1,454,793 ----------$ 6,313,587 ===========

See notes to financial statements.

TRAILER BRIDGE, INC. STATEMENTS OF CASH FLOWS
1994 OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Provision for uncollectible accounts (Gain) loss on sale of equipment Change in assets and liabilities: Decrease (increase) in trade receivables Decrease (increase) in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in accrued liabilities Increase (decrease) in unearned revenue Net cash provided by operating activities INVESTING ACTIVITIES: Increase (decrease) in due to affiliate Purchases and construction of property and equipment Proceeds from the sale of equipment (Increase) decrease in other assets Net cash used in investing activities FINANCING ACTIVITIES: Proceeds from borrowings on notes payable Payments on notes payable Payments of dividends Payments for repurchase of stock Payments on capital lease obligations Net cash provided by (used in) financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES: Amounts paid for state income taxes Amounts paid for interest: Related party Other $ 5,154 =========== $ 1,142,955 680,646 ----------$ 1,823,601 =========== $ 10,524 =========== $ 824,538 632,549 ----------$ 1,457,087 =========== $ 68,035 =========== $ 457,151 652,554 ----------$ 1,109,705 =========== $ 6,629 =========== $ 143,991 111,851 ----------$ 255,842 =========== $ 4,358,299 Years Ended December 31, 1995 $ 7,396,756 1996 $ Three Months Ended March 31, 1996 1997 (Unaudited) 702,468 $ 1,454,793

$ 3,371,374

2,646,572 515,302 (12,143) (904,486) 728,100 284,066 46,434 137,618 ----------7,799,762 ----------(2,930,298) (4,598,587) 320,609 (82,643) ----------(7,290,919) ----------4,127,158 (2,612,244) (578,938) ----------935,976 ----------1,444,819 501,550 ----------$ 1,946,369 ===========

2,761,139 158,995 (47,834) (1,282,693) 649,459 (289,355) (1,125,571) (95,288) ----------8,125,608 ----------(4,617,442) (1,430,179) 1,031,000 7,080 ----------(5,009,541) ----------1,032,500 (3,410,552) (1,350,302) (517,270) (318,484) ----------(4,564,108) ----------(1,448,041) 1,946,369 ----------$ 498,328 ===========

2,944,069 673,699 (66,523) (70,153) (353,742) 659,377 145,544 (55,271) ---------7,248,374 ---------(3,171,944) (6,707,075) 426,462 (13,217) ----------(9,465,774) ----------6,637,569 (3,125,722) (133,854) ----------3,377,993 ----------1,160,593 498,328 ----------$ 1,658,921 ===========

701,283 106,063 9,173 1,136,321 (346,741) 131,411 (242,844) 116,946 ----------2,314,080 ----------(1,725,996) (43,862) 7,150 (25,336) ----------(1,788,044) -----------

689,016 120,413

(66,976) 621,968 (622,359) 590,532 76,254 ---------2,863,641 ----------1,225,172 (2,514,053) 60,312 ----------(1,228,569) ----------1,134,018 (981,856) (1,185,750) (14,199) ----------(1,047,787) ----------587,285 1,658,921 ----------$ 2,246,206 ===========

(626,815) (24,127) ----------(650,942) ----------(124,906) 498,328 ----------$ 373,422 ===========

$ 283,620 ----------$ 283,620 ===========

Equipment acquired under capital lease agreements

$ 211,060 ===========

See notes to financial statements.

TRAILER BRIDGE, INC. NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1996 AND 1997 1. ORGANIZATION Trailer Bridge, Inc. (the "Company") is a domestic trucking and marine transportation company with contract and common carrier authority. Highway transportation services are offered primarily in the continental United States, while marine transportation is offered between Jacksonville, Florida and San Juan, Puerto Rico. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid securities with original maturities of three months or less to be cash equivalents. Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, which include trade receivables, accounts payable, other accrued liabilities, capital lease obligations and notes payable, approximate fair value. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Allowance for Doubtful Accounts - The Company provides an allowance for doubtful accounts on trade receivables based upon estimated collectibility and collection experience. Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. Property and equipment are depreciated on a straight-line method based on the following estimated useful lives: Years Buildings and structures Office furniture and equipment Freight equipment Leasehold improvements Equipment under capital leases 40 6-10 4-12 2-5 5

Leasehold improvements and equipment under capital leases are amortized over the lesser of the estimated lives of the asset or the lease terms. Maintenance and repairs which do not materially extend useful life and minor replacements are charged to earnings as incurred. Goodwill - Goodwill is being amortized on a straight-line basis over twenty-five years. Insurance - The Company is self-insured for employee medical coverage above deductible amounts. Reinsurance is obtained to cover losses in excess of certain limits. Provisions for losses are determined on the basis of claims reported and an estimate of claims incurred but not reported. Revenue Recognition - Common carrier operations revenue is recorded on the percentage-of-completion basis. Income Taxes - The Company is organized under Subchapter S of the Internal Revenue Code for income tax purposes and therefore, all Federal and certain state income taxes are the responsibility of the Company's stockholders. The Company is subject to state income taxes in those states that do not recognize Subchapter S elections. State income tax expense for 1994, 1995 and 1996 was not significant due to the utilization of net operating loss carryforwards. New Accounting Standards Effective January 1, 1996, the Company adopted the provisions of Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS No. 121) which requires that long-lived assets and certain intangibles to be held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The adoption of SFAS No. 121 did not have a material impact on the Company. Effective January 1, 1996, the Company adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123). SFAS 123 establishes a fair value based method of accounting for stock-based employee compensation plans; however, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees". Under the fair value based method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company has elected to account for its employee stock compensation plan under APB Opinion No. 25 with pro forma disclosures of net earnings and earnings per share, as if the fair value based method of accounting defined in SFAS No. 123 has been applied. In March 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share." This Statement establishes standards for computing and presenting earnings per share ("EPS") and applies to all entities with publicly held common stock or potential common stock. This Statement replaces the presentation of primary EPS and fully diluted EPS with a presentation of basic EPS and diluted EPS, respectively. Basic EPS excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects the potential dilution of securities that

could share in the earnings. This Statement is not expected to have a material effect on the Company's reported EPS amounts. This Statement is effective for the Company's financial statements for the year ended December 31, 1997. 3. INTERIM AND PRO FORMA INFORMATION Unaudited Interim Information - The financial information with respect to the three-month periods ended March 31, 1996 and 1997 is unaudited. The results of operations for the three-month period ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of such periods. Pro Forma Adjustments - The Company is organized under Subchapter S of the Internal Revenue Code. The Company has not been subject to Federal income taxes and state income tax expense has not been significant due to the utilization of net operating loss carryforwards. Prior to the closing of the proposed public offering, the Company will terminate its status as an S Corporation. The pro forma adjustments reflect a provision for income taxes that would have been incurred had the Company not been organized under Subchapter S of the Internal Revenue Code. The effective rate differs from the Federal statutory rate of 34% due to state income taxes (net of Federal income tax benefits), amortization of goodwill and other nondeductible expenses and due to the utilization of the net operating loss carryforwards of a business acquired in 1992. The pro forma statement of operations data do not give effect to the onetime, non-cash charge of approximately $650,000 in recognition of deferred income taxes resulting from the termination of the Company's S Corporation status upon the effectiveness of the Company's proposed stock offering. Pro Forma Stockholders' Equity - The Company intends to declare a dividend payable to existing stockholders in the aggregate amount of $6 million. Such dividend will be paid with a portion of the net proceeds of the Company's proposed stock offering. Upon completion of the proposed stock offering, the remaining retained earnings will be reclassified to additional paid-in capital. Pro Forma Net Income Per Share - Earnings per share are based on the weighted average number of shares of common stock outstanding during the period adjusted for the effect of a 20,000 for 1 stock split that will become effective upon the closing of the proposed stock offering. Supplementary Pro Forma Net Income Per Share - The Company expects to use a portion of the proceeds from its initial public offering to repay amounts due to affiliate. Pro forma net income per share adjusted for the effect of the expected repayment of this indebtedness and the issuance of additional shares of common stock for the year ended December 31, 1996 and for the three months ended March 31, 1997, as if this transaction occurred on January 1, 1996, would have been $.25 and $.06, respectively. 4. PROPERTY AND EQUIPMENT Property and equipment consist of the following:

1995 Land Construction in progress Buildings and structures Office furniture and equipment Freight equipment Leasehold improvements Equipment under capital leases Less accumulated depreciation and amortization Property and equipment, net

December 31,

1996

March 31, 1997 $ 504,703 1,601,450 1,137,127 1,060,269 16,507,080 712,799 536,495

$ $ 89,005 1,088,937 12,444,515 716,347 365,540

504,703 90,512 1,137,127 1,058,381 16,726,428 712,798 536,495

(5,853,119) ----------$ 8,851,225 ===========

(8,254,314) ----------$12,512,130 ===========

(7,711,061) ----------$14,348,862 ===========

Depreciation and amortization expense on property and equipment and equipment under capital leases was $2,599,793, $2,714,360 and $2,897,290 in 1994, 1995 and 1996, respectively, and was $689,588 and $677,321 for the three months ended March 31, 1996 and 1997, respectively. 5. TRANSACTIONS WITH AFFILIATED COMPANY Due to Affiliate - Amounts due to affiliate include cash advanced to the Company from an affiliated company to fund various construction projects, general and administrative expenses, interest payable on such cash advances and barge rent. The advances bear interest at 8% and are due on December 31, 1997. The affiliated company has indicated that it is willing to extend the payment date of such notes for another term of one year in the event that the Company is unable to pay such amounts on December 31, 1997. Management of the Company believes that such indebtedness will be repaid through a combination of cash flows from future operations with such debt to be refinanced on a long-term basis and from the proceeds of equity offerings. Lease Agreements - The Company leases two roll-on/roll-off barge vessels and a ramp system from an affiliate under operating lease agreements. For the period from January 1, 1994 through May 10, 1996 for one vessel and through July 19, 1996, as to the other vessel, the lease payment was $5,000 per day for each vessel. Upon completion of the renovations to the vessels during 1996 which extended the barges from a length of approximately 500 feet to a length of approximately 750 feet, the lease payments were increased to $10,500 per day for each

vessel. The leases expire at the later of September 1, 2010 or the repayment of all obligations under an affiliate's construction loan related to the vessel renovations, which payment has been guaranteed by the Company. Such construction loan is scheduled to be repaid in quarterly installments ending June 30, 2003. The leases provide the Company the option to extend the leases through September 1, 2018 for total payments of $22,00011,000 per vessel per day or, alternatively, the Company may purchase the vessels at their then fair market values. Total lease expense under these leases from affiliate totaled $3,600,000, $3,600,000 and $5,900,000 in 1994, 1995 and 1996. While the vessels were undergoing renovations, the Company leased barges from a third party. In recognition of the $1,160,000 of additional barge rent and $509,000 of other transitional expenses incurred in 1996 during the renovation period, the affiliate agreed to reduce the charter rental due from the Company by approximately $1,669,000. Guarantee Agreement - The Company is the guarantor on an affiliated company's construction loan for $26.5 million, and has pledged all assets to secure this agreement. The loan is also collateralized by a mortgage on the vessels and a lien on the related ramp structures which are owned by the affiliate and leased to the Company. 6. CAPITALIZED LEASE OBLIGATIONS Future minimum lease payments under capitalized leases as of December 31, 1996 are as follows:
Year ending December 31: 1997 1998 1999 2000 2001 Total minimum lease payments Interest portion Present value of minimum lease payment Less current portion $ 55,727 50,400 50,400 50,400 45,378 -------252,305 (52,664) -------199,641 (38,197) -------$161,444 ======== 7. LONG-TERM DEBT

Following is a summary of long-term debt:
1995 Notes payable to finance company totaling $4,957,569 maturing from June to October 2001; payable in 60 monthly installments of principal and interest; interest at fixed rates ranging from 8.867% to 9.290%; collateralized by trailers with a carrying value of $4,763,490 at December 31, 1996 Note payable to bank totaling $1,680,000 maturing October 2006; payable in 120 monthly installments of principal and interest; interest at fixed rate of 7.95%; collateralized by land, construction in progress and buildings and structures with a carrying value of $1,703,900 at December 31, 1996 Notes payable to bank totaling $6,333,512, maturing November 1997 to July 1998; payable in 48 monthly installments of principal and interest; interest at variable or fixed rate selected by the Company (7.125% at December 31, 1996); collateralized by tractors with a carrying value of $2,775,799 at December 31, 1996 Notes payable to finance company totaling $1,032,500 maturing June 2000; payable in 60 monthly installments of principal and interest; interest at a rate of 3.5% above LIBOR (8.875% at December 31, 1996); collateralized by trailers with a carrying value of $917,386 at December 31, 1996 Notes payable to finance company totaling $3,068,796, maturing July to November 1997; payable in 48 monthly installments of principal and interest; interest at a rate of 3.75% above LIBOR (9.125% at December 31, 1996); collateralized by tractors with a carrying value of $772,975 at December 31, 1996 Unsecured notes payable due in 1997; interest at prime plus 1% (9.25% at December 31, 1996); principal is payable in semiannual installments December 31, 1996 March 31, 1997

$4,626,830

$4,420,979

1,652,000

1,610,000

$3,225,131

1,641,754

1,175,482

894,834

681,800

630,364

1,090,330

322,424

106,127

304,000

101,333

101,333

Borrowings under $7.1 million line of credit maturing April 1, 2000; payable in 35 monthly installments of principal and interest plus a final payment of $340,205 plus interest; interest on outstanding borrowings at fixed rate of 7.98%; collateralized by tractors with a carrying value of $1,446,646 at March 31, 1997 (unaudited) Less current portion

---------5,514,295 (2,677,870) ---------$2,836,425 ==========

---------9,026,141 (3,117,069) ---------$5,909,072 ==========

1,134,018 ---------9,178,303 (2,865,326) ---------$6,312,977 ==========

In March 1997, the Company obtained a $7.1 million line of credit from a financial institution. At the election of the Company, interest on each borrowing under the line of credit will accrue at (a) a variable interest rate of the financial institution's Base Rate, (b) a variable interest rate of 1.40% above the financial institution's Eurodollar Rate or (c) a fixed interest rate of 1.40% above the financial institution's three year cost of funds. The line will be used to purchase tractors which will be used as collateral. All long-term debt agreements at 1995 and 1996 are guaranteed by an affiliated company. The notes include financial covenants that require that the Company and affiliate, on a combined basis, maintain certain financial ratios which are calculated as of the end of each fiscal quarter. As of December 31, 1996, the Company and affiliate were in compliance with such covenants. Following are maturities of long-term debt for each of the next five years:
Year ending December 31: 1997 1998 1999 2000 2001 Thereafter $ 3,117,069 1,465,021 1,396,740 1,375,147 860,164 812,000 ----------$ 9,026,141 =========== 8. OPERATING LEASES

The Company has various operating lease agreements, principally for its office facilities, terminals and equipment. Certain of the leases contain provisions calling for additional contingent rentals based on volume of transportation activity. Future minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of December 31, 1996 are as follows:
Year ending December 31: 1997 1998 1999 2000 2001 Thereafter Total minimum payments required $16,095,651 8,070,107 3,051,030 1,823,277 1,789,768 5,202,719 ----------$36,032,552 ===========

Lease expense for all operating leases, including leases with terms of less than one year, was $10,330,913, $12,683,332 and $14,806,980 for 1994, 1995 and 1996. 9. PROFIT SHARING/401(k) PLAN The Company has a profit sharing/401(k) Plan which covers substantially all employees. Participants are allowed to make contributions of up to 15% of their compensation not to exceed certain limits. The Company makes matching contributions to the Plan at a rate not in excess of 3.0% of compensation. The Company contributed approximately $137,640, $60,546 and $142,994 to the Plan during 1994, 1995 and 1996. The Company made an optional contribution of $32,700 in December 1996. 10. COMMITMENT At December 31, 1996, the Company is obligated under construction agreements totaling approximately $1.7 million.

11. RECAPITALIZATION In May 1997, the Company's Board of Directors and stockholders authorized the following which will become effective in connection with the Company's initial public offering: (i) a 20,000-for-1 stock split, (ii) an increase in the authorized number of common shares from 2,000 to 20,000,000, (iii) a change in the par value of common stock from $1.00 to $.01 and (iv) 1,000,000 shares of preferred stock with a par value of $.01 per share. Stockholders' equity has been restated to give retroactive recognition to the stock split and change in par value in prior periods. In addition, all references in the financial statements to the number of shares and per share amounts have been restated. 12. SUBSEQUENT EVENTS (UNAUDITED) In January 1997, the Company entered into an agreement to purchase 100 tractors at an aggregate cost of approximately $7.2 million. In May 1997, the Company's Board of Directors and stockholders authorized the establishment of an Incentive Stock Plan with a maximum of 1,000,000 shares issuable under the Plan and the granting of options for 600,000 shares under the Plan subject to consummation of the Company's initial public offering. These options have an exercise price equal to the initial public offering price and vest equally over a period of five years. In March 1997, the Company entered into an agreement for the construction of two vessels, known as Triplestack Box Carriers/TM/, for a total cost of approximately $12 million. The Company plans to finance approximately $10.5 million of the acquisition cost with the assistance of the sale of bonds with a Title XI guaranty commitment issued by the U.S. Maritime Administration. The Title XI bonds to be sold in May 1997 call for even semi-annual principal payments over a 25 year term. In addition, the Company has contracted for the construction of 53' containers and chassis units with an aggregate cost of approximately $13 million. In May 1997, the Company entered in an amendment to its lease of two roll-on/roll-off barge vessels and ramp system. The amendment reduces the total payments under the lease from $21,000 to $20,100 per day effective with this offering. On May 21, 1997, the majority stockholder of the Company granted to the Company's Chairman and Chief Executive Officer, an option to purchase up to 1,200,000 shares of common stock (adjusted for the 20,000-for-1 stock split) owned by him at $.74 per share or an aggregate price of $891,330 for all shares. These options are immediately exercisable and have a term of 10 years. In connec- tion with this option, the Company expects to record a non- recurring, noncash charge for compensation expense and a credit to paid-in capital of approximately $11 million in the second quarter of 1997, representing the difference between the exercise price and the deemed fair market value of the common stock at the date of grant. This option does not involve the issuance of additional shares of common stock by the Company and therefore, any subsequent purchase of shares under the option will not have a dilutive effect on the Company's book value or earnings per share amounts. The Company is in the process of an initial public offering of its shares of common stock.

No person has been authorized in connection with the offering made hereby to give any information or to make any representation not contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or any Underwriters. This Prospectus does not constitute an offer to sell or a solicitation of any offer to buy any of the securities offered hereby to any person or by anyone in any jurisdiction in which it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that the information contained herein is correct as of any date subsequent to the date hereof. _________________

__________ Shares Trailer Bridge, Inc. Common Stock

__________ PROSPECTUS __________

TABLE OF CONTENTS ALEX. BROWN & SONS
Prospectus Summary . . . . Risk Factors . . . . . . . S Corporation Status . . . Use of Proceeds . . . . . . Dividend Policy . . . . . . Capitalization . . . . . . Dilution . . . . . . . . . Selected Financial and Operating Data . . . . . Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . Industry Overview . . . . . Business . . . . . . . . . Management . . . . . . . . Certain Transactions . . . Principal Stockholders . . Description of Capital Stock Shares Eligible for Future Sale . . . . . . . . . . Underwriting . . . . . . . Legal Matters . . . . . . . Experts . . . . . . . . . . Additional Information . . Page 1 4 10 10 10 11 12 13 _____________, 1997 INCORPORATED

15 22 23 32 36 37 39 42 43 44 44 44

Index to Financial Statements F-1 Until ________________, 1997 (25 days after the date of this Prospectus), all dealers effecting transactions in the Common Stock offered hereby, whether or not participating in this distribution, may be required to deliver a Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus when acting as Underwriters and with respect to their unsold allotments or subscriptions.

PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Insurance and Distribution.
Securities and Exchange Commission filing NASD filing fee . . . . . . . . . . . . . Nasdaq listing fee . . . . . . . . . . . Transfer agent expenses and fees . . . . Printing and engraving . . . . . . . . . Accountants' fees and expenses . . . . . Legal fees and expenses . . . . . . . . . Miscellaneous . . . . . . . . . . . . . . Total fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,393 3,600 ** ** ** ** ** ** ------------$ ============= $

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

__________________________

* Other than the SEC filing fee and NASD filing fee, all fees and expenses are estimated. ** To be supplied by amendment. Item 14. Indemnification of Directors and Officers. The Delaware General Corporation Law (the "Delaware Act") permits a Delaware corporation to indemnify a present or former director or officer of the corporation (and certain other persons serving at the request of the corporation in related capacities) for liabilities, including legal expenses, arising by reason of service in such capacity if such person shall have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and in any criminal proceeding if such person had no reasonable cause to believe his conduct was unlawful. However, in the case of actions brought by or in the right of the corporation, no indemnification may be made with respect to any matter as to which such director or officer shall have been adjudged liable, except in certain limited circumstances. The Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that the Company may indemnify directors and officers to the fullest extent now or hereafter permitted by the Delaware Act. In addition, the Company intends to enter into Indemnification Agreements with its directors and executive officers in which the Registrant will agree to indemnify such persons to the fullest extent now or hereafter permitted by the Delaware Act. The indemnification provided by the Delaware General Corporation Law and the Company's Amended and Restated Bylaws is not exclusive of any other rights to which a director or officer may be entitled. The general effect of the foregoing provisions may be to reduce the circumstances in which an officer or director may be required to bear the economic burden of the foregoing liabilities and expense. The Company may obtain a liability insurance policy for its directors and officers as permitted by the Delaware Act which may extend to, among other things, liability arising under the Securities Act of 1933, as amended (the "Securities Act"). Item 15. Recent Sales of Unregistered Securities. The Company was incorporated under the laws of the State of Delaware effective April 1, 1991. The Company has not made any sales of securities during the last three years. Item 16. Exhibits and Financial Statement Schedules. (a) Exhibits. *1. Form of Underwriting Agreement *3A Amended and Restated Certificate of Incorporation of the Registrant *3B Amended and Restated Bylaws of the Registrant 4A See Exhibits 3A and 3B for provisions of the Certificate of Incorporation and Bylaws of the Registrant defining the rights of holders of the Registrant's Common Stock *4B Form of stock certificate for Common Stock *5 Opinion of Foley & Lardner as to the legality of the securities to be issued *10A Form of Indemnification Agreement with Directors and Executive Officers 10B Bareboat Charter Party dated February 1992

(i) Amendment to Bareboat Charter Party dated December 31, 1994 (ii) Second Amendment to Bareboat Charter Party dated October 1995 (iii) Third Amendment to Bareboat Charter Party dated March 1, 1997 10C Promissory Note dated January 1, 1997 payable to Kadampanattu Corp. in the principal amount of $4,569,131 10D Construction and Term Loan Agreement dated as of October 13, 1995 between the Registrant, Kadampanattu Corp. and The First National Bank of Boston, as Agent (i) First Amendment to Construction and Term Loan Agreement dated as of May 9, 1996 (ii) Second Amendment to Construction and Term Loan Agreement dated as of July 10, 1996 *(iii) Third Amendment to Construction and Term Loan Agreement and Consent and Limited Waiver dated as of January 1, 1997 10E Chattel Mortgage Line of Credit Agreement dated as of February 28, 1997 10F Vessel Construction Contract dated as of December 30, 1996 between Coastal Ship, Inc. and Halter Marine, Inc. (i) Assignment of Vessel Construction Contract dated March 24, 1997 between Coastal Ship, Inc. and the Registrant (ii) Amendment No. 1 to Vessel Construction Contract dated as of April 1997 10G Real Estate Promissory Note dated April 18, 1996 between the Registrant and First Union National Bank of Florida *10H Title XI Guaranty Commitment *(i) Assignment of Letter Commitment to Guarantee Obligations *10I Agreement and Lease dated as of August 1, 1991 between the Registrant and the Jacksonville Port Authority *10J Time Charter dated January 31, 1994 between the Registrant and Tidewater Marine, Inc. Towing Division *10K Incentive Stock Plan *10L Stock Option Award Agreement *23A Consent of Deloitte & Touche LLP *23B Consent of Foley & Lardner (included in Opinion filed as Exhibit 5) 24 Powers of Attorney (included on signature page of this Registration Statement) 27 Financial Data Schedule (b) Financial Statement Schedules. * Report of Independent Auditors * Schedule II - Valuation and Qualifying Accounts.

* To be filed by amendment. All other financial statement schedules have been omitted either because they are not applicable or because the information that would be included in such schedules is included elsewhere in this Registration Statement. Item 17. Undertakings. The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Jacksonville, and State of Florida, on this 30th day of May 1997. TRAILER BRIDGE, INC.
By: /s/ John D. McCown John D. McCown Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears hereon constitutes and appoints John D. McCown, Ralph W. Heim and William G. Gotimer, Jr., and each of them individually, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, including any amendment or registration statement filed pursuant to Rule 462, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Signature /s/ John D. McCown John D. McCown Title Chairman of the Board and Chief Executive Officer and Director (Principal Executive Officer) Vice President Administration and Chief Financial Officer (Principal Financial and Accounting Officer) Director Date May 30, 1997

/s/ Mark A. Tanner Mark A. Tanner

May 30, 1997

/s/ Malcom P. McLean Malcom P. McLean

May 30, 1997

EXHIBIT INDEX *1. Form of Underwriting Agreement *3A Amended and Restated Certificate of Incorporation of the Registrant *3B Amended and Restated Bylaws of the Registrant 4A See Exhibits 3A and 3B for provisions of the Certificate of Incorporation and Bylaws of the Registrant defining the rights of holders of the Registrant's Common Stock *4B Form of stock certificate for Common Stock *5 Opinion of Foley & Lardner as to the legality of the securities to be issued *10A Form of Indemnification Agreement with Directors and Executive Officers 10B Bareboat Charter Party dated February 1992 (i) Amendment to Bareboat Charter Party dated December 31, 1994 (ii) Second Amendment to Bareboat Charter Party dated October 1995 (iii) Third Amendment to Bareboat Charter Party dated March 1, 1997 10C Promissory Note dated January 1, 1997 payable to Kadampanattu Corp. in the principal amount of $4,569,131 10D Construction and Term Loan Agreement dated as of October 13, 1995 between the Registrant, Kadampanattu Corp. and The First National Bank of Boston, as Agent (i) First Amendment to Construction and Term Loan Agreement dated as of May 9, 1996 (ii) Second Amendment to Construction and Term Loan Agreement dated as of July 10, 1996 *(iii) Third Amendment to Construction and Term Loan Agreement and Consent and Limited Waiver dated as of January 1, 1997 10E Chattel Mortgage Line of Credit Agreement dated as of February 28, 1997 10F Vessel Construction Contract dated as of December 30, 1996 between Coastal Ship, Inc. and Halter Marine, Inc. (i) Assignment of Vessel Construction Contract dated March 24, 1997 between Coastal Ship, Inc. and the Registrant (ii) Amendment No. 1 to Vessel Construction Contract dated as of April 1997 10G Real Estate Promissory Note dated April 18, 1996 between the Registrant and First Union National Bank of Florida *10H Title XI Guaranty Commitment *(i) Assignment of Letter Commitment to Guarantee Obligations *10I Agreement and Lease dated as of August 1, 1991 between the Registrant and the Jacksonville Port Authority *10J Time Charter dated January 31, 1994 between the Registrant and Tidewater Marine, Inc. Towing Division *10K Incentive Stock Plan *10L Stock Option Award Agreement *23A Consent of Deloitte & Touche LLP *23B Consent of Foley & Lardner (included in Opinion filed as Exhibit 5) 24 Powers of Attorney (included on signature page of this Registration Statement)

27 Financial Data Schedule

* To be filed by amendment.

EXHIBIT 10B BAREBOAT CHARTER PARTY DESCRIPTION OF VESSEL; CHARTERER. This Charter Party, made and concluded in this City of New York on the ___ day of February, 1992 between Kadampanattu Corp., a Delaware corporation, with offices at 500 Park Avenue, New York, NY 10022, Owner of the good Roll-on/Roll-off Barge Vessel Jax-San Juan Bridge provided with proper certificate for hull and machinery and classed _________, of about, _________ tons deadweight, or thereabouts, on summer freeboard, inclusive of bunkers and stores, and Trailer Bridge, Inc., a Delaware corporation, with offices at 9550 Regency Square Boulevard, Jacksonville, Florida 32225, Charterer. PERIOD. WITNESSETH, The Owner agrees to let and Charterer agrees to hire said vessel from the time of delivery for a period of about a year on the following terms and conditions. 1. PORT OF DELIVERY; ACCEPTANCE. The Vessel shall be delivered to Charterer at the port of Jacksonville, Florida, and being on her delivery tight, staunch, strong, and well and sufficiently tackled, appareled, furnished and equipped, and in every respect seaworthy and in good running order, condition and repair so as far as the exercise of due diligence can make her. The delivery to the Charterer of said vessel and the acceptance of said vessel by the Charterer shall constitute a full performance by the Owner of all of the Owner's obligations hereunder, and thereafter the Charterer shall not be entitled to make or assert any claim against the Owner on account of any representations or warranties expressed or implied, with respect to said vessel, but the Owner shall be responsible for repairs or renewals occasioned by latent defects in the vessel, her machinery or appurtenances, existing at the time of delivery under the Charter, which defects are not discovered on the survey. 2. TIME FOR DELIVERY; CANCELLATION DATE. If required by the Charterer, time not to commence before February 1, 1992, and should vessel not be ready for delivery on or before February 29, 1992, Charterer, or his agent, to have the option of cancelling this charter, such option to be declared by noon of the following day, and if not so declared Charter to be considered in force. 3. TRADING LIMITS. The vessel shall be employed in carrying lawful merchandise in such lawful trades between safe port and/or ports in the United States and the Caribbean. In the event of serious outbreak of pestilence, war, Acts of God, force majeure, or other causes beyond the Charter's control, making the use of the vessel in such trade commercially impracticable, the vessel may be placed or may be sublet for employment in any other safe trades, upon first securing the approval of the Owner. 4. SURVEYS. The vessel shall be surveyed before delivery and upon redelivery to determine the condition of the vessel, under the terms of the Charter, and the cost of such survey on delivery shall be paid for by the Charterer, and the cost of such survey on redelivery shall be paid for by the Owner. 5. CHARTERER TO PROVIDE. The Charterer shall, at its own cost and expense, man, operate, victual, fuel, and supply the vessel, the Master and Chief Engineer, however to be subject to the approval of the Owner, and the Owner shall have the right to require the removal of the Master or Chief Engineer if it should have reason to be dissatisfied. 6. The Charterer shall pay all port charges, pilotages, and all other costs and expenses incident to the use and operation of the vessel. 7. MAINTENANCE. The Charterer shall, at its own expense, keep the said vessel in good running order and condition and in substantially the same condition as when received from Owner and have her regularly overhauled and repaired when necessary. Vessel shall be dry-docked, cleaned, and painted by the Charterer as may be necessary, but at least once in every eight calendar months from date of Charter. 8. HIRE. The Charterer shall pay to the Owner for the use of said vessel at the rate of Five Thousand Dollars ($5,000) per day commencing on and from the day and hour of her delivery to the Charterer, and at and after the same rate for any part of a day; hire to continue until the day and hour when the vessel is redelivered to the Owner. If the vessel is lost, hire shall be paid up to and including the day of her loss (if the time of her loss be uncertain, then up to and including the day she is last heard from). Payment of hire shall be made to the Owner at 500 Park Avenue, New York, NY 10022 in cash on delivery, for the remainder of that calendar month, and thereafter monthly in advance on the first day of each month, and in default of such payment the Owner may forthwith withdraw the vessel from the service to the Charterer without prejudice to any claim which the Owner may have against the Charterer pursuant to this Charter. Should any dispute arise between the Owner and the Charterer with respect to responsibility for repairs, renewals, or replacements, or as to the condition of the vessel at the time of redelivery, either the Charterer or the Owner may without prejudice to its contentions, make and pay for such repairs, renewals, or replacements, or any part thereof before or after tender of redelivery, and may recover the cost thereof from the party for whose account it may be under the terms of the Charter. In the event Charterer's liability for such repairs, renewals, or replacements is established, the Charterer shall pay hire for all time lost thereby. 9. Should the vessel be on her voyage toward port of redelivery at time when payment of hire becomes due, said payment shall be made for such length of time as the Owner and the Charterer may agree upon as the estimated time necessary to complete the voyage, and when the vessel is redelivered to the Owner any difference shall be refunded by the Owner or paid by the Charterer, as the case may require. 10. FUEL AND STORES. The Charterer shall accept and pay for all fuel and consumable stores on board at time of vessel's delivery, and the Owner shall accept and pay for all such fuel and stores left on board on redelivery (with the exception of perishable stores) at the current market prices at the respective ports of delivery and redelivery; but if redelivery be taken at a port other than the port of redelivery named in the

Charter, the Owner shall pay for the fuel and stores left on board on redelivery at the current market prices at the port of redelivery named in the Charter Party. 11. USE OF EQUIPMENT. The Charterer shall have the use of all outfit, equipment, and appliances now on board the vessel without extra cost (with the exception of the submarine signal apparatus, blinker lights, and radio equipment), provided the same or their substantial equivalent shall be returned to the Owner on redelivery in the same good order and condition as when received, ordinary wear and tear excepted. 12. INVENTORIES. A complete inventory of the vessel's entire equipment, outfit, appliances, and of all consumable stores shall be taken and mutually agreed upon at the time of delivery, and a similar inventory shall be taken and mutually agreed upon at the time of redelivery. 13. LIENS AGAINST VESSEL. Neither the Charterer nor the Master of the vessel shall have any right, power, or authority to create, incur, or permit to be imposed upon the vessel any liens whatsoever except for crew's wages and salvage. The Charterer agrees to carry a properly certified copy of this Charter Party with the ship's papers, and on demand to exhibit the same to any person having business with the vessel which might give rise to any lien thereon, other than liens for crew's wages and salvage. The Charterer agrees to notify any person furnishing repairs, supplies, towage, or other necessaries to the vessel that neither the Charterer nor the Master has any right to create, incur, or permit to be imposed upon the vessel any liens whatsoever except for crew's wages and salvage. Such notice, as far as may be practicable, shall be in writing in the form attached hereto as "Exhibit A". The Charterer further agrees to fasten to the vessel in a conspicuous place and to maintain during the life of this Charter, a notice reading as follows "This vessel is the property of Kadampanattu Corp. It is under Charter to Trailer Bridge, Inc. and by the terms of the Charter neither the Charterer nor the Master has any right, power or authority to create, incur, or permit to be imposed upon the vessel any liens whatsoever except for crew's wages and salvage." 14. BILLS OF LADING. The Charterer shall cause all bills of lading issued for cargo carried on the vessel to contain all the exemptions and stipulations usual to the particular trade or service in which the vessel may be engaged and such bills of lading shall provide that the carriage of goods shall be subject to all the provisions of and exemptions contained in the Act of Congress of February 13, 1893, known as the Harter Act and also subject to the provisions of the Carriage of Goods at Sea Act approved April 16, 1936 and it shall reserve a lien upon the cargoes for freight, advance charges on goods, extra compensation, demurrage, forwarding charges, general average claims, any demands made and liability incurred by the carrier in respect of the goods (not required under the bills of lading to be borne by the carrier). 15. JASON CLAUSE. The bills of lading used by the Charterer shall contain the amended "Jason" clause substantially as follows: "If the Owner shall have exercised due diligence to make the vessel in all respects seaworthy and to have her properly manned, equipped, and supplied, it is hereby agreed that in the event of accident, danger, damage or disaster before or after commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequence of which, the shipowner is not responsible, by statute or contract or otherwise, the shippers, consignees, or owners of the cargo shall contribute with the shipowner in general average to the payment of any sacrifices, losses, or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect of the cargo." 16. BOTH TO BLAME COLLISION CLAUSE. All Bills of Lading shall include the following Both-To-Blame Collision Clause:- "If the shipowner shall have exercised due diligence to make the vessel seaworthy and properly manned, equipped and supplied, it is hereby agreed that in the event of the vessel coming into collision with another vessel as a result of the negligent navigation of both vessels, the owners of the cargo carried under the Bill of Lading will indemnify the shipowner against all liability to the other vessel or owners in so far as such liability represents loss, damage, or claim of said cargo paid or payable by the other vessel or her owners to the said cargo owners and set off, recouped, or recovered by the other vessel or her owners as part of their claim against the carrying vessel or shipowner." 17. GENERAL AVERAGE. Said bills of lading shall provide that general average, if any, shall be according to York-Antwerp Rules of 1950, excluding Rule XXII thereof, and as to matters not therein contained, according to the law and usage of the Port of New York. General average shall be adjusted at New York; in case general-average statement be required, the same to be adjusted by an Adjuster to be appointed by the Charterer, subject to the approval of the Owner, and said Adjuster to attend to the settlement and collection of the average, subject to the customary charges. 18. LIENS UPON CARGO. The Owner shall have a lien upon all cargoes and all subfreights for any amounts due under this Charter, and the Charterer shall have a lien on the vessel for all moneys paid in advance to the Owner and not earned. 19. INSURANCE. The Owner shall, at its own expense, fully insure the vessel for Owner's account with an insurer and in a form acceptable to Owner. The Owner and/or insurer shall not have any right of recovery or subrogation against the Charterer on account of loss of or any damage to the vessel or her machinery or appurtenances covered by such insurance, or on account of payments made to discharge claims against or liabilities of the vessel or Owner covered by such insurance. The Charterer shall, at its own expense, obtain protection and indemnity insurance satisfactory to the Owner, and this insurance shall be extended to protect any liability the Owner may incur. The Charterer shall furnish to the Owner proper evidence of such entry immediately upon signing this Charter.

In the event that any act or negligence of the Charterer shall vitiate any of the insurance hereinbefore provided, the Charterer shall pay to the Owner all losses and indemnify the Owner against all claims and demands which would otherwise have been covered by such insurance. REPAIRS. The Charterer shall, subject to the approval of the Owner or Owner's underwriters, effect all insured repairs, and the Charterer shall undertake settlement of all miscellaneous expenses in connection with such repairs as well as insured charges, expenses and liabilities, to an amount not exceeding $10,000; reimbursement to be secured through Owner's underwriters for such expenditures upon presentation of accounts. Individual bills for insurance repairs or other insured charges, expenses and liabilities in excess of $10,000 shall be submitted to and paid by Owner's underwriters. 20. REDELIVERY. The vessel shall at the expiration of the Charter period be redelivered to the Owner (unless lost) at Jacksonville, Florida in the same or as good order and condition as that in which she was when delivered, ordinary wear and tear excepted, but any repairs covered by insurance and any repairs or replacements due to latent defects in the vessel, machinery or appurtenances at the time of delivery are to be paid for in the manner hereinabove provided. 21. OFFHIRE. In the event of loss of time caused by damages to or by vessel covered by insurance, or in making repairs or replacements for which the Owner is liable; preventing the working of vessel for more than forty-eight consecutive hours, hire shall cease for the time thereby lost. The Owner shall not be responsible, however, for any expenses as are incident to the use and operation of the vessel for such time as may be required to make such repairs. 22. DAMAGE. In the event of damage to the vessel covered by insurance under Clause 19 of this Charter in excess of the sum of Thirty Thousand Dollars ($30,000), the Owner has the option of cancelling this Charter, in which event hire to be computed as earned up to the date and hour of the incident. 23. INSPECTION. The vessel is to be inspected to determine her condition at least once in every six months, unless waived by Owner. Such inspection to be made by two inspectors, one to be appointed by the Owners and one by the Charterers. The cost of such inspection to be borne equally by the Owners and Charterers. 24. REPORTS. The Charterer, immediately upon the receipt of such information, shall keep the Owner informed of the arrival and departure of this vessel at and from all ports of call. At the end of each voyage the Charterer shall supply deck and engine room logs of the voyage, if required by Owner. 25. SPECIAL EQUIPMENT. That submarine signal apparatus, blinker lights, and radio equipment, if any, on the vessel at time of delivery shall be kept and maintained by the Charterer, and the Charterer shall assume the obligations and liabilities of the Owner under any contracts in connection therewith and shall reimburse the Owner for all expenses incurred in connection therewith. The Charterer shall carry a radio operator at all times when the vessel is in actual service. 26. SALVAGE. All derelicts and salvage shall be prorated--25 percent to the Owner, 75 percent to the Charterer, after deducting Owner's and Charterer's expenses and crews proportion. However, hire of the vessel shall not be considered an item of the Charterer's expense hereunder. 27. BOND. No bond shall be required of Charterer, but Owner may require a bond in a sum reasonably expected to guaranty full performance of Charterer's obligations under this Charter by giving Charterer thirty (30) days written notice. 28. ALTERATIONS. The Charterer shall not make any structural changes in the vessel without first securing the approval of Owner. 29. CONFERENCE. The Charterer agrees, in the event of entering any trade controlled by conferences in which American tonnage is interested, to join such conferences before placing this vessel in this trade, and further agrees to maintain conference rates prescribed by the conference. 30. LIBELS. The Charterer shall indemnify and hold harmless the Owner against any liens of whatsoever nature upon such vessel and against any claims against the Owner arising out of the operation of said vessel by the Charterer, or out of any act or neglect of the Charterer in relation to said vessel, except in so far as such liens or claims arise out of any matter covered by the insurance provided herein. If a libel should be filed against said vessel, or if said vessel is otherwise levied against or taken into custody by virtue of legal proceedings in any court because of any such lien or claim, the Charterer shall within fifteen (15) days thereof cause the said vessel to be released and the lien to be discharged. This clause shall not in any way authorize the creation of any liens against the vessel or in any way affect or impair the provisions of Clause 12 of this Charter. 31. DEFAULT. If at any time after the delivery of the said vessel to the Charterer hereunder, the Charterer shall fail to perform any of its duties or obligations, or shall violate any of the prohibitions imposed upon it under this Charter, or if the Charterer shall be dissolved or be adjudged a bankrupt, or shall have a petition in bankruptcy filed against it, or shall make a general assignment for creditors, or if a receiver or receivers shall be appointed for the Charterer, the Owner may, without prejudice to any other rights which it may have under this Charter, withdraw and retake the said vessel, wherever the same may be found, whether upon the high seas or in any port, harbor, or other place and without prior

demand and without legal process, and for that purpose may enter upon any dock, pier, or other premises where the vessel may be and take possession thereof. 32. REDELIVERY NOTICE. The Charterer shall give the Owner at least ten days' notice of expected redelivery and redelivery port. 33. LICENSE FOR ADDITIONAL EQUIPMENT. In consideration of this Charter and the charter, between the same parties, of the Vessel Jax-San Juan Bridge, and so long as such Charters are in full force and effect and Charterer is not in default to Owner under this Charter or any other charter or agreement between the parties, Charterer is hereby granted a license to use Owner's ramps, loading structures and other associated equipment at Charterer's ports in Jacksonville, Florida and San Juan, Puerto Rico at no additional charge. IN WITNESS WHEREOF, the parties hereto have caused this Charter to be executed by their duly authorized representatives in duplicate originals as of the date first written above. KADAMPANATTU CORP. TRAILER BRIDGE, INC. As Owner As Charterer
/s/ John D. McCown By: Vice President /s/ John D. McCown By: Secretary

Exhibit A (Fill in name and address of supplier/vendor/contractor) Re: Barge ____________________ Notice of No Lien Rights Gentlemen: The captioned vessel is on charter from its owner, Kadampanattu Corp., to Trailer Bridge, Inc. (Charterer) who has no right, power, or authority to incur or create any liens against the said vessel, nor is Charterer authorized to act as agent for the vessel, its owner, its operator, or its master and crew with respect to the ordering or purchasing of goods, services, supplies or necessaries for the vessel. Please be hereby advised that any goods, services, supplies or necessaries which you may provide or deliver to the vessel at the order or request of Charterer were ordered or requested NOT ON THE CREDIT OF THE VESSEL. Therefore, your delivering or providing of any such goods, services, supplies or necessaries to the vessel, in light of this notice to you constitutes a waiver by you of any and all lien rights against the vessel. provide or deliver to the vessel at the order or request of Charterer Very Truly Yours, TRAILER BRIDGE, INC.

EXHIBIT 10B(i) AMENDMENT TO BAREBOAT CHARTER PARTY THIS AMENDMENT TO BAREBOAT CHARTER PARTY, made as of this 31st day of December, 1994, (hereinafter referred to as the "Amendment") by and between Kadampanattu Corp. (K Corp) and Allen Freight Trailer Bridge, Inc. (AFTB). WHEREAS, in February, 1992 K Corp and AFTB entered into two (2) identical Bareboat Charter Party agreements for the vessels JAX-SAN JUAN BRIDGE and SAN JUAN-JAX BRIDGE; and WHEREAS, such Bareboat Charter Party agreements have been extended each year for an additional year. In consideration of the mutual covenants and agreements to be kept and performed on the part of said parties hereto, respectively as herein stated, K Corp and AFTB hereby agree as follows: I. Amendment to section entitled "Period" The section entitled "Period" of each Bareboat Charter Party is hereby amended by deleting the text thereof in its entirety and substituting the following therefor: PERIOD. This Charter Party shall remain in effect until March 1, 1997 at which time it may be extended by mutual agreement of the parties. Except, and solely to the extent that the same has been specifically modified, amended or supplemented hereby, by this Amendment, all of the terms and conditions of the Bareboat Charter Party shall continue in full force and effect. IN WITNESS WHEREOF, K Corp and AFTB have caused this Amendment to be executed as of the date and year first above written. KADAMPANATTU CORP.
By: /s/ John D. McCown John D. McCown

ALLEN FREIGHT TRAILER BRIDGE, INC.
By: /s/ Ralph W. Heim Ralph W. Heim Executive Vice President

EXHIBIT 10B(ii) SECOND AMENDMENT TO BAREBOAT CHARTER PARTY THIS SECOND AMENDMENT TO BAREBOAT CHARTER PARTY, made as of this day of October, 1995, (hereinafter referred to as the "Second Amendment") by and between Kadampanattu Corp. (K Corp) and Trailer Bridge, Inc., (at the time of the Amendment dated December 31, 1994, Allen Freight Trailer Bridge, Inc.) (Trailer Bridge). WHEREAS, in February, 1992 K Corp and Trailer Bridge entered into two (2) identical Bareboat Charter Party agreements for the vessels JAX-SAN JUAN BRIDGE and SAN JUAN-JAX BRIDGE; and WHEREAS, such Bareboat Charter Party agreements were extended each year for an additional year; and WHEREAS, in December, 1994 K Corp and Trailer Bridge entered into an amendment to extend such Bareboat Charter Party agreements to March 1, 1997; and WHEREAS, K Corp presently intends to modify each of the JAX-SAN JUAN BRIDGE and SAN JUAN-JAX BRIDGE to add a mid-body section to increase each vessels capacity; and WHEREAS, Trailer Bridge wishes K Corp to so modify the vessels. In consideration of the mutual covenants and agreements to be kept and performed on the part of said parties hereto, respectively as herein stated, K Corp and Trailer Bridge hereby agree as follows: I. Amendment to section entitled "Period" The section entitled "Period" of each Bareboat Charter Party is hereby amended by deleting the text thereof in its entirety and substituting the following therefor: PERIOD. This Charter Party shall remain in effect until the later of March 1, 1997 and the date upon which the Construction and Term Loan Agreement between K Corp and The First National Bank of Boston terminates and all Loans and other obligations thereunder have been indefeasibly and irrevocably repaid in full, in cash, at which time this Charter Party may be extended by mutual agreement of the parties. II. Amendment to section entitled "Hire" The section entitled "Hire" of each Bareboat Charter Party is hereby amended by adding the following after the first sentence of the section: The Charterer shall pay to the Owner for the use of the said vessel after the vessel has been modified, at the rate of Ten Thousand Five Hundred Dollars per day commencing on and from the day and hour the vessel is redelivered in its modified state to the Charterer, and continuing until the vessel is redelivered to Owner or Charterer gives notice of an increase in such daily rate. Except, and solely to the extent that the same has been specifically modified, amended or supplemented hereby, by this Second Amendment, all of the terms and conditions of the Bareboat Charter Party shall continue in full force and effect. IN WITNESS WHEREOF, K Corp and Trailer Bridge have caused this Second Amendment to be executed as of the date and year first above written.
KADAMPANATTU CORP. By: /s/ John D. McCown John D. McCown President TRAILER BRIDGE, INC. By: /s/ John D. McCown John D. McCown Vice President

EXHIBIT 10B(iii) THIRD AMENDMENT TO BAREBOAT CHARTER PARTY THIS THIRD AMENDMENT TO BAREBOAT CHARTER PARTY, made as of this 1st day of March, 1997 (hereinafter referred to as the "Third Amendment") by and between Kadampanattu Corp. (K Corp) and Trailer Bridge, Inc. (Trailer Bridge). WHEREAS, in February, 1992 K Corp and Trailer Bridge entered into two (2) identical Bareboat Charter Party agreements for the vessels JAX-SAN JUAN BRIDGE and SAN JUAN-JAX BRIDGE; and WHEREAS, such Bareboat Charter Party agreements were extended each year for an additional year; and WHEREAS, in December, 1994 K Corp and Trailer Bridge entered into an amendment to extend such Bareboat Charter Party agreements to March 1, 1997; and WHEREAS, in October, 1995 K Corp and Trailer Bridge entered into an amendment to extend such Bareboat Charter Party agreements until the later of March 1, 1997 and the date upon which the Construction and Term Loan Agreement between K Corp and The First National Bank of Boston terminates and all Loans and other obligations thereunder have been indefeasibly and irrevocably repaid in full, in cash, In consideration of the mutual covenants and agreements to be kept and performed on the part of said parties hereto, respectively as herein stated, K Corp and Trailer Bridge hereby agree as follows: 1. Amendment to section entitled "Period". The section entitled "Period" of each Bareboat Charter Party is hereby amended by deleting the text thereof in its entirety and substituting the following therefor: PERIOD. This Charter Party shall remain in effect until the later of September 1, 2010 or the date upon which the Construction and Term Loan Agreement between K Corp and The First National Bank of Boston terminates and all Loans and other obligations thereunder have been indefeasibly and irrevocably repaid in full, in cash, at which time this Charter Party may be extended by mutual agreement of the parties. At the later of September 1, 2010 or the date upon which the Construction and Term Loan Agreement between K Corp and The First National Bank of Boston terminates and all Loans and other obligations thereunder have been indefeasibly and irrevocably repaid in full, in cash. Trailer Bridge shall have the right, but not the obligation, by giving written notice to K Corp, not more than 120 days but not less than 60 days prior to the expiration of the term of this Charter Party, to extend this Charter Party until September 1, 2018 at the rate of ELEVEN THOUSAND DOLLARS AND NO CENTS ($11,000.00) per day for each vessel or, alternatively, Trailer Bridge, may purchase the vessel from K Corp at its then fair market value. Except, and solely to the extent that the same has been specifically modified, amended or supplemented hereby, by this Third Amendment, all of the terms and conditions of the Bareboat Charter Party shall continue in full force and effect. IN WITNESS WHEREOF, K Corp and Trailer Bridge have caused this Third Amendment to be executed as of the date and year first above written. KADAMPANATTU CORP.
By: /s/ John D. McCown John D. McCown, President

TRAILER BRIDGE, INC.
By: /s/ John D. McCown John D. McCown, Chairman

EXHIBIT 10C PROMISSORY NOTE $ 4,569,131.00 January 1, 1997 FOR VALUE RECEIVED, Trailer Bridge, Inc. ("TBI") promises to pay to the order of Kadampanattu Corp., the principal amount of Four Million, Five Hundred Sixty Nine Thousand, One Hundred Thirty One Dollars and no cents ($4,653,131.00), with interest from the date hereof on the unpaid principal at the rate of eight percent (8.00%) per annum. The unpaid principal and accrued interest shall be payable in full on December 31, 1997, at which time the unpaid principal and interest shall be due in full. TBI may, at its election, prepay without penalty any or all of the unpaid principal hereof. Upon such prepayment TBI shall also pay the interest accrued on the principal amount to the date of the prepayment. All payments on this Note shall be applied first to fees, expenses and other amounts due hereunder (excluding principal and interest); second to accrued interest; and third to outstanding principal. Prepayments shall be applied to installments of principal in the inverse order of the dates on which they become due. Amounts prepaid may not be reborrowed. Overdue payments of principal (whether at maturity, by acceleration or otherwise) and, to the extent permitted by applicable law, overdue interest and other amounts due hereunder shall bear interest from and including the due date thereof until paid, compounded daily and payable on demand, at a rate of ten percent (10.00%). All sums due hereunder shall be payable to Kadampanattu Corp. at the following address: 500 Park Avenue New York, New York 10022 or at such other place as Kadampanattu Corp. may specify in writing. In the event TBI shall default in payment of any installment of principal or interest when the same shall become due and payable hereunder and such default shall not be cured within ten (10) days, then the holders of this Note may, at their option, declare the entire principal of this Note due and payable, together with all accrued interest thereon. It is hereby agreed that in the event TBI shall become insolvent, or file a voluntary petition in bankruptcy, or if a petition in bankruptcy shall be filed against it, or if any application for receivership of any nature be filed or a receiver be appointed of its property or assets, then the principal of this Note and all unpaid interest shall forthwith be due and payable. In the event of a default described above TBI will pay upon demand all expenses of Kadampanattu Corp. in connection with the default by TBI, collection, waiver or amendment of the obligations hereunder, or in connection with Kadampanattu Corp.'s exercise, preservation or enforcement of any of its rights or remedies or options hereunder, including fees of outside legal counsel or the allocation cost of in house legal counsel. Notice of dishonor, protest and notice of protest are hereby waived. This Note is governed by the law of the State of New York without taking into effect its choice of law provisions. This Note is non-negotiable. Dated: January 1, 1997. TRAILER BRIDGE, INC.
/s/ Mark A. Tanner By: Mark A. Tanner Its: Vice President

EXHIBIT 10D CONSTRUCTION AND TERM LOAN AGREEMENT dated as of October 13, 1995 among KADAMPANATTU CORP., TRAILER BRIDGE, INC. and THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on Schedule 1 hereto (the "Banks"), and The First National Bank of Boston, as agent for the Banks

TABLE OF CONTENTS
Schedules Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule 1 1.1(b) 1.1(c) 7.2 7.3 7.5(a) 7.18 7.19 7.20 7.24 9.1 9.2 9.3 Commitments; Commitment Percentages Maximum Cumulative Advance Amounts Project Budgets Governmental Approvals Title to Properties; Leases Material Changes Environmental Matters Joint Ventures Real Property Insurance Permitted Indebtedness Permitted Liens Permitted Investments Exhibits Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit Exhibit A B C D E F G H I J K L M N Form of Construction Loan Note Form of Term Note Form of Construction Advance Request Charter Plans and Specifications Form of Security Agreement Form of Guaranty Form of Assignment of Contract Form of Assignment of Insurance Form of Charter Assignment Form of Contract Collateral Assignment Form of First Preferred Ship Mortgage Principal Financial Officer Certificate Form of Assignment and Acceptance

CONSTRUCTION AND TERM LOAN AGREEMENT

This CONSTRUCTION AND TERM LOAN AGREEMENT is made as of October 13, 1995, by and among KADAMPANATTU CORP. (the "Borrower") a Delaware corporation having its principal place of business at 500 Park Avenue, New York, New York 10021, TRAILER BRIDGE, INC. (the "Guarantor"), a Delaware corporation having its principal place of business at 9550 Regency Square Boulevard, Suite 500, Jacksonville, Florida 32225 and THE FIRST NATIONAL BANK OF BOSTON, a national banking association and the other lending institutions listed on Schedule 1 and THE FIRST NATIONAL BANK OF BOSTON as agent for itself and such other lending institutions. DEFINITIONS AND RULES OF INTERPRETATION. Definitions. The following terms shall have the meanings set forth in this Section 1 or elsewhere in the provisions of this Credit Agreement referred to below: Adjustment Date. The first day of the month immediately following the month in which a Compliance Certificate is to be delivered by the Borrower pursuant to Section 8.4(d) hereof. Advance(s). Any advances of the Construction Loan or the Term Loan. Affiliate. Any Person that would be considered to be an affiliate of the Borrower under Rule 144(a) of the Rules and Regulations of the Securities and Exchange Commission, as in effect on the date hereof, if the Borrower were issuing securities. Agent. The First National Bank of Boston acting as agent for the Banks. Agent's Head Office. The Agent's head office located at 100 Federal Street, Boston, Massachusetts 02110, or at such other location as the Agent may designate from time to time. Agent's Special Counsel. Bingham, Dana & Gould or such other counsel as may be approved by the Agent. Applicable Margin. For each period commencing on an Adjustment Date through the date immediately preceding the next Adjustment Date (each a "Rate Adjustment Period"), the Applicable Margin shall be the applicable margin set forth below with respect to the Borrower's Interest Coverage Ratio as determined for the fiscal period of the Borrower ending on the fiscal quarter ended immediately preceding the applicable Rate Adjustment Period.
Base Rate Advances 1.75% 1.00% Eurodollar Rate Advances

Interest Coverage Ratio Less than or equal to 3.00:1.00 Greater than 3.00:1.00, but less than or equal to 4.00:1.00 Greater than 4.00:1.00

3.00% 2.00%

0.50%

1.50%

Notwithstanding the foregoing, (a) for Advances outstanding during the period commencing on the Closing Date through the date immediately preceding the first Adjustment Date to occur after the Conversion Date, the Applicable Margin shall be three percent (3%) per annum for Eurodollar Rate Advances and one and three- quarters percent (1 3/4%) per annum for Base Rate Advances, and (b) if at any time after the Conversion Date the Borrower fails to deliver any Compliance Certificate when required by Section 8.4(d) hereof then, for the period commencing on the next Adjustment Date to occur subsequent to such failure through the date immediately following the date on which such Compliance Certificate is delivered, the Applicable Margin shall be the highest Applicable Margin set forth in the table above. Appraisals. The appraisals of the value of each Vessel, determined on a market value basis and performed by Jacques Pierot Jr. & Sons, Inc. or another qualified independent appraiser approved by the Agent. Assignment and Acceptance. See Section 19.1 hereof.

Assignment of Contracts. The collateral assignment of contracts, permits, licenses and approvals executed and delivered by the Borrower to the Agent and substantially in the form of Exhibit H attached hereto. Assignment of Insurance. The collateral assignment of insurance policies executed and delivered by the Borrower to the Agent and substantially on the form of Exhibit I attached hereto. Balance Sheet Date. December 31, 1994. Banks. FNBB and the other lending institutions listed on Schedule 1 hereto and any other Person who becomes an assignee of any rights and obligations of a Bank pursuant to Section 19. Base Rate. The higher of (a) the annual rate of interest announced from time to time by FNBB at its head office in Boston, Massachusetts, as its "base rate" or (b) one-half of one percent (1/2%) above the Federal Funds Effective Rate. For the purposes of this definition, "Federal Funds Effective Rate" shall mean, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three funds brokers of recognized standing selected by the Agent. Base Rate Advance. Any Construction Advance or portion thereof and all or any portion of the Term Loan bearing interest calculated by reference to the Base Rate. Borrower. As defined in the preamble hereto. Builder. Trinity Marine Group, Inc., a Nevada corporation, the owner and operator of the shipyards located in New Orleans, Louisiana and Port Bieneville, Mississippi, which will perform the construction on the Vessels pursuant to the Contract. Business Day. Any day on which banking institutions in Boston, Massachusetts, are open for the transaction of banking business and, in the case of Eurodollar Rate Advances, also a day which is a Eurodollar Business Day. Capital Assets. Fixed assets, both tangible (such as land, buildings, fixtures, machinery and equipment) and intangible (such as patents, copyrights, trademarks, franchises and good will); provided that Capital Assets shall not include any item customarily charged directly to expense or depreciated over a useful life of twelve (12) months or less in accordance with Generally Accepted Accounting Principles. Capital Expenditures. Amounts paid or indebtedness incurred by the Borrower or the Guarantor in connection with the purchase or lease by the Borrower or the Guarantor of Capital Assets that would be required to be capitalized and shown on the balance sheet of such Person in accordance with Generally Accepted Accounting Principles. Capitalized Leases. Leases under which the Borrower or the Guarantor is the lessee or obligor, the discounted future rental payment obligations under which are required to be capitalized on the balance sheet of the lessee or obligor in accordance with Generally Accepted Accounting Principles. CERCLA. See Section 7.18 hereof. Charter. The charter of the Vessels from the Borrower to the Guarantor to operate the Vessels exclusively in the domestic, or Jones Act, trades between the mainland U.S. and Puerto Rico, substantially in the form of Exhibit D attached hereto. Charter Assignment. The collateral assignment of the Charter executed and delivered by the Borrower to the Agent and in substantially the form of Exhibit J attached hereto. Chattel Mortgage. The Chattel Mortgage dated within thirty (30) days of the Closing Date between the Borrower and the Agent, and in form and substance satisfactory to the Agent and the Banks. Closing Date. The first date on which the conditions set forth in Section 11 have been satisfied and the first Construction Advance is to be made. Closing Fee. See Section 5.1. Code. The Internal Revenue Code of 1986. Collateral. All of the property, rights and interests of the Borrower and the Builder that are or are intended to be subject to the security interests and mortgages created by the Security Documents.

Combined or combined. With reference to any term defined herein, shall mean that term as applied to the accounts of the Guarantor and the Borrower, combined in accordance with Generally Accepted Accounting Principles. Combined Financial Obligations. With respect to any period, an amount equal to the sum of all payments, whether of principal, interest or other amounts, on Indebtedness that become due or payable or that are to become due and payable during such period pursuant to any agreement or instrument to which the Guarantor or the Borrower is a party relating to the borrowing of money or the obtaining of credit or in respect of Capitalized Leases. Demand obligations shall be deemed to be due and payable during any period which such obligations are outstanding. Combined Net Income. The combined net income (or deficit) of the Guarantor and the Borrower, after deduction of all expenses, taxes and other proper charges determined in accordance with Generally Accepted Accounting Principles. Combined Operating Cash Flow. For any period, an amount equal to (a) the sum of (i) Earnings Before Interest and Taxes for such period, plus (ii) depreciation, amortization and all other non-cash charges for such period, less (b) the sum of (i) cash payments for all taxes and Tax Distributions paid during such period, plus (ii) twenty percent (20%) of Capital Expenditures (other than Capital Expenditures made in connection with the Project) made during such period. Combined Tangible Net Worth. Combined Net Worth, less the sum of: (a) the total book value of all assets of the Guarantor and the Borrower properly classified as intangible assets under Generally Accepted Accounting Principles, including such items as good will, the purchase price of acquired assets in excess of the fair market value thereof, trademarks, trade names, service marks, brand names, copyrights, patents and licenses, and rights with respect to the foregoing; plus (b) all amounts representing any write-up in the book value of any assets of the Guarantor and the Borrower resulting from a revaluation thereof subsequent to the Balance Sheet Date; plus (c) investments in and advances to non-Combined Affiliates; plus (d) to the extent otherwise includable in the computation of Combined Tangible Net Worth, any subscriptions receivable. Combined Total Assets. All assets of the Guarantor and the Borrower determined on a combined basis in accordance with Generally Accepted Accounting Principles. Combined Total Liabilities. The sum of (a) all liabilities of the Guarantor and the Borrower determined on a combined basis in accordance with Generally Accepted Accounting Principles, plus (b) all Indebtedness of the Guarantor and the Borrower, whether or not so classified, plus (c) the net present value (applying a ten percent (10%) discount rate thereto) of all future payments due under operating leases of revenue equipment having terms of twelve (12) months or more to which either the Borrower or the Guarantor is a party. Commitment. With respect to each Bank, the amount set forth on Schedule 1 hereto as the amount of such Bank's commitment to make Construction Advances to the Borrower, as the same may be reduced from time to time; or if such commitment is terminated pursuant to the provisions hereof, zero. Commitment Percentage. With respect to each Bank, the percentage set forth on Schedule 1 hereto as such Bank's percentage of the aggregate Commitments of all of the Banks, and with respect to the Term Loan, the percentage amount of each Bank's commitment to make the Term Loan as set forth on Schedule 1 hereto. Compliance Certificate. See Section 8.4(d) hereof. Construction Advance. See Section 2.1 hereof. Construction Advance Request. See Section 2.6 hereof. Construction Documents. The Contract and the Intercreditor Agreement. Construction Inspector. The consulting architect, engineer or inspector appointed by the Borrower and approved by the Majority Banks or, if the Agent or the Majority Banks so elect from time to time, the consulting architect, engineer or inspector appointed by the Agent with the approval of the Majority Banks. Construction Loan. See Section 2.1 hereof. Construction Loan Advance Date. Each of the dates on which a Milestone has been achieved, as set forth on Schedule 1.1(b) hereto, entitling the Borrower to make a Construction Advance Request under Section 2.1. Construction Loan Notes. See Section 2.4 hereof.

Construction Loan Note Record. A Record with respect to the Construction Loan Notes. Contract. The Vessel Repair and Refurbishment Contract dated October 13, 1995, between the Borrower and the Builder, as amended from time to time, providing for the construction to be performed on each Vessel, copies of which have been furnished to the Agent and the Banks. Contract Collateral Assignment. The assignment of the Borrower's right, title and interest in and to (including without limitation, rights to enforce the Shipbuilding Guaranty) the Contract collateral, substantially in the form of Exhibit K attached hereto. Contract Price. The total construction price payable for the work performed on each of the Vessels pursuant to the Contract, provided, however, that in no event shall the Contract Price for either Vessel exceed $10,300,000 without the prior written consent of the Banks. Conversion Date. The earlier of (a) the Project Completion Date and (b) September 30, 1996. Conversion Request. A notice given by the Borrower to the Agent of the Borrower's election to convert or continue an Advance in accordance with Section 2.7. Credit Agreement. This Construction and Term Loan Agreement, including the Schedules and Exhibits hereto. Default. See Section 13 hereof. Distribution. The declaration or payment of any dividend on or in respect of any shares of any class of capital stock of the Borrower or the Guarantor, other than dividends payable solely in shares of common stock of the Borrower or the Guarantor; the purchase, redemption, or other retirement of any shares of any class of capital stock of the Borrower or the Guarantor, directly or indirectly; the return of capital by the Borrower or the Guarantor to its shareholders as such; or any other distribution on or in respect of any shares of any class of capital stock of the Borrower or the Guarantor. Dollars or $. Dollars in lawful currency of the United States of America. Domestic Lending Office. Initially, the office of each Bank designated as such in Schedule 1 hereto; thereafter, such other office of such Bank, if any, located within the United States that will be making or maintaining Base Rate Advances. Drawdown Date. The date on which any Construction Advance or the Term Loan is made or is to be made, and the date on which any Construction Advance or the Term Loan is converted or continued in accordance with Section Section 2.7 and 4.5. Earnings Before Interest and Taxes. The Combined Net Income of the Guarantor and the Borrower for any period, after all expenses and other proper charges but before payment or provision for any income taxes, tax distributions or interest expense for such period, determined in accordance with Generally Accepted Accounting Principles, and after eliminating therefrom all extraordinary nonrecurring items of income (or deficit). Eligible Assignee. Any of (a) a commercial bank or finance company organized under the laws of the United States, or any State thereof or the District of Columbia, and having total assets in excess of $1,000,000,000; (b) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof or the District of Columbia, and having a net worth of at least $100,000,000, calculated in accordance with Generally Accepted Accounting Principles; (c) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having total assets in excess of $1,000,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; (d) the central bank of any country which is a member of the OECD; and (e) if, but only if, an Event of Default has occurred and is continuing, any other bank, insurance company, commercial finance company or other financial institution or other Person approved by the Agent, such approval not to be unreasonably withheld. Employee Benefit Plan. Any employee benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Multiemployer Plan. Environmental Laws. See Section 7.18(a) hereof. ERISA. The Employee Retirement Income Security Act of 1974. ERISA Affiliate. Any Person which is treated as a single employer with the Borrower under Section 414 of the Code. ERISA Reportable Event. A reportable event with respect to a Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the regulations promulgated thereunder as to which the requirement of notice has not been waived.

Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate Advance, the maximum rate (expressed as a decimal) at which any lender subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against "Eurocurrency Liabilities" (as that term is used in Regulation D), if such liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on and as of the effective date of any change in the Eurocurrency Reserve Rate. Eurodollar Business Day. Any day on which commercial banks are open for international business (including dealings in Dollar deposits) in London or such other eurodollar interbank market as may be selected by the Agent in its sole discretion acting in good faith. Eurodollar Lending Office. Initially, the office of each Bank designated as such in Schedule 1 hereto; thereafter, such other office of such Bank, if any, that shall be making or maintaining Eurodollar Rate Advances. Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate Advance, the rate of interest equal to (a) the rate per annum (rounded upwards to the nearest 1/16 of one percent) at which the Reference Bank's Eurodollar Lending Office is offered Dollar deposits two (2) Eurodollar Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations of such Eurodollar Lending Office are customarily conducted at or about 10:00 a.m., Boston time, for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Rate Advance of the Reference Bank to which such Interest Period applies, divided by (b) a number equal to 1.00 minus the Eurocurrency Reserve Rate, if applicable. Eurodollar Rate Advances. Any Construction Advance or portion thereof or all or any portion of the Term Loan bearing interest calculated by reference to the Eurodollar Rate. Event of Default. See Section 13 hereof. Fee Letter. See Section 5.2 hereof. First Preferred Fleet Mortgage. The First Preferred Fleet Mortgage dated as of the date hereof from the Borrower to the Agent and substantially in the form of Exhibit L attached hereto. FNBB. The First National Bank of Boston in its individual capacity. Generally Accepted Accounting Principles. (a) When used in Section 10, whether directly or indirectly through reference to a capitalized term used therein, means (i) principles that are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and (ii) to the extent consistent with such principles, the accounting practice of the Borrower and the Guarantor reflected in their financial statements for the year ended on the Balance Sheet Date, and (b) when used in general, other than as provided above, means principles that are (i) consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time and (ii) consistently applied with past financial statements of the Borrower and the Guarantor adopting the same principles, provided that in each case referred to in this definition of "Generally Accepted Accounting Principles" a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in Generally Accepted Accounting Principles) as to financial statements in which such principles have been properly applied. Governmental Authority. The United States of America, any State thereof, any political subdivision thereof, and any agency, authority, department, commission, board, bureau, or instrumentality of any of them (including without limitation the Federal Maritime Commission, the Maritime Administration of the United States Department of Transportation and the United States Coast Guard). Guaranteed Pension Plan. Any employee pension benefit plan within the meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate the benefits of which are guaranteed on termination in full or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer Plan. Guarantor. As defined in the preamble hereto. Guaranty. The Guaranty dated as of the date hereof made by the Guarantor in favor of the Banks and the Agent pursuant to which the Guarantor guaranties to the Banks and the Agent the payment and performance of the Obligations and in substantially the form of Exhibit G attached hereto. Hazardous Substances. See Section 7.18(b) hereof. Indebtedness. All obligations, contingent and otherwise, that in accordance with Generally Accepted Accounting Principles should be classified upon the obligor's balance sheet as liabilities, or to which reference should be made by footnotes thereto, including in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indirect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured

thereby shall have been assumed; and (c) all guarantees, endorsements and other contingent obligations whether direct or indirect in respect of indebtedness of others, including any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit. Intercreditor Agreement. The Intercreditor Agreement, dated as of the date hereof among the Banks, the Agent, the Builder, the Shipbuilding Guarantor, the Guarantor and the Borrower and in form and substance satisfactory to the Banks and the Agent. Interest Coverage Ratio. As at any date of determination, the ratio of (a) Earnings Before Interest and Taxes for the period of four (4) consecutive fiscal quarters then ended to (b) the aggregate amount of all interest expense for such period. Interest Payment Date. (a) As to any Base Rate Advance, the last day of the calendar quarter which includes the Drawdown Date thereof; and (b) as to any Eurodollar Rate Advance in respect of which the Interest Period is (i) three (3) months or less, the last day of such Interest Period and (ii) more than three (3) months, the date that is three (3) months from the first day of such Interest Period and, in addition, the last day of such Interest Period. Interest Period. With respect to each Construction Advance or all or any relevant portion of the Term Loan, (a) initially, the period commencing on the Drawdown Date of such Advance and ending on the last day of one of the periods set forth below, as selected by the Borrower in a Construction Advance Request (i) for any Base Rate Advance, the last day of the calendar quarter; and (ii) for any Eurodollar Rate Advance, 1, 2, 3, or 6 months; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such and ending on the last day of one of the periods set forth above, as selected by the Borrower in a Conversion Request; provided that all of the foregoing provisions relating to Interest Periods are subject to the following: (a) if any Interest Period with respect to a Eurodollar Rate Advance would otherwise end on a day that is not a Eurodollar Business Day, that Interest Period shall be extended to the next succeeding Eurodollar Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Eurodollar Business Day; (b) if any Interest Period with respect to a Base Rate Advance would end on a day that is not a Business Day, that Interest Period shall end on the next succeeding Business Day; (c) if the Borrower shall fail to give notice as provided in Section 2.7, the Borrower shall be deemed to have requested a conversion of the affected Eurodollar Rate Advance to a Base Rate Advance and the continuance of all Base Rate Advances as Base Rate Advances on the last day of the then current Interest Period with respect thereto; (d) any Interest Period that begins on the last Eurodollar Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Eurodollar Business Day of a calendar month; and (e) any Interest Period relating to any Eurodollar Rate Advance that would otherwise extend beyond the Term Loan Maturity Date (if comprising the Term Loan or a portion thereof) shall end on the Term Loan Maturity Date. Investments. All expenditures made and all liabilities incurred (contingently or otherwise) for the acquisition of stock or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under Indebtedness), or obligations of, any Person. In determining the aggregate amount of Investments outstanding at any particular time: (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding; (b) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (c) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemption, retirement, repayment, liquidating dividend or liquidating distribution); (d) there shall not be deducted in respect of any Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (b) may be deducted when paid; and (e) there shall not be deducted from the aggregate amount of Investments any decrease in the value thereof. Loan Documents. This Credit Agreement, the Notes, the Fee Letter, the Intercreditor Agreement and the Security Documents. Majority Banks. As of any date, the Banks holding at least sixty-six and two thirds percent (66 2/3%) of the outstanding principal amount of the Notes on such date; and if no such principal is outstanding, the Banks whose aggregate Commitments constitutes at least sixty-six and two thirds percent (66 2/3%) of the Total Commitment. Maximum Cumulative Advance Amount. With respect to any Construction Loan Advance Date, the amount set forth in Schedule 1.1(b) opposite a Milestone as the maximum aggregate amount of the Total Commitment available to have been and to be utilized as of such Construction Loan Advance Date to fund the Project Costs associated with the achievement of such Milestone (including without limitation

progress payments under the Contract and such increases in the scheduled progress payments as arise from change orders or other adjustments strictly in accordance with the provisions of the Contract and approved by the Banks). Milestone Amount. At each Construction Loan Advance Date, an amount equal to (a) the Maximum Cumulative Advance Amount for such Construction Loan Advance Date less (b) the Construction Loan outstanding, provided, however, the Milestone Amount for any Construction Advance shall never exceed the amount set forth in Schedule 1.1(b) opposite a Milestone as the maximum aggregate amount needed to fund the Project Costs associated with achieving such Milestone. Milestones. Those stages in the construction and fitting of each of the Vessels set forth on Schedule 1.1(b) hereto, the achievement of which shall entitle the Borrower to make a Construction Advance Request pursuant to Section 2.1. Multiemployer Plan. Any multiemployer plan within the meaning of Section 3(37) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate. Net Worth. The excess of (a) all assets of a Person determined on a consolidated basis in accordance with Generally Accepted Accounting Principles less (b) all liabilities of a Person determined on a consolidated basis in accordance with generally accepted account principles and all Indebtedness of such Person, whether or not so classified. Notes. The Term Notes and the Construction Loan Notes. Obligations. All indebtedness, obligations and liabilities of any of the Borrower, the Guarantor and/or their affiliates to any of the Banks and the Agent, individually or collectively, existing on the date of this Credit Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Credit Agreement or any of the other Loan Documents or in respect of any of the Advances or any of the Notes or other instruments at any time evidencing any thereof. Outstanding. With respect to the Advances, the aggregate unpaid principal thereof as of any date of determination. PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of ERISA and any successor entity or entities having similar responsibilities. Perfection Certificate. The Perfection Certificate as defined in the Security Agreement. Performance Bond. The dual-obligee payment and performance bond relating to the Builder, naming the Borrower and the Agent (for the benefit of the Agent and the Banks) as co-obligees, issued by a licensed surety company or companies acceptable to the Agent and the Banks in an amount of not less than the Contract Price, such performance bond to specify that the interest of the Agent (for the benefit of the Agent and the Banks) shall be in preference to and have priority over the Borrower and any other Person claiming under, from or through the Borrower and that any and all payments thereunder shall be made directly to the Agent (for the benefit of the Agent and the Banks) so long as any Obligations remain Outstanding and unpaid and the Banks have any commitment to make advances under the Credit Agreement. Permitted Liens. Liens, security interests and other encumbrances permitted by Section 9.2. Person. Any individual, corporation, partnership, trust, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivision thereof. Plans and Specifications. All plans and specifications in connection with the construction and design of the expansion to be performed on each Vessel, a copy of which are attached hereto as Exhibit E. Project. As the context may require, the design, construction and finish of the expansion of the Vessels and decorative work and installation of fixtures, furniture and equipment of and on each Vessel and of all of the property represented by each such Vessel prior to the Project Completion Date. Project Approvals. All approvals, consents, waivers, orders, agreements, acknowledgment, authorizations, permits and licenses required under applicable Requirements, or otherwise necessary or appropriate, for the construction and equipping of each Vessel, and the use, occupancy and operation of each such Vessel following completion of its construction, whether obtained from a Governmental Authority or any other Person. Project Budget. The estimated Project Costs as set forth on Schedule 1.1(c) hereto. Project Completion Date. The date on which all work (other than warranty and other post completion obligations) under the Contract for both Vessels has been performed in all material respects, and both Vessels have resumed commercial operation or are in all material respects ready to resume commercial operation.

Project Costs. The total cost to complete the Project, including the Contract Price, costs and expenses under and associated with the Contract, architects' fees and miscellaneous fees and expenses as set forth in the Project Budget; provided, however, that in no event shall the aggregate amount of such Project Costs for each Vessel exceed $10,550,000. Ramp. That portion of the Borrower's personal property located Puerto Rico which constitutes the ramps for the Vessels, all as more fully described in the Chattel Mortgage. Rate Adjustment Period. As defined in the definition of "Applicable Margin". Real Estate. All real property at any time owned or leased (as lessee or sublessee) by the Borrower or the Guarantor. Record. The grid attached to a Note, or the continuation of such grid, or any other similar record, including computer records, maintained by any Bank with respect to any Advance referred to in such Note. Reference Bank. FNBB. Rental Obligations. All present or future obligations of the Borrower or the Guarantor under any rental agreements or leases of real or personal property, other than (a) obligations that can be terminated by the giving of notice without liability to the Guarantor or the Borrower in excess of the liability for rent due as of the date on which such notice is given and under which no penalty or premium is paid as a result of any such termination, and (b) obligations in respect of Capitalized Leases. Requirements. Any law, ordinance, code, order, rule or regulation of any Governmental Authority relating in any way to the construction and ownership of either Vessel, or the use, occupancy and operation of such Vessel following the completion of its construction. Security Agreement. The Security Agreement dated as of the date hereof between the Borrower and the Agent and substantially in the form of Exhibit F attached hereto. Security Documents. The Guaranty, the Assignment of Insurance, the Contract Collateral Assignment, the Assignment of Contracts, the Chattel Mortgage, the Charter Assignment, the Louisianna Security Agreement, the First Preferred Fleet Mortgage, and the Shipbuilding Guaranty. Shipbuilding Guarantor. Trinity Industries, Inc., a Delaware corporation. Shipbuilding Guaranty. See Section 6 hereof. Strong/American. The integrated tug/barge vessels owned by the Borrower know as the Strong/American, official Nos. 598665 and 678752, respectively, operated as a U.S. flag vessels. Subsidiary. Any corporation, association, trust, or other business entity of which the designated parent shall at any time own directly or indirectly through a Subsidiary or Subsidiaries at least a majority (by number of votes) of the outstanding Voting Stock. Tax Distributions. For any Person, the lesser of (a) total Distributions made in each fiscal year (other than those Distributions set forth on Schedule 7.5(a) and (b) thirty-eight percent (38%) of Combined Net Income for each fiscal year. Term Loan. The Term Loan made or to be made by the Banks to the Borrower on the Conversion Date as contemplated by Section 4 hereof. Term Loan Maturity Date. June 30, 2003. Term Notes. See Section 4.1 hereof. Term Note Record. A Record with respect to a Term Note. Total Commitment. The sum of the Commitments of the Banks, as in effect from time to time. Type. As to any Advance its nature as a Base Rate Advance or a Eurodollar Rate Advance. Vessels. The two roll-on roll-off barges known as the Jax-San Juan Bridge, Official No. 667879 and the San Juan-Jax Bridge, Official No. 667317, each configured to carry 267 48-foot over-the-road trailers, which barges are to be reconstructed with mid-bodies to be designed, engineered and built in accordance with the Plans and Specifications and which will continue to operated as U.S. flag barges, each to be home ported in New York, New York. Voting Stock. Stock or similar interests, of any class or classes (however designated), the holders of which are at the time entitled, as such holders, to vote for the election of a majority of the directors (or persons performing similar functions) of the corporation, association, trust or other business entity involved, whether or not the right so to vote exists by reason of the happening of a contingency.

Rules of Interpretation. (a) A reference to any document or agreement shall include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and the terms of this Credit Agreement. (b) The singular includes the plural and the plural includes the singular. (c) A reference to any law includes any amendment or modification to such law. (d) A reference to any Person includes its permitted successors and permitted assigns. (e) Accounting terms not otherwise defined herein have the meanings assigned to them by Generally Accepted Accounting Principles applied on a consistent basis by the accounting entity to which they refer. (f) The words "include", "includes" and "including" are not limiting. (g) All terms not specifically defined herein or by Generally Accepted Accounting Principles, which terms are defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts, have the meanings assigned to them therein, with the term "instrument" being that defined under Article 9 of the Uniform Commercial Code. (h) Reference to a particular "Section " refers to that section of this Credit Agreement unless otherwise indicated. (i) The words "herein", "hereof", "hereunder" and words of like import shall refer to this Credit Agreement as a whole and not to any particular section or subdivision of this Credit Agreement. THE CONSTRUCTION LOAN. Agreement to Make Construction Advances. Subject to the terms and conditions set forth in this Credit Agreement, each of the Banks severally agrees to advance to the Borrower (a) on each Construction Loan Advance Date, upon notice by the Borrower to the Agent given in accordance with Section 2.6 hereof, an amount equal to such Bank's Commitment Percentage multiplied by the lesser of (i) the Construction Advance requested in such notice or (ii) the Milestone Amount, provided that the sum of the Outstanding amount of all Construction Advances made by all Banks to the Borrower pursuant to this Section 2.1 (after giving effect to all amounts requested) shall not at any time exceed the Total Commitment and, provided further, the proceeds of such Construction Advance shall be used to finance the Project Costs associated with achieving such Milestone, and (b) on the Closing Date, upon notice by the Borrower to the Agent given in accordance with Section 2.6 hereof, an amount equal to such Bank's Commitment Percentage of the Construction Advance requested in such notice, provided that the sum of the Outstanding amount of all Construction Advances made by all Banks to the Borrower pursuant to this Section 2.1 (after giving effect to all amounts requested) shall not at any time exceed the Total Commitment and, provided further, the proceeds of such Construction Advance requested pursuant to this Section 2.1(b) shall be used to refinance existing Indebtedness of the Borrower owing to Greyrock Financial in an aggregate amount not to exceed $5,000,000, provided that the sum of the Outstanding amount of all Construction Advances made by all Banks to the Borrower pursuant to this Section 2.1 (after giving effect to all amounts requested) shall not at any time exceed the Total Commitment. The aggregate principal amount requested pursuant to Section 2.6 hereof to be advanced by the Banks to the Borrower on any given Construction Loan Advance Date is referred to herein, in each instance, as a "Construction Advance", and the aggregate cumulative principal amount of all sums advanced by the Banks to the Borrower from time to time pursuant to this Section 2.1 is referred to herein as the "Construction Loan". Each Construction Advance shall be made pro rata in accordance with each Bank's Commitment Percentage. Each request for a Construction Advance hereunder shall constitute a representation and warranty by the Borrower that the conditions set forth in Section 11 and Section 12 hereof, in the case of the initial Construction Advance to be made on the Closing Date, and Section 12 hereof, in the case of all other Construction Advances, have been satisfied on the date of such request. Commitment Fee. The Borrower agrees to pay to the Agent for the accounts of the Banks in accordance with their respective Commitment Percentages a commitment fee calculated at the rate of one-half of one percent (1/2%) per annum on the average daily amount during each calendar quarter or portion thereof from the Closing Date to the Conversion Date by which the Total Commitment exceeds the Outstanding amount of the Construction Loan during such calendar quarter. The commitment fee shall be payable quarterly in arrears on the first day of each calendar quarter for the immediately preceding calendar quarter commencing on the first such date following the date hereof, with a final payment on the Conversion Date or any earlier date on which the Commitments shall terminate. Reduction of Total Commitment.

The Borrower shall have the right at any time and from time to time upon three (3) Business Days prior written notice to the Agent to reduce by $5,000,000 or an integral multiple thereof or terminate entirely the unborrowed portion of the Total Commitment, whereupon the Commitments of the Banks shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice or, as the case may be, terminated. In the case of a reduction of the Total Commitment, the Maximum Cumulative Advance Amount for each of the remaining Construction Loan Advance Dates shall be reduced pro rata as a result of such reduction of the Total Commitment. Promptly after receiving any notice of the Borrower delivered pursuant to this Section 2.3, the Agent will notify the Banks of the substance thereof. Upon the effective date of any such reduction or termination, the Borrower shall pay to the Agent for the respective accounts of the Banks the full amount of any commitment fee then accrued on the amount of the reduction. No reduction of the Commitments may be reinstated. The Notes. The Construction Loan shall be evidenced by separate promissory notes of the Borrower in substantially the form of Exhibit A attached hereto (each a "Construction Loan Note"), dated as of the Closing Date and completed with appropriate insertions. One Construction Loan Note shall be payable to the order of each Bank in a principal amount equal to such Bank's Commitment or, if less, the Outstanding amount of all Construction Loan Advances made by such Bank, plus interest accrued thereon, as set forth below. The Borrower irrevocably authorizes each Bank to make or cause to be made, at or about the time of the Drawdown Date of any Construction Advance or at the time of receipt of any payment of principal on such Bank's Construction Loan Note, an appropriate notation on such Bank's Construction Loan Note Record reflecting the making of such Construction Advance or (as the case may be) the receipt of such payment. The Outstanding amount of the Construction Advances set forth on such Bank's Construction Loan Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to such Bank, but the failure to record, or any error in so recording, any such amount on such Bank's Construction Loan Note Record shall not limit or otherwise affect the obligations of the Borrower hereunder or under any Construction Loan Note to make payments of principal of or interest on any Construction Loan Note when due. Interest on Construction Advances. Except as otherwise provided in Section 5.10, (a) Each Base Rate Advance shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto at the rate per annum equal to the Base Rate plus the Applicable Margin. (b) Each Eurodollar Rate Advance shall bear interest for the period commencing with the Drawdown Date thereof and ending on the last day of the Interest Period with respect thereto at the rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin. (c) The Borrower promises to pay interest on each Construction Advance in arrears on each Interest Payment Date with respect thereto. Requests for Construction Advances. The Borrower shall give to the Agent written notice in the form of Exhibit C attached hereto (or telephonic notice confirmed in a writing in the form of Exhibit C attached hereto) of each Construction Advance requested hereunder (a "Construction Advance Request") no less than (a) two (2) Business Days prior to any Drawdown Date of any Base Rate Advance or (b) three (3) Eurodollar Business Days prior to any Drawdown Date of any Eurodollar Rate Advance. Each such notice shall specify (i) the principal amount of the Construction Advance; (ii) the amount of the Project Costs associated with the achievement of the Milestone to be funded by the requested Construction Advance (with reference to the Builder's, subcontractor's or supplier's invoices relating to such Project Costs and/or other supporting documentation, a copy of which shall have been delivered to the Agent prior to or together with the Construction Advance Request) or, if such Construction Advance is to fund the repayment of Indebtedness owing to Greyrock Financial existing on the Closing Date, the amount of such Indebtedness; (iii) the aggregate principal amount of the Construction Loan Outstanding after giving effect to the Construction Advance requested; (iv) for Construction Advances requested to pay Project Costs, the Maximum Cumulative Advance Amount pursuant to Schedule 1.1(b) as at the proposed Construction Loan Advance Date, the Milestone Amount as of such Construction Loan Advance Date, and the amount set forth on Schedule 1.1(b) necessary to achieve such Milestone, (v) the Interest Period for such Construction Advance, and (vi) the Type of such Construction Advance. Promptly upon receipt of any such notice, the Agent shall notify the Banks thereof. Each such notice, in the case of a Construction Advance Request requested to pay Project Costs shall be accompanied by a certificate of the Construction Inspector stating that the Milestone relating to the Construction Loan Advance Date has been achieved in compliance with applicable requirements of the Contract, other Vessel contracts, the Construction Documents and this Credit Agreement. Each such notice shall be irrevocable and binding on the Borrower and shall obligate the Borrower to accept from the Banks on the applicable Construction Loan Advance Date the requested Construction Advance provided in such notice. The amount of each Construction Advance requested pursuant to each Construction Loan Request shall be in a minimum aggregate amount of $500,000. Conversion Options. Conversion to Different Type of Construction Advance.

The Borrower may elect from time to time to convert any Outstanding Construction Advance to a Construction Advance of another Type, provided that (a) with respect to any such conversion of a Construction Advance to a Base Rate Advance, the Borrower shall give the Agent at least three (3) Business Days prior written notice of such election; (b) with respect to any such conversion of a Eurodollar Rate Advance into a Construction Advance of another Type, such conversion shall only be made on the last day of the Interest Period with respect thereto; (c) with respect to any such conversion of a Base Rate Advance to a Eurodollar Rate Advance, the Borrower shall give the Agent at least three (3) Eurodollar Business Days prior written notice of such election and (d) no Construction Advance may be converted into a Eurodollar Rate Advance when any Default or Event of Default has occurred and is continuing. On the date on which such conversion is being made each Bank shall take such action as is necessary to transfer its Commitment Percentage of such Construction Advances to its Domestic Lending Office or its Eurodollar Lending Office, as the case may be. All or any part of Outstanding Construction Advances of any Type may be converted as provided herein, provided that partial conversions shall be in an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof. Each Conversion Request relating to the conversion of a Construction Advance to a Eurodollar Rate Advance shall be irrevocable by the Borrower. Continuation of Type of Construction Advance. Any Construction Advances of any Type may be continued as such upon the expiration of an Interest Period with respect thereto by compliance by the Borrower with the notice provisions contained in Section 2.7.1; provided that no Eurodollar Rate Advance may be continued as such when any Default or Event of Default has occurred and is continuing, but shall be automatically converted to a Base Rate Advance on the last day of the first Interest Period relating thereto ending during the continuance of any Default or Event of Default of which the officers of the Agent active upon the Borrower's account have actual knowledge. In the event that the Borrower fails to provide any such notice with respect to the continuation of any Eurodollar Rate Advance as such, then such Eurodollar Rate Advance shall be automatically converted to a Base Rate Advance on the last day of the first Interest Period relating thereto. The Agent shall notify the Banks promptly when any such automatic conversion contemplated by this Section 2.7 is scheduled to occur. Eurodollar Rate Advances. Any conversion to or from Eurodollar Rate Advances shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of all Eurodollar Rate Advances having the same Interest Period shall not be less than $1,000,000 or a whole multiple of $100,000 in excess thereof. Funds for Construction Advances. Funding Procedures. Not later than 11 o'clock a.m. (Boston time) on the proposed Drawdown Date of any Construction Advance, each of the Banks will make available to the Agent, at its Head Office, in immediately available funds, the amount of such Bank's Commitment Percentage of the amount of the requested Construction Advance. Upon receipt from each Bank of such amount, and upon receipt of the documents required by Section Section 11 and 12 and the satisfaction of the other conditions set forth therein, to the extent applicable, the Agent will make available to the Borrower the aggregate amount of such Advances made available to the Agent by the Banks in the manner provided in Section Section 2.8.3 and 2.8.4. The failure or refusal of any Bank to make available to the Agent at the aforesaid time and place on any Drawdown Date the amount of its Commitment Percentage of the requested Construction Advance shall not relieve any other Bank from its several obligation hereunder to make available to the Agent the amount of such other Bank's Commitment Percentage of any requested Construction Advance. Advances by Agent. The Agent may, unless notified to the contrary by any Bank prior to a Drawdown Date, assume that such Bank has made available to the Agent on such Drawdown Date the amount of such Bank's Commitment Percentage of the Construction Advance to be made on such Drawdown Date, and the Agent may (but it shall not be required to), in reliance upon such assumption, make available to the Borrower a corresponding amount. If any Bank makes available to the Agent such amount on a date after such Drawdown Date, such Bank shall pay to the Agent on demand an amount equal to the product of (a) the average computed for the period referred to in clause (c) below, of the weighted average interest rate paid by the Agent for federal funds acquired by the Agent during each day included in such period, times (b) the amount of such Bank's Commitment Percentage of such Construction Advance, times (c) a fraction, the numerator of which is the number of days that elapse from and including such Drawdown Date to the date on which the amount of such Bank's Commitment Percentage of such Construction Advance shall become immediately available to the Agent, and the denominator of which is 365. A statement of the Agent submitted to such Bank with respect to any amounts owing under this paragraph shall be prima facie evidence of the amount due and owing to the Agent by such Bank. If the amount of such Bank's Commitment Percentage of such Construction Advance is not made available to the Agent by such Bank within three (3) Business Days following such Drawdown Date, the Agent shall be entitled to recover such amount from the Borrower on demand, with interest thereon at the rate per annum applicable to the Construction Advance made on such Drawdown Date. Construction Advances to Borrower or Builder.

All Construction Advances made pursuant to this Section 2.8 shall be made, at the sole and absolute discretion of the Agent, either directly to the Borrower or directly to the Builder for deposit in an appropriately designated special bank account, and the execution of this Credit Agreement by the Borrower shall, and hereby does, constitute an irrevocable authorization to disburse the proceeds of the Construction Advances to fund progress payments to the Builder when due, in accordance with Schedule 1.1(b) and the provisions of the Contract. No further authorization from the Borrower shall be necessary to warrant such direct disbursements of the proceeds of the Construction Advances to the Builder and all such disbursements shall satisfy pro tanto the obligations of the Agent and the Banks hereunder and shall be secured by the Security Documents as fully as if made directly to the Borrower. Construction Advances to Others. Upon the occurrence and during the continuance of any Default or Event of Default and following five (5) days prior written notice to the Borrower (provided that such prior notice is not required if in the reasonable opinion of the Agent such prior notice would adversely affect the Collateral or the rights and benefits of the Banks in respect of the Collateral), at the direction of the Majority Banks in their sole discretion, the Agent may disburse all or any portion of the proceeds of any Construction Advance to any Person to whom the Agent in good faith determines payment is due for goods delivered, services rendered or expenditures incurred in connection with the Project, or in order to preserve and protect the Collateral in relation to the Project, and any portion of a Construction Advance so disbursed by the Agent shall be deemed disbursed as of the date on which the Agent makes such disbursement. Subject to the provisions of this paragraph, the execution of this Credit Agreement by the Borrower shall, and hereby does, constitute an irrevocable authorization so to disburse the proceeds of any Construction Advance and no further authorization from the Borrower shall be necessary to warrant such direct disbursements and all such disbursements shall satisfy pro tanto the obligations of the Agent and the Banks hereunder and shall be secured by the Security Documents as fully as if made directly to the Borrower. Advances Pursuant to Contract. Upon the occurrence and during the continuance of any Default or Event of Default and following five (5) days prior written notice to the Borrower (provided that such notice is not required if in the reasonable opinion of the Agent such prior notice would adversely affect the Collateral or the rights and benefits of the Banks in respect of the Collateral), at the direction of the Majority Banks in their sole discretion, the Banks may fund additional Construction Advances to the Builder or any other Person the Banks deem necessary to continue and complete all or a portion of the construction on the Vessels. The execution of this Credit Agreement by the Borrower shall, and hereby does, constitute an irrevocable authorization to make such Construction Advances and disburse the proceeds in accordance with this Section 2.8.5, and such Advances shall be Construction Advances and shall be secured by the Security Documents as fully as if requested directly by the Borrower and made directly to the Borrower. Construction Advances Do Not Constitute a Waiver. No Construction Advance made by the Banks shall constitute a waiver of any of the conditions to the obligation of the Banks to make further Construction Advances nor, in the event the Borrower or the Guarantor fails to satisfy any such condition, shall any such Construction Advance have the effect of precluding the Agent or the Majority Banks from thereafter declaring such failure to satisfy a condition to be an Event of Default (unless the satisfaction of such condition has been waived pursuant to Section 26 hereof). REPAYMENT OF THE CONSTRUCTION LOAN. Maturity. In the event the Construction Loan is not converted into the Term Loan on the Conversion Date, the Borrower promises to pay on the Conversion Date, and there shall become absolutely due and payable on the Conversion Date, the entire unpaid principal balance Outstanding of the Construction Loan on such date, together with any and all accrued and unpaid interest thereon. Mandatory Repayments of Construction Loan. If at any time the Outstanding amount of the Construction Loan exceeds the Total Commitment, then the Borrower shall immediately pay the amount of such excess to the Agent for application to the Construction Loan. Optional Repayments of Construction Loan. The Borrower shall have the right, at its election, to repay the Outstanding amount of the Construction Loan, as a whole or in part, at any time without penalty or premium, provided that the full or partial prepayment of the Outstanding amount of any Eurodollar Rate Advance pursuant to this Section 3.3 may be made only on the last day of the Interest Period relating thereto. The Borrower shall give the Agent, no later than 10:00 a.m., Boston time, at least three (3) Business Days prior written notice, of any proposed repayment pursuant to this Section 3.3 of Base Rate Advances, and four (4) Eurodollar Business Days notice of any proposed repayment pursuant to this Section 3.3 of Eurodollar Rate Advances, in each case, specifying the proposed date of payment of Construction Advances and the principal amount to be paid. Each such partial prepayment of the Construction Loan shall be in an integral multiple of $1,000,000, shall be accompanied by the payment of accrued interest on the principal repaid to the date of payment and shall be applied first to the principal of Base Rate Advances and then to the principal

of Eurodollar Rate Advances. Each partial prepayment shall be allocated among the Banks, in proportion, as nearly as practicable, to the respective unpaid principal amount of each Bank's Note, with adjustments to the extent practicable to equalize any prior repayments not exactly in proportion. THE TERM LOAN. Conversion of Construction Loans; the Term Loan. Subject to the terms and conditions hereinafter set forth, including, without limitation, the satisfaction of the conditions set forth in Section 12 hereof, on the Conversion Date the aggregate amount of the Outstanding Construction Loan shall be converted into a Term Loan in an aggregate principal amount equal to the aggregate Outstanding principal balance of the Construction Loan on that date, held severally by the Banks in accordance with their Commitment Percentages. The Term Loan Outstanding after conversion shall be evidenced by the separate promissory notes of the Borrower in substantially the form of Exhibit B attached hereto (each a "Term Note"), dated as of the Conversion Date and completed with appropriate insertions. One Term Note shall be payable to the order of each Bank in a principal amount equal to such Bank's Commitment Percentage of the Term Loan, plus interest accrued thereon. On the Conversion Date the Borrowers shall pay to the Agent for the pro rata accounts of the Banks all commitment fees and other fees payable to the Agent and the Banks hereunder (if any), and, as soon as reasonably practicable after such payment, each Bank shall surrender to the Borrower its Construction Loan Note against receipt of its Term Note evidencing the amount of the Outstanding Construction Loan so converted. The Term Notes. Each Term Note shall represent the obligation of the Borrower to pay to such Bank such principal amount or, if less, the Outstanding amount of such Bank's Commitment Percentage of the Term Loan, plus interest accrued thereon, as set forth below. The Borrower irrevocably authorizes the Agent to make or cause to be made a notation on the Agent's Term Note Record reflecting the original principal amount of each Bank's Commitment Percentage of the Term Loan and, at or about the time of the Agent's receipt of any principal payment on any Term Note, an appropriate notation on the Term Note Record reflecting such payment. The aggregate unpaid amount set forth on each Term Note Record shall be prima facie evidence of the principal amount thereof owing and unpaid to each Bank, but the failure to record, or any error in so recording, any such amount on the Term Note Record shall not affect the obligations of the Borrower hereunder or under any Term Note to make payments of principal of and interest on any Term Note when due. Schedule of Installment Payments of Principal of Term Loan. The Borrower promises to pay to the Agent for the account of the Banks the principal amount of the Term Loan in (a) twenty (20) consecutive quarterly installments of $750,000, such installments to be due and payable on the last day of each fiscal quarter of the Borrower commencing with the fiscal quarter ending September 30, 1996, and (b) seven (7) consecutive quarterly installments of $1,250,000, such installments to be due and payable on the last day of each fiscal quarter of the Borrower commencing with the fiscal quarter ending September 30, 2001, with a final payment of all remaining Outstanding principal amounts of the Term Loan, together with all accrued and unpaid interest thereon, due and payable on the Term Loan Maturity Date. In addition, the Borrower promises to pay to the Agent for the respective accounts of the Banks those amounts as are required to be paid pursuant to any asset disposition consummated in connection with Section 9.5.2. after the Conversion Date, in the manner and at the times set forth in Section 9.5.2, which amounts shall be applied to the Outstanding Term Loan in the inverse order of maturity. Optional Prepayment of Term Loan. The Borrower shall have the right at any time to prepay the Term Notes on or before the Term Loan Maturity Date, as a whole, or in part, upon not less than three (3) Business Days' prior written notice to the Agent, without premium or penalty, provided that (a) each partial prepayment shall be in a principal amount equal to $3,000,000 or an integral multiple of $1,000,000 in excess thereof, (b) no portion of the Term Loan bearing interest at the Eurodollar Rate may be prepaid pursuant to this Section 4.4 except on the last day of the Interest Period relating thereto and (c) each partial prepayment shall be allocated among the Banks, in proportion, as nearly as practicable, to the respective Outstanding amount of each Bank's Term Note, with adjustments to the extent practicable to equalize any prior prepayments not exactly in proportion. Any prepayment of principal of the Term Loan shall include all interest accrued to the date of prepayment and shall be applied pro rata against the remaining scheduled installments of principal due on the Term Loan. No amount repaid with respect to the Term Loan may be reborrowed. Interest on Term Loan. Interest Rates. Except as otherwise provided in Section 5.10, the Term Loan shall bear interest during each Interest Period relating to all or any portion of the Term Loan at the following rates: (a) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Base Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Base Rate plus the Applicable Margin.

(b) To the extent that all or any portion of the Term Loan bears interest during such Interest Period at the Eurodollar Rate, the Term Loan or such portion shall bear interest during such Interest Period at the rate per annum equal to the Eurodollar Rate then in effect plus the Applicable Margin. (c) The Borrower promises to pay interest on the Term Loan or any portion thereof Outstanding during each Interest Period in arrears on each Interest Payment Date applicable to such Interest Period. Notification by Borrower. The Borrower shall notify the Agent, such notice to be irrevocable, at least two (2) Business Days prior to the Conversion Date if all or any portion of the Term Loan is to bear interest at the Base Rate and at least three (3) Business Days prior to the Conversion Date if all or any portion of the Term Loan is to bear interest at the Eurodollar Rate. After the Term Loan has been made, the provisions of Section 2.7 shall apply mutatis mutandis with respect to all or any portion of the Term Loan so that the Borrower may have the same interest rate options with respect to all or any portion of the Term Loan as it would be entitled to with respect to the Construction Loan, subject to the same limitations as applied to Construction Advances. Amounts, etc. Any portion of the Term Loan bearing interest at the Eurodollar Rate relating to any Interest Period shall be in the amount of $1,000,000 or an integral multiple of $500,000 in excess thereof. No Interest Period relating to the Term Loan or any portion thereof bearing interest at the Eurodollar Rate shall extend beyond the date on which a regularly scheduled installment payment of the principal of the Term Loan is to be made unless a portion of the Term Loan at least equal to such installment payment has an Interest Period ending on such date or is then bearing interest at the Base Rate. CERTAIN GENERAL PROVISIONS. Closing Fee. The Borrower agrees to pay to the Agent on the Closing Date a closing fee (the "Closing Fee") in the amount set forth in the Fee Letter. Funds for Payments. Payments to Agent. All payments of principal, interest, commitment fees and any other amounts due hereunder or under any of the other Loan Documents shall be made to the Agent, for the respective accounts of the Banks and the Agent, at the Agent's Head Office or at such other location in the Boston, Massachusetts, area that the Agent may from time to time designate, in each case in immediately available funds. No Offset, etc. All payments by the Borrower hereunder and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation is imposed upon the Borrower with respect to any amount payable by it hereunder or under any of the other Loan Documents, the Borrower will pay to the Agent, for the account of the Banks or (as the case may be) the Agent, on the date on which such amount is due and payable hereunder or under such other Loan Document, such additional amount in Dollars as shall be necessary to enable the Banks or the Agent to receive the same net amount which the Banks or the Agent would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower hereunder or under such other Loan Document. Computations. All computations of interest on the Base Rate Advances and of commitment or other fees shall be based on a 365-day year and paid for the actual number of days elapsed. All computations of interest on the Eurodollar Rate Advances shall be based on a 360-day year and paid for the actual number of days elapsed. Except as otherwise provided in the definition of the term "Interest Period" with respect to Eurodollar Rate Advances, whenever a payment hereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The Outstanding amount of the Advances as reflected on the Records from time to time shall be prima facie evidence of the amounts so Outstanding. Inability to Determine Eurodollar Rate.

In the event, prior to the commencement of any Interest Period relating to any Eurodollar Rate Advance, the Agent shall determine or be notified by the Majority Banks that adequate and reasonable methods do not exist for ascertaining the Eurodollar Rate that would otherwise determine the rate of interest to be applicable to any Eurodollar Rate Advance during any Interest Period, the Agent shall forthwith give notice of such determination (which shall be conclusive and binding on the Borrower and the Banks) to the Borrower and the Banks. In such event (a) any Construction Advance Request or Conversion Request with respect to Eurodollar Rate Advances shall be automatically withdrawn and shall be deemed a request for Base Rate Advances, (b) each Eurodollar Rate Advance will automatically, on the last day of the then current Interest Period thereof, become a Base Rate Advance, and (c) the obligations of the Banks to make Eurodollar Rate Advances shall be suspended until the Agent or the Majority Banks determines that the circumstances giving rise to such suspension no longer exist, whereupon the Agent or, as the case may be, the Agent upon the instruction of the Majority Banks, shall so notify the Borrower and the Banks. Illegality. Notwithstanding any other provisions herein, if any present or future law, regulation, treaty or directive or in the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Rate Advances, such Bank shall forthwith give notice of such circumstances to the Borrower and the other Banks and thereupon (a) the commitment of such Bank to make Eurodollar Rate Advances or convert Advances of another Type to Eurodollar Rate Advances shall forthwith be suspended and (b) such Bank's Advances then Outstanding as Eurodollar Rate Advances, if any, shall be converted automatically to Base Rate Advances on the last day of each Interest Period applicable to such Eurodollar Rate Advances or within such earlier period as may be required by law. The Borrower hereby agrees promptly to pay the Agent for the account of such Bank, upon demand by such Bank, any additional amounts necessary to compensate such Bank for any costs incurred by such Bank in making any conversion in accordance with this Section 5.5, including any interest or fees payable by such Bank to lenders of funds obtained by it in order to make or maintain its Eurodollar Rate Advances hereunder. Additional Costs, etc. If any present or future applicable law, which expression, as used herein, includes statutes, rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time hereafter made upon or otherwise issued to any Bank or the Agent by any central bank or other fiscal, monetary or other authority (whether or not having the force of law), shall: (a) subject any Bank or the Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Credit Agreement, the other Loan Documents, such Bank's Commitment or the Advances (other than taxes based upon or measured by the revenue, income or profits of such Bank or the Agent), or (b) materially change the basis of taxation (except for changes in taxes on revenue, income or profits) of payments to any Bank of the principal of or the interest on the Advances or any other amounts payable to any Bank or the Agent under this Credit Agreement or the other Loan Documents, or (c) impose or increase or render applicable (other than to the extent specifically provided for elsewhere in this Credit Agreement) any special deposit, reserve, assessment, liquidity, capital adequacy or other similar requirements (whether or not having the force of law) against assets held by, or deposits in or for the account of, or loans by, or commitments of an office of any Bank, or (d) impose on any Bank or the Agent any other conditions or requirements with respect to this Credit Agreement, the other Loan Documents, the Advances, such Bank's Commitment, or any class of loans or commitments of which the Advances or such Bank's Commitment forms a part, and the result of any of the foregoing is (i) to increase the cost to any Bank of making, funding, issuing, renewing, extending or maintaining the Advances or such Bank's Commitment, or (ii) to reduce the amount of principal, interest or other amount payable to such Bank or the Agent hereunder on account of such Bank's Commitment or the Advances, or (iii) to require such Bank or the Agent to make any payment or to forego any interest or other sum payable hereunder, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by such Bank or the Agent from the Borrower hereunder, then, and in each such case, the Borrower will, upon demand made by such Bank or (as the case may be) the Agent at any time and from time to time and as often as the occasion therefor may arise, pay to such Bank or the Agent such additional amounts as will be sufficient to compensate such Bank or the Agent for such additional cost, reduction, payment or foregone interest or other sum. Capital Adequacy.

If after the date hereof any Bank or the Agent determines that (a) the adoption of or change in any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) regarding capital requirements for banks or bank holding companies or any change in the interpretation or application thereof by a court or governmental authority with appropriate jurisdiction, or (b) compliance by such Bank or the Agent or any corporation controlling such Bank or the Agent with any law, governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) of any such entity regarding capital adequacy, has the effect of reducing the return on such Bank's or the Agent's commitment or Advances to a level below that which such Bank or the Agent could have achieved but for such adoption, change or compliance (taking into consideration such Bank's or the Agent's then existing policies with respect to capital adequacy and assuming full utilization of such entity's capital) by any amount deemed by such Bank or (as the case may be) the Agent to be material, then such Bank or the Agent may notify the Borrower of such fact. To the extent that the amount of such reduction in the return on capital is not reflected in the Base Rate, the Borrower agrees to pay such Bank or (as the case may be) the Agent for the amount of such reduction in the return on capital as and when such reduction is determined upon presentation by such Bank or (as the case may be) the Agent of a certificate in accordance with Section 5.9 hereof. Each Bank shall allocate such cost increases among its customers in good faith and on an equitable basis. Certificate. A certificate setting forth any additional amounts payable pursuant to Section 5.6 or 5.7 and a complete explanation of such amounts which are due, submitted by any Bank or the Agent to the Borrower, shall be prima facie evidence that such amounts are due and owing. Indemnity. The Borrower agrees to indemnify each Bank and to hold each Bank harmless from and against any loss, cost or expense (including loss of anticipated profits) that such Bank may sustain or incur as a consequence of (a) default by the Borrower in payment of the principal amount of or any interest on any Eurodollar Rate Advances as and when due and payable, including any such loss or expense arising from interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain its Eurodollar Rate Advances, (b) default by the Borrower in making a borrowing after the Borrower has given (or is deemed to have given) a Construction Advance Request or a Conversion Request relating thereto in accordance with Section 2.6 or Section 2.7 or (c) the making of any payment of a Eurodollar Rate Advance or the making of any conversion of any such Advance to a Base Rate Advance on a day that is not the last day of the applicable Interest Period with respect thereto, including interest or fees payable by such Bank to lenders of funds obtained by it in order to maintain any such Advances. Interest After Default. Overdue Amounts. Overdue principal and (to the extent permitted by applicable law) interest on the Advances and all other overdue amounts payable hereunder or under any of the other Loan Documents shall bear interest compounded monthly and payable on demand at a rate per annum equal to two and one-half percent (2 1/2%) above the rate applicable to Base Rate Advances until such amount shall be paid in full (after as well as before judgment). Amounts Not Overdue. During the continuance of a Default or an Event of Default the principal of the Advances not overdue shall, until such Default or Event of Default has been cured or remedied or such Default or Event of Default has been waived by the Majority Banks pursuant to Section 26, bear interest at a rate per annum equal to the greater of (i) two and one-half percent (2 1/2%) above the rate of interest otherwise applicable to the Advances pursuant to Section 2.5 and Section 4.5 and (ii) the rate of interest applicable to overdue principal pursuant to Section 5.10.1. Certain Rights of the Agent and Banks. Right to Retain the Construction Inspector. The Agent shall have the right to retain, at the Borrower's cost and expense (to the extent of reasonable market rates for such professional services and which are estimated on the Closing Date not to exceed $15,000), the Construction Inspector to perform the following services on behalf of the Agent and the Banks: (a) to make periodic inspections (i) for the purpose of providing the Agent and the Banks with an opinion to satisfy the conditions set forth in Section 12.5 hereof, and (ii) otherwise for the purpose of assuring that construction of the Vessels to the date thereof is in accordance with the Plans and Specifications, and to advise the Agent and the Banks of the anticipated cost of and time for completion of construction on the Vessels; and (b) to review and advise the Agent and the Banks on any proposed change orders or construction change directives. Any such review and inspection for the purposes of Section 11.15 or Section 12.5 hereof shall be performed in a timely manner.

The fees of the Construction Inspector shall be paid by the Borrower forthwith upon billing therefor and expenses incurred by the Agent and the Banks on account thereof shall be reimbursed to the Agent and the Banks forthwith upon request therefor, but neither the Agent nor the Banks shall have any liability to the Borrower on account of (i) the services performed by the Construction Inspector, (ii) any neglect or failure on the part of the Construction Inspector to properly perform its services, or (iii) any approval by the Construction Inspector of construction on the Vessels. Neither the Agent, the Banks nor the Construction Inspector assumes any obligation to the Borrower or any other Person concerning the quality of construction on the Vessels or the absence therefrom of defects. Right to Obtain Appraisals. The Agent and the Banks shall have the right to obtain from time to time, at the Borrower's cost and expense, updated Appraisals of the Collateral, and an Appraisal of each of the Vessels, provided that so long as no Default or Event of Default shall have occurred and be continuing, the Borrower shall only be obligated to pay for the costs and expenses associated with one such Appraisal per Vessel during any calendar year or the number of Appraisals as otherwise required by a Governmental Authority or by law. The reasonable costs and expenses incurred by the Agent and the Banks in obtaining such Appraisals shall be paid by the Borrower forthwith upon billing or request by the Agent and the Banks for reimbursement therefor. SECURITY AND GUARANTIES. Security of Borrower. The Obligations shall be secured by a perfected first priority security interest (subject only to Permitted Liens entitled to priority under applicable law) in all of the assets of the Borrower, whether now owned or hereafter acquired, pursuant to the terms of the Security Documents to which the Borrower is a party. Without limiting the generality of the foregoing, the Obligations shall be secured by the following: (a) a perfected first priority lien and security interest in all assets of the Borrower pursuant to the terms of the Security Agreement; (b) a perfected first priority security interest in all of the Borrower's rights (but not its obligations) under the Contract (including without limitation rights to enforce the Shipbuilding Guaranty), such security interests to be granted pursuant to the Contract Collateral Assignment; (c) a perfected first priority security interest in and assignment of all the Borrower's right, title, and interest in and to any insurance and/or insurance policies with respect to each of the Vessels and the Strong/American such security interest to be granted pursuant to the Assignment of Insurance; (d) a perfected first priority security interest in an assignment of all of the Borrower's right, title and interest in and to the irrevocable guaranty (the "Shipbuilding Guaranty") by the Shipbuilding Guarantor to the Borrower, guarantying the performance and payment of Builder of its obligations under the Contract and naming the Borrower and the Agent (for the benefit of the Agent and the Banks) as co-beneficiaries and specifying that the interest of the Agent (for the benefit of the Agent and the Banks) shall be in preference to and have priority over the Borrower and any Person claiming under, from or through the Borrower, in a form acceptable to the Agent and the Banks provided, however, if at any time the Net Worth of the Shipbuilding Guarantor is less than $500,000,000, such Shipbuilding Guaranty shall be secured by collateral acceptable to the Agent, or replaced with the Performance Bond pursuant to the requirements set forth in the Intercreditor Agreement; (e) a perfected first priority security interest in and assignment of all the Borrower's right, title and interest in and to all contracts, permits and licenses relating to each Vessel and the Strong/American, such security interest to be granted pursuant to the Assignment of Contracts; (f) a perfected first priority security interest in and assignment to all of the Borrower's right, title and interest in and to the Charter (including but not limited to dominion over cash payments due under the Charter), such security interest to be granted pursuant to the Assignment of Charter; and (g) a perfected first preferred mortgage lien and security interest in each Vessel and the Strong/American pursuant to the terms of the First Preferred Fleet Mortgage. Guaranties of the Guarantor. The Obligations shall also be guaranteed pursuant to the terms of the Guaranty. REPRESENTATIONS AND WARRANTIES. Each of the Borrower and the Guarantor represents and warrants to the Banks and the Agent as follows: Corporate Authority. Incorporation; Good Standing.

Each of the Borrower and the Guarantor (a) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, (b) has all requisite corporate power to own its property and conduct its business as now conducted and as presently contemplated, and (c) is in good standing as a foreign corporation and is duly authorized to do business in each jurisdiction where such qualification is necessary except where a failure to be so qualified would not have a materially adverse effect on the business, assets or financial condition of the Borrower or the Guarantor. Authorization. The execution, delivery and performance of this Credit Agreement and the other Loan Documents to which the Borrower or the Guarantor is or is to become a party and the transactions contemplated hereby and thereby (a) are within the corporate authority of such Person, (b) have been duly authorized by all necessary corporate proceedings, (c) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which the Borrower or the Guarantor is subject or any judgment, order, writ, injunction, license or permit applicable to the Borrower or the Guarantor and (d) do not conflict with any provision of the corporate charter or bylaws of, or any agreement or other instrument binding upon, the Borrower or the Guarantor. Enforceability. The execution and delivery of this Credit Agreement and the other Loan Documents to which the Borrower or the Guarantor is or is to become a party will result in valid and legally binding obligations of such Person enforceable against it in accordance with the respective terms and provisions hereof and thereof, except as enforceability is limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting generally the enforcement of creditors' rights and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. Governmental Approvals. The execution, delivery and performance by the Borrower and the Guarantor of this Credit Agreement and the other Loan Documents to which the Borrower and the Guarantor is or is to become a party and the transactions contemplated hereby and thereby do not require the approval or consent of, or filing with, any Governmental Authority other than those already obtained and listed on Schedule 7.2 hereto. Title to Properties; Leases. Except as indicated on Schedule 7.3 hereto, the Borrower and the Guarantor own all of the assets reflected in the combined balance sheet of the Guarantor and the Borrower as at the Balance Sheet Date or acquired since that date (except property and assets sold or otherwise disposed of in the ordinary course of business since that date), subject to no rights of others, including any mortgages, leases, conditional sales agreements, title retention agreements, liens or other encumbrances except Permitted Liens. Financial Statements and Projections. Financial Statements. There has been furnished to the Agent a combined balance sheet of the Borrower and the Guarantor as at the Balance Sheet Date, and a combined statement of income for the fiscal year then ended, certified by the Borrower's independent certified public accountants. Such balance sheet and statement of income have been prepared in accordance with Generally Accepted Accounting Principles and fairly present the financial condition of the Borrower and the Guarantor as at the close of business on the date thereof and the results of operations for the fiscal year then ended. There are no contingent liabilities of the Borrower or the Guarantor as of such date involving material amounts, known to the officers of the Borrower not disclosed in said balance sheet and the related notes thereto. Projections. The projections of the annual operating budgets of each of the Borrower and the Guarantor on an individual basis, balance sheets and cash flow statements for the 1995 to 1999 fiscal years, copies of which have been delivered to each Bank, disclose all assumptions made with respect to general economic, financial and market conditions used in formulating such projections. To the knowledge of the Borrower and the Guarantor, no facts exist that (individually or in the aggregate) would result in any material change in any of such projections. The projections are based upon reasonable estimates and assumptions, have been prepared on the basis of the assumptions stated therein and reflect the reasonable estimates of the Borrower and the Guarantor of the results of operations and other information projected therein. No Material Changes, etc. (a) Since the Balance Sheet Date there has occurred no materially adverse change in the financial condition or business of the Borrower and the Guarantor as shown on or reflected in the combined balance sheet of the Borrower and the Guarantor as at the Balance Sheet Date, or the combined statement of income for the fiscal year then ended, other than changes in the ordinary course of business that have not had any materially adverse effect either individually or in the aggregate on the business or financial condition of the Borrower and the Guarantor. Except as set forth on Schedule 7.5(a), since the Balance Sheet Date, neither the Guarantor nor the Borrower has made any Distributions.

(b) Each of the Borrower and the Guarantor (before and after giving effect to the transactions contemplated by this Credit Agreement the other Loan Documents) (i) is solvent, (ii) has assets having a fair value in excess of its liabilities, (iii) has assets having a fair value in excess of the amount required to pay its liabilities on existing debts as such debts become absolute and matured, and (iv) has, and expects to continue to have, access to adequate capital for the conduct of its business and the ability to pay its debts from time to time incurred in connection with the operation of its business as such debts mature. Franchises, Patents, Copyrights, etc. Each of the Borrower and the Guarantor possesses all franchises, patents, copyrights, trademarks, trade names, licenses and permits, and rights in respect of the foregoing, adequate for the conduct of its business substantially as now conducted without known conflict with any rights of others. Litigation. There are no actions, suits, proceedings or investigations of any kind pending or threatened against the Borrower or the Guarantor before any court, tribunal or administrative agency or board that, if adversely determined, might, either in any case or in the aggregate, materially adversely affect the properties, assets, financial condition or business of the Borrower or the Guarantor or materially impair the right of the Borrower and the Guarantor considered as a whole, to carry on business substantially as now conducted by them, or result in any substantial liability not adequately covered by insurance, or for which adequate reserves are not maintained on the combined balance sheet of the Borrower and the Guarantor, or which question the validity of this Credit Agreement or any of the other Loan Documents, or any action taken or to be taken pursuant hereto or thereto. No Materially Adverse Contracts, etc. Neither the Borrower nor the Guarantor is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation that has or is expected in the future to have a materially adverse effect on the business, assets or financial condition of the Borrower or the Guarantor. Neither the Borrower nor the Guarantor is a party to any contract or agreement that has or is expected, in the judgment of the Borrower's officers, to have any materially adverse effect on the business of the Borrower or the Guarantor . Compliance With Other Instruments, Laws, etc. Neither the Borrower nor the Guarantor is in violation of any provision of its charter documents, bylaws, or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, judgment, statute, license, rule or regulation, in any of the foregoing cases in a manner that could result in the imposition of substantial penalties or materially and adversely affect the financial condition, properties or business of the Borrower or the Guarantor. Tax Status. Each of the Borrower and the Guarantor (a) have made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which any of them is subject, (b) have paid all taxes and other governmental assessments and charges shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and by appropriate proceedings and (c) have set aside on their books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Borrower know of no basis for any such claim. Each of the Borrower and the Guarantor is a "S Corporation" as defined in Section 1361(a)(1) of the Code. No Event of Default. No Default or Event of Default has occurred and is continuing. Holding Company and Investment Company Acts. Neither the Borrower nor the Guarantor is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935; nor is it an "investment company", or an "affiliated company" or a "principal underwriter" of an "investment company", as such terms are defined in the Investment Company Act of 1940. Absence of Financing Statements, etc. Except with respect to Permitted Liens, there is no financing statement, security agreement, chattel mortgage, real estate mortgage or other document filed or recorded with any filing records, registry, or other public office, that purports to cover, affect or give notice of any present or possible future lien on, or security interest in, any assets or property of the Borrower or the Guarantor or rights thereunder.

Perfection of Security Interest. All filings, assignments, pledges and deposits of documents or instruments have been made and all other actions have been taken that are necessary, under applicable law, to establish and perfect the Agent's security interest in the Collateral, other than the Ramp, provided, however, that all necessary filings, assignments, pledges and deposits of document or instruments necessary to establish and perfect the Agent's security interest in the Ramp will have been made within thirty (30) days of the Closing Date. The Collateral and the Agent's rights with respect to the Collateral are not subject to any setoff, claims, withholdings or other defenses. The Borrower is the owner of the Collateral free from any lien, security interest, encumbrance and any other claim or demand, except for Permitted Liens. All of the Obligations of the Borrower and the Guarantor will, at the time from and after the execution and delivery of each of the Security Documents, be entitled to the benefits of and be secured by each of the Security Documents. Certain Transactions. None of the officers, directors, or employees of the Borrower or the Guarantor is presently a party to any transaction with Borrower or the Guarantor (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Borrower or the Guarantor, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. Employee Benefit Plans. In General. Each Employee Benefit Plan has been maintained and operated in compliance in all material respects with the provisions of ERISA and, to the extent applicable, the Code, including but not limited to the provisions thereunder respecting prohibited transactions. The Borrower has heretofore delivered to the Agent the most recently completed annual report, Form 5500, with all required attachments, and actuarial statement required to be submitted under Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan. Terminability of Welfare Plans. Under each Employee Benefit Plan which is an employee welfare benefit plan within the meaning of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are due unless the event giving rise to the benefit entitlement occurs prior to plan termination (except as required by Title I, Part 6 of ERISA). The Borrower or an ERISA Affiliate, as appropriate, may terminate each such Plan at any time (or at any time subsequent to the expiration of any applicable bargaining agreement) in the discretion of the Borrower or such ERISA Affiliate without liability to any Person. Guaranteed Pension Plans. Each contribution required to be made to a Guaranteed Pension Plan, whether required to be made to avoid the incurrence of an accumulated funding deficiency, the notice or lien provisions of Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an accumulated funding deficiency or extension of amortization periods has been received with respect to any Guaranteed Pension Plan. No liability to the PBGC (other than required insurance premiums, all of which have been paid) has been incurred by the Borrower or any ERISA Affiliate with respect to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event, or any other event or condition which presents a material risk of termination of any Guaranteed Pension Plan by the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which in each case occurred within twelve months of the date of this representation), and on the actuarial methods and assumptions employed for that valuation, the aggregate benefit liabilities of all such Guaranteed Pension Plans within the meaning of Section 4001 of ERISA did not exceed the aggregate value of the assets of all such Guaranteed Pension Plans, disregarding for this purpose the benefit liabilities and assets of any Guaranteed Pension Plan with assets in excess of benefit liabilities. Multiemployer Plans. Neither the Borrower nor any ERISA Affiliate has incurred any material liability (including secondary liability) to any Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as a result of a sale of assets described in Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has been notified that any Multiemployer Plan is in reorganization or insolvent under and within the meaning of Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan intends to terminate or has been terminated under Section 4041A of ERISA. Regulations U and X.

The proceeds of the Construction Loan shall be used to finance the construction on the Vessels, to pay Project Costs and up to $5,000,000 of such proceeds may be used to refinance existing Indebtedness owing to Greyrock Financial, and pay costs and fees associated with such refinancing. No portion of the Construction Loan or the Term Loan is to be used for the purpose of purchasing or carrying any "margin security" or "margin stock" as such terms are used in Regulations U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224. Environmental Compliance. The Guarantor and Borrower have taken all necessary steps to investigate the past and present condition and usage of the Real Estate and the operations conducted thereon and, based upon such diligent investigation, have determined that: (a) none of the Borrower, the Guarantor or any operator of the Real Estate or any operations thereon is in violation, or alleged violation, of any judgment, decree, order, law, license, rule or regulation pertaining to environmental matters, including without limitation, those arising under the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any state or local statute, regulation, ordinance, order or decree relating to health, safety or the environment (hereinafter "Environmental Laws"), which violation would have a material adverse effect on the environment or the business, assets or financial condition of the Borrower or the Guarantor; (b) neither the Borrower nor the Guarantor has received notice from any third party including, without limitation: any federal, state or local governmental authority, (i) that any one of them has been identified by the United States Environmental Protection Agency ("EPA") as a potentially responsible party under CERCLA with respect to a site listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any hazardous substances as defined by 42 U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) and any toxic substances, oil or hazardous materials or other chemicals or substances regulated by any Environmental Laws ("Hazardous Substances") which any one of them has generated, transported or disposed of has been found at any site at which a federal, state or local agency or other third party has conducted or has ordered that the Borrower or the Guarantor conduct a remedial investigation, removal or other response action pursuant to any Environmental Law; or (iii) that it is or shall be a named party to any claim, action, cause of action, complaint, or legal or administrative proceeding (in each case, contingent or otherwise) arising out of any third party's incurrence of costs, expenses, losses or damages of any kind whatsoever in connection with the release of Hazardous Substances; (c) except as set forth on Schedule 7.18 attached hereto: (i) no portion of the Real Estate has been used for the handling, processing, storage or disposal of Hazardous Substances except in accordance with applicable Environmental Laws; and no underground tank or other underground storage receptacle for Hazardous Substances is located on any portion of the Real Estate; (ii) in the course of any activities conducted by the Borrower, the Guarantor or operators of its properties, no Hazardous Substances have been generated or are being used on the Real Estate except in accordance with applicable Environmental Laws; (iii) there have been no releases (i.e. any past or present releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing or dumping) or threatened releases of Hazardous Substances on, upon, into or from the properties of the Borrower or the Guarantor, which releases would have a material adverse effect on the value of any of the Real Estate or adjacent properties or the environment; (iv) to the best of the Borrower's knowledge, there have been no releases on, upon, from or into any real property in the vicinity of any of the Real Estate which, through soil or groundwater contamination, may have come to be located on, and which would have a material adverse effect on the value of, the Real Estate; and (v) in addition, any Hazardous Substances that have been generated on any of the Real Estate have been transported offsite only by carriers having an identification number issued by the EPA, treated or disposed of only by treatment or disposal facilities maintaining valid permits as required under applicable Environmental Laws, which transporters and facilities have been and are, to the best of the Guarantor's and the Borrower's knowledge, operating in compliance with such permits and applicable Environmental Laws; and (d) None of the Borrower, the Guarantor or any of the Real Estate is subject to any applicable environmental law requiring the performance of Hazardous Substances site assessments, or the removal or remediation of Hazardous Substances, or the giving of notice to any governmental agency or the recording or delivery to other Persons of an environmental disclosure document or statement by virtue of the transactions set forth herein and contemplated hereby. Subsidiaries, etc. The Borrower and the Guarantor have no Subsidiaries. Except as set forth on Schedule 7.19 hereto, neither the Guarantor nor the Borrower is engaged in any joint venture or partnership with any other person. Real Property. Except as set forth on Schedule 7.20, neither of the Guarantor nor the Borrower owns or leases (as lessee or sublessee) any Real Estate. Principal Place of Business.

The Borrower's principal place of business is 500 Park Avenue, New York, New York 10022. The Guarantor's principal place of business is 9550 Regency Square Boulevard, Suite 500, Jacksonville, Florida 32225. Disclosure. None of this Credit Agreement, any of the other Loan Documents nor any of the Construction Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements herein or therein not misleading. There is no fact known to either the Borrower or the Guarantor which materially adversely affects, or which is reasonably likely in the future to materially adversely affect, exclusive of effects resulting from changes in general economic conditions, the business, assets, financial condition or prospects of the Borrower or the Guarantor. Fiscal Year. The Borrower's fiscal year is the twelve months ending December 31 of each year. The Guarantor's fiscal year is the twelve months ending December 31 of each year. Insurance. Schedule 7.24 attached hereto lists the policies and types and amounts of coverage (including deductibles) of theft, fire, liability, life, property and casualty and other insurance owned or held by the Borrower and the Guarantor on the date hereof. Such policies of insurance are maintained with financially sound and reputable insurance companies, funds, underwriters or mutual indemnification associations and are of the kinds, cover such risks and are in such amounts, with such deductibles and exclusions, as are required under Section 8.7 hereof and under the Security Documents. All such policies are in full force and effect; are sufficient for compliance by the Borrower and the Guarantor with all requirements of law and all agreements to which the Borrower and the Guarantor is a party; are valid and enforceable policies and will remain in full force and effect through the respective dates set forth in such schedule; and coverage thereunder will not be reduced by, or terminate or lapse by reason of, the transactions contemplated by this Credit Agreement. Construction Contracts. The Construction Contract is in full force and effect and both the Borrower and the other party or parties to such contract are in full compliance with their respective obligations under such contract. The work to be performed under the Construction Contract is the work called for by the Plans and Specifications. All work required to complete the construction in accordance with the Plans and Specifications is provided for under the Construction Contract. Concerning the Vessels. (a) The Borrower's ownership and operation of each Vessel and the Strong/American complies with all applicable requirements of the Shipping Act, 1916, as amended and in effect, and all applicable regulations thereunder. Each of the Borrower and the Guarantor is a citizen of the United States for purposes of operating each of the Vessels and the Strong/American in the registry or coastwise trade in accordance with Section 2 of the Shipping Act of 1916, as amended and in effect, and the regulations thereunder. Each Vessel and the Strong/American is (a) covered by hull and machinery, protection and indemnity and excess liability insurance in accordance by the requirements of the First Preferred Fleet Mortgage, and (b) operated and maintained as a vessel in the registry or coastwise trade (subject in the case of the Strong/American, to certain restrictions resulting from the construction financing thereof) in accordance with the Shipping Act, 1916, as amended and in effect, and the regulations thereunder. (b) None of the Vessels is subject to any charter other than the Charter. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR. Each of the Borrower and the Guarantor covenants and agrees that, so long as the Construction Loan, Term Loan or any Note is Outstanding or any Bank has any obligation to make any Construction Advance: Punctual Payment. The Borrower will duly and punctually pay or cause to be paid the principal and interest on the Advances and the commitment fees provided for in this Credit Agreement, all in accordance with the terms of this Credit Agreement and the Notes. Maintenance of Office. Each of the Guarantor and the Borrower will maintain its chief executive office of those locations listed in Section 7.21, or at such other place in the United States of America as the Borrower shall designate upon written notice to the Agent, where notices, presentations and demands to or upon the Borrower in respect of the Loan Documents may be given or made. Records and Accounts.

Each of the Guarantor and the Borrower will (a) keep true and accurate records and books of account in which full, true and correct entries will be made in accordance with Generally Accepted Accounting Principles and (b) maintain adequate accounts and reserves for all taxes (including income taxes), depreciation, depletion, obsolescence and amortization of its properties contingencies, and other reserves. Financial Statements, Certificates and Information. The Borrower will deliver to the Agent for delivery to each of the Banks: (a) as soon as practicable, but in any event not later than ninety (90) days after the end of each fiscal year of the Borrower, the combined balance sheet of the Guarantor and the Borrower and the combining balance sheet of the Guarantor and the Borrower, each as at the end of such year, and the related combined statement of income and combined statement of cash flow and combining statement of income and combining statement of cash flow for such year, each setting forth in comparative form the figures for the previous fiscal year and all such combined and combining statements to be in reasonable detail, prepared in accordance with Generally Accepted Accounting Principles, and certified without qualification by Deloitte & Touche or by other independent certified public accountants satisfactory to the Agent, together with a written statement from such accountants to the effect that they have read a copy of this Credit Agreement, and that, in making the examination necessary to said certification, they have obtained no knowledge of any Default or Event of Default, or, if such accountants shall have obtained knowledge of any then existing Default or Event of Default they shall disclose in such statement any such Default or Event of Default; provided that such accountants shall not be liable to the Banks for failure to obtain knowledge of any Default or Event of Default; (b) as soon as practicable, but in any event not later than forty-five (45) days after the end of each of the fiscal quarters of the Borrower, copies of the unaudited combined balance sheet of the Borrower and the Guarantor and the unaudited combining balance sheet of the Borrower and the Guarantor, each as at the end of such quarter, and the related combined statement of income and combined statement of cash flow and combining statement of income and combining statement of cash flow for the portion of the Borrower's and the Guarantor's fiscal year then elapsed, all in reasonable detail and prepared in accordance with Generally Accepted Accounting Principles, together with a certification by the principal financial or accounting officer of the Borrower that the information contained in such financial statements fairly presents the financial position of the Guarantor and the Borrower on the date thereof (subject to year-end adjustments); (c) as soon as practicable, but in any event not later than thirty (30) days after the end of each fiscal year, the annual budget for each of the Borrower and the Guarantor for the next succeeding fiscal year, such annual budget to be set forth in reasonable detail on a month-to-month basis; (d) simultaneously with the delivery of the financial statements referred to in subsections (a) and (b) above, a statement certified by the principal financial or accounting officer of the Borrower (the "Compliance Certificate") in substantially the form of Exhibit M hereto and setting forth in reasonable detail computations evidencing compliance with the covenants contained in Section 10 and (if applicable) reconciliations to reflect changes in Generally Accepted Accounting Principles since the Balance Sheet Date; (e) contemporaneously with the filing or mailing thereof, copies of all material of a financial nature filed with the Securities and Exchange Commission or sent to the stockholders of the Borrower or the Guarantors; (f) from time to time upon request of the Agent, projections of the Borrower and the Guarantor updating those projections delivered to the Banks and referred to in Section 7.4.2 hereto or, if applicable, updating any later such projections delivered in response to a request pursuant to this Section 8.4(f); and (g) from time to time such other financial data and information (including accountants' management letters) as the Agent or any Bank may reasonably request. Notices. Defaults. The Borrower will promptly notify the Agent and each of the Banks in writing of the occurrence of any Default or Event of Default. If any Person shall give any notice or take any other action in respect of a claimed default (whether or not constituting an Event of Default) under this Credit Agreement or any other note, evidence of indebtedness, indenture or other obligation to which or with respect to which the Borrower or the Guarantor is a party or obligor, whether as principal or surety, the Borrower shall forthwith give written notice thereof to each of the Banks, describing the notice or action and the nature of the claimed default. Environmental Events. The Borrower will promptly give notice to the Agent (a) of any violation of any Environmental Law that the Borrower or the Guarantor reports in writing or is reportable by such Person in writing (or for which any written report supplemental to any oral report is made) to any federal, state or local environmental agency and (b) upon becoming aware thereof, of any inquiry, proceeding, investigation, or other action, including a notice from any agency of potential environmental liability, or any federal, state or local environmental agency or board, that has the potential

to materially affect the assets, liabilities, financial conditions or operations of the Borrower or the Guarantor, or the Agent's security interests pursuant to the Security Documents. Notification of Claims Against Collateral. The Borrower will, immediately upon becoming aware thereof, notify the Agent in writing of any setoff, claims (including, with respect to the Real Estate, environmental claims), withholdings or other defenses to which any of the Collateral, or the Agent's rights with respect to the Collateral, are subject. Notice of Litigation and Judgments. Each of the Guarantor and the Borrower will give notice to the Agent in writing within fifteen (15) days of becoming aware of any litigation or proceedings threatened in writing or any pending litigation and proceedings affecting the Borrower or the Guarantor or to which the Borrower or the Guarantor is or becomes a party involving an uninsured claim against the Borrower or the Guarantor that could reasonably be expected to have a materially adverse effect on the Borrower or the Guarantor and stating the nature and status of such litigation or proceedings. The Guarantor and the Borrower will give notice to the Agent, in writing, in form and detail satisfactory to the Agent, within ten (10) days of any judgment not covered by insurance, final or otherwise, against the Borrower or the Guarantor in an amount in excess of $500,000. Notice of Nonpayment. The Borrower will immediately notify the Bank in writing if the Borrower receives any written or other formal notice from the Builder or any laborer, subcontractor or materialman to the effect that the Builder, such laborer, subcontractor or materialman has not been paid an amount in excess of $200,000 when due for labor or materials furnished in connection with the construction on either Vessel. Corporate Existence; Maintenance of Properties. Each of the Guarantor and the Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises. Each (a) will cause all of its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment, (b) will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Guarantor or the Borrower, as the case may be, may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and (c) will continue to engage primarily in the businesses now conducted by them and in related businesses; provided that nothing in this Section 8.6 shall prevent the Borrower or the Guarantor from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Borrower or the Guarantor, as the case may be, desirable in the conduct of its or their business and that do not in the aggregate materially adversely affect the business of the Borrower and the Guarantor on a combined basis. Insurance. Each of the Guarantor and the Borrower will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies and in such types and amounts and with such deductibles as in accordance with Schedule 7.24 and shall be in accordance with the terms of the Security Documents. In addition, the Borrower will require the Builder and any other party to the Contract to obtain and maintain at all times during the construction on the Vessels the insurance required by the Contract and such other insurance as may be reasonably required by the Banks (including, without limitation, commercial general liability insurance, comprehensive automobile liability insurance, builders all risk insurance, workmen's compensation insurance and employer liability insurance), all such insurance to be in such amounts and form, to include such coverage and endorsements, and to be issued by such insurers as shall be approved by the Banks, and to contain the written agreement of the insurer to give the Agent thirty (30) days prior written notice of cancellation, nonrenewal, modification or expiration thereof. The Borrower will provide or will cause the Builder and any other party to the Contract to provide the Agent with certificates evidencing such insurance. The Borrower will, at their expense, cause the Agent to be named as additional insured and loss payee under each of the policies providing such insurance coverage, without recourse against the Agent or any of the Banks for payment of premiums, and with the right to prior notice of any cancellation or termination of coverage. Taxes. Each of the Guarantor and the Borrower will duly pay and discharge, or cause to be paid and discharged, before the same shall become overdue, all taxes, assessments and other governmental charges (other than taxes, assessments and other governmental charges imposed by foreign jurisdictions that in the aggregate are not material to the business or assets of the Guarantor or the Borrower on an individual basis or of the Borrower and the Guarantor on a combined basis) imposed upon it and its real properties, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies that if unpaid might by law become a lien or charge upon any of its property; provided that any such tax, assessment, charge, levy or claim need not be paid if the validity or amount thereof shall currently be contested in good faith by appropriate proceedings and if the Guarantor or the Borrower shall have set aside on its books adequate reserves with respect thereto; and provided further that the Guarantor and the Borrower will pay all such taxes, assessments, charges, levies or claims forthwith upon the commencement of proceedings to foreclose any lien that may have attached as security therefor.

Inspection of Properties and Books, etc. General. Each of the Guarantor and the Borrower shall permit the Banks, through the Agent or any of the Banks' other designated representatives, to visit and inspect any of the properties of the Borrower or the Guarantor to examine the books of account of the Borrower or the Guarantor (and to make copies thereof and extracts therefrom), and to discuss the affairs, finances and accounts of the Borrower or the Guarantor with, and to be advised as to the same by, its and their officers, all at such reasonable times and intervals as the Agent or any Bank may reasonably request. Communication with Accountants. After prior written notice to the Borrower, each of the Guarantor and the Borrower agrees to authorize the Agent and, if accompanied by the Agent, the Banks to communicate directly with the Guarantor's and the Borrower's independent certified public accountants and agrees to authorize such accountants to disclose to the Agent and the Banks any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and other affairs of the Borrower or the Guarantor. At the request of the Agent, the Borrower and the Guarantor shall deliver a letter addressed to such accountants instructing them to comply with the provisions of this Section 8.9.2. Compliance with Laws, Contracts, Licenses, and Permits. Each of the Guarantor and the Borrower will comply with (a) the applicable laws and regulations wherever its business is conducted, including all Environmental Laws, (b) the provisions of its charter documents and by-laws, (c) all agreements and instruments by which it or any of its properties may be bound and (d) all applicable decrees, orders, and judgments. If at any time while any Advance or Note is Outstanding or any Bank has any obligation to make Advances hereunder, any authorization, consent, approval, permit or license from any officer, agency or instrumentality of any government shall become necessary or required in order that the Guarantor or the Borrower may fulfill any of its obligations hereunder, the Guarantor and the Borrower will immediately take or cause to be taken all reasonable steps within the power of the Guarantor or the Borrower to obtain such authorization, consent, approval, permit or license and furnish the Banks with evidence thereof. Employee Benefit Plans. The Borrower will (a) promptly upon filing the same with the Department of Labor or Internal Revenue Service furnish to the Agent a copy of the most recent actuarial statement required to be submitted under Section 103(d) of ERISA and Annual Report, Form 5500, with all required attachments, in respect of each Guaranteed Pension Plan and (b) promptly upon receipt or dispatch, furnish to the Agent any notice, report or demand sent or received in respect of a Guaranteed Pension Plan under Section Section 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under Section Section 4041A, 4202, 4219, 4242, or 4245 of ERISA. Use of Proceeds. The Borrower will use the proceeds of the Construction Loan solely to finance the construction on the Vessels, to pay Project Costs associated with the Vessels and to refinance existing Indebtedness owing to Greyrock Financial, provided, however, the proceeds of the Construction Loan used to refinance existing Indebtedness (including the payment of any prepayment penalties) to Greyrock Financial shall be in an amount of not more than $5,000,000 in the aggregate. Commencement, Pursuit and Completion of Construction. Pursuant to the Contract, the Borrower will cause the Builder to do all work in connection with the Project in a good and workmanlike manner and without any material defects. The Borrower will pay all such sums and perform all such acts as may be appropriate to complete the Project (i) in accordance with the Plans and Specifications, (ii) in compliance in all material respects with the Requirements and with all terms and conditions of the Loan Documents, (iii) without material deviation from the Plans and Specifications unless the Borrower has obtained the prior approval of the Banks and the Agent, and (iv) free from any liens, claims or assessments (actual or contingent) asserted against either Vessel for any material, labor or other items furnished in connection with the Project. Approvals. The Borrower will give, or cause the Builder to give, all such notices to, and take all such other actions with respect to, such Governmental Authority as may be required in order to comply with all applicable Requirements in the completion of the construction on the Vessels and the use and operation of the Vessels. Laborers, Subcontractors and Materialmen. The Borrower will cause the Builder to furnish to the Agent, upon request at any time, and from time to time, affidavits listing all laborers, subcontractors, materialmen, and any other Persons who might or could claim statutory or common law liens, and who are furnishing or have

furnished labor or material in connection with the Project, or any part thereof, in each case in excess of $100,000 and in the aggregate in excess of $250,000, together with affidavits or other evidence satisfactory to the Agent, showing that such parties have been paid all amounts then due for labor and materials furnished in connection with the Project. The Borrower will cause the Builder to furnish to the Agent, at any time and from time to time upon demand by the Banks, lien waivers bearing a then current date and prepared on a form satisfactory to the Agent from the Builder and any such subcontractors or materialmen to whom amounts equal to or exceeding $100,000 are owed, in each case, and $250,000 in the aggregate, as the Banks may request. Classification. Each Vessel will be in compliance with the requirements of the American Bureau of Shipping or any other classification society acceptable to the Agent, for the highest classification for vessels of like age and type at all times except when dry docked for the purpose of the performance of the construction of the Project with respect to such Vessel. Recordation of Vessel Mortgage. On or prior to the Closing Date, each Vessel will be documented with the United States Coast Guard, and the Borrower will execute and deliver the First Preferred Fleet Mortgage on the Vessels to the Agent for the benefit of the Agent and the Banks and cause such First Preferred Fleet Mortgage to be recorded with the United States Coast Guard in accordance with the provisions of this Credit Agreement. Execution and Delivery of Term Note. The Borrower shall execute and deliver to each Bank, on or before the Conversion Date, the Term Notes contemplated by Section 4.2 hereof. S Corporation Status. Each of the Borrower and the Guarantor shall take all necessary action to maintain its status as an "S Corporation" as defined in Section 1361(a)(1) of the Code. Further Assurances. Each of the Guarantor and the Borrower will cooperate with the Banks and the Agent and execute such further instruments and documents as the Banks or the Agent shall reasonably request to carry out to their satisfaction the transactions contemplated by this Credit Agreement and the other Loan Documents. Concerning the Vessels. The Borrower and the Guarantor shall at all times operate each Vessel and the Strong/American in compliance in all respect with all applicable governmental rules, regulations and requirements pertaining to such vessels (including, without limitation, all requirements of the Shipping Act of 1916, as amended and in effect, applicable to each such vessel) and in compliance in all respects with all rules, regulations and requirements of the American Bureau of Shipping. Each of the Borrower and the Guarantor shall at all times maintain its citizenship in the United States for purposes of operating each of the Vessels in the coastwise trade in accordance with Section 2 of the Shipping Act of 1916, as amended and in effect, and the regulations thereunder. The Borrower shall furnish to the Agent and the Bank the certificate of the American Bureau of Shipping covering each of the Vessels and the Strong/American no later than thirty (30) days after the end of each fiscal year of the Borrower. The Borrower shall keep each Vessel registered under the laws of the United States with a certificate of vessel documentation endorsed to evidence its ability to engage in the registry or coastwise trade (except to the extent provided in Section 7.26 with respect to the Strong/American). Chattel Mortgage on Ramps. The Borrower shall, by not later than thirty (30) days after the Closing Date, deliver to the Agent, for the benefit of the Agent and the Banks, a chattel mortgage on the property of the Borrower constituting the ramps located in Puerto Rico granting to the Agent, for the benefit of the Agent and the Banks, a first priority perfected security interest in such ramps, which chattel mortgage shall be in form and substance satisfactory to the Agent and the Banks. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTOR Each of the Borrower and the Guarantor covenants and agrees that, so long as any Advance or Note is Outstanding or any Bank has any obligation to make any Construction Advances: Restrictions on Indebtedness. Each Guarantor and the Borrower will not create, incur, assume, guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other than: (a) Indebtedness to the Banks and the Agent arising under any of the Loan Documents;

(b) current liabilities of the Guarantor and the Borrower incurred in the ordinary course of business not incurred through (i) the borrowing of money, or (ii) the obtaining of credit except for credit on an open account basis customarily extended and in fact extended in connection with normal purchases of goods and services; (c) Indebtedness in respect of taxes, assessments, governmental charges or levies and claims for labor, materials and supplies to the extent that payment therefor shall not at the time be required to be made in accordance with the provisions of Section 8.8; (d) Indebtedness in respect of judgments or awards that have been in force for less than the applicable period for taking an appeal so long as execution is not levied thereunder or in respect of which the Guarantor or the Borrower, as the case may be, shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review; (e) endorsements for collection, deposit or negotiation and warranties of products or services, in each case incurred in the ordinary course of business; (f) obligations under Capitalized Leases not exceeding $2,000,000 in aggregate amount at any time Outstanding; (g) Indebtedness incurred in connection with the acquisition after the date hereof of any real or personal property by the Guarantor or the Borrower, provided that the aggregate principal amount of such Indebtedness incurred in connection with the acquisition after the date hereof of any real or personal property of the Guarantor and the Borrower shall not exceed the aggregate amount of $15,000,000 at any one time; and (h) Indebtedness existing on the date of this Credit Agreement and listed and described on Schedule 9.1 hereto. Restrictions on Liens. Each of the Guarantor and the Borrower will not (a) create or incur or suffer to be created or incurred or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other security interest of any kind upon any of its property or assets of any character whether now owned or hereafter acquired, or upon the income or profits therefrom; (b) transfer any of such property or assets or the income or profits therefrom for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of its general creditors; (c) acquire, or agree or have an option to acquire, any property or assets upon conditional sale or other title retention or purchase money security agreement, device or arrangement; (d) suffer to exist for a period of more than thirty (30) days after the same shall have been incurred any Indebtedness or claim or demand against it that if unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any priority whatsoever over its general creditors; or (e) sell, assign, pledge or otherwise transfer any accounts, contract rights, general intangibles, chattel paper or instruments, with or without recourse; provided that the Guarantor and the Borrower may create or incur or suffer to be created or incurred or to exist: (a) liens to secure taxes, assessments and other government charges in respect of obligations not overdue or liens on properties to secure claims for labor, material or supplies in respect of obligations not overdue; (b) deposits or pledges made in connection with, or to secure payment of, workmen's compensation, unemployment insurance, old age pensions or other social security obligations; (c) liens on properties other than the Vessels the Strong/American and the Pontoons in respect of judgments or awards, the Indebtedness with respect to which is permitted by Section 9.1(d); (d) liens of carriers, warehousemen, mechanics and materialmen, and other like liens on properties other than the Vessels the Strong/American and the Pontoons in existence less than 120 days from the date of creation thereof in respect of obligations not overdue; (e) encumbrances consisting of easements, rights of way, zoning restrictions, restrictions on the use of real property and defects and irregularities in the title thereto, landlord's or lessor's liens under leases to which the Guarantor or the Borrower is a party, and other minor liens or encumbrances none of which in the opinion of the Borrower interferes materially with the use of the property affected in the ordinary conduct of the business of the Guarantor or the Borrower, which defects do not individually or in the aggregate have a materially adverse effect on the business of the Borrower individually or of the Guarantor and the Borrower on a combined basis; (f) presently outstanding liens listed on Schedule 9.2 hereto; (g) purchase money security interests in or purchase money mortgages on real or personal property other than the Vessels the Strong/American and the Pontoons acquired after the date hereof to secure purchase money Indebtedness of the type and amount permitted by Section 9.1(g), incurred in connection with the acquisition of such property, which security interests or mortgages cover only the real or personal property so acquired; and (h) liens in favor of the Agent for the benefit of the Banks and the Agent under the Loan Documents. Restrictions on Investments.

Each of the Guarantor and the Borrower will not make or permit to exist or to remain Outstanding any Investment except Investments in: (a) marketable direct or guaranteed obligations of the United States of America that mature within one (1) year from the date of purchase by the Guarantor or the Borrower; (b) demand deposits, certificates of deposit, bankers acceptances and time deposits of United States banks having total assets in excess of $1,000,000,000; (c) securities commonly known as "commercial paper" issued by a corporation organized and existing under the laws of the United States of America or any state thereof that at the time of purchase have been rated and the ratings for which are not less than "P 1" if rated by Moody's Investors Services, Inc., and not less than "A 1" if rated by Standard and Poor's; (d) Investments existing on the date hereof and listed on Schedule 9.3 hereto; and (e) Investments consisting of the Guaranty; provided, however, that, such Investments will be considered Investments permitted by this Section 9.3 only if all actions have been taken to the satisfaction of the Agent to provide to the Agent, for the benefit of the Banks and the Agent, a first priority perfected security interest in all of such Investments free of all encumbrances other than Permitted Encumbrances. Distributions. Each of the Guarantor and the Borrower will not make any Distributions if any Default or Event of Default (a) has occurred and is continuing or (b) would exist as a result of making such Distribution. Merger, Consolidation. Mergers and Acquisitions. Each of the Guarantor and the Borrower will not become a party to any merger or consolidation, or agree to or effect any asset acquisition or stock acquisition (other than the acquisition of assets in the ordinary course of business consistent with past practices). Disposition of Assets. Each of the Guarantor and the Borrower will not become a party to or agree to or effect any disposition of assets, other than the disposition of assets in the ordinary course of business, consistent with past practices. Sale and Leaseback. Each of the Guarantor and the Borrower will not enter into any arrangement, directly or indirectly, whereby either the Guarantor or the Borrower shall sell or transfer any property owned by it in order then or thereafter to lease such property or lease other property that the Guarantor or the Borrower intends to use for substantially the same purpose as the property being sold or transferred. Compliance with Environmental Laws. Each of the Guarantor and the Borrower will not (a) use any of the Real Estate or any portion thereof for the handling, processing, storage or disposal of Hazardous Substances, (b) cause or permit to be located on any of the Real Estate any underground tank or other underground storage receptacle for Hazardous Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d) conduct any activity at any Real Estate or use any Real Estate in any manner so as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping) or threatened release of Hazardous Substances on, upon or into the Real Estate or (e) otherwise conduct any activity at any Real Estate or use any Real Estate in any manner that would violate any Environmental Law or bring such Real Estate in violation of any Environmental Law. Negative Pledge. Each of the Guarantor and the Borrower will not enter into any agreement limiting such Person's right to grant to the Agent and the Banks a lien or security interest in the unencumbered assets of such Person. Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate will: (a) engage in any "prohibited transaction" within the meaning of Section 406 of ERISA or Section 4975 of the Code which could result in a material liability for the Borrower or any of its Subsidiaries; or

(b) permit any Guaranteed Pension Plan to incur an "accumulated funding deficiency", as such term is defined in Section 302 of ERISA, whether or not such deficiency is or may be waived; or (c) fail to contribute to any Guaranteed Pension Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner which, could result in the imposition of a lien or encumbrance on the assets of the Borrower or any of its Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA; or (d) permit or take any action which would result in the aggregate benefit liabilities (with the meaning of Section 4001 of ERISA) of all Guaranteed Pension Plans exceeding the value of the aggregate assets of such Plans, disregarding for this purpose the benefit liabilities and assets of any such Plan with assets in excess of benefit liabilities, by more than the amount set forth in Section 7.16.3 hereof. Non-Compete. Each of the Guarantor and the Borrower will not permit any affiliate of the Guarantor or the Borrower to engage in the same or any similar line of business as any of the Borrower or the Guarantor in the Puerto Rico market. Change of Principal Place of Business or Corporate Name. The Borrower will not change its principal place of business or its corporate name unless it shall have (a) given the Agent at least thirty (30) days' advance written notice of such change, and (b) filed in all necessary jurisdictions such documents as may be necessary to continue without impairment or interruption the perfection and priority of the liens on the Collateral in favor of the Agent pursuant to the Security Documents. Fiscal Year. Neither the Guarantor nor the Borrower will change its fiscal year from that set forth in Section 7.23 hereof. Restriction on Change Orders. The Borrower will not cause, permit or suffer to exist any deviations from the Plans and Specifications, nor approve or consent to any change order or construction change directive, without the prior approval of the Agent except for deviations or change orders not exceeding $100,000 individually and $250,000 in the aggregate. Charter. The Borrower will not amend, supplement or otherwise modify the terms of or terminate, the Charter without the prior written consent of the Agent and the Banks. Transactions with Affiliates. Neither the Borrower nor the Guarantor will enter into, or cause, suffer or permit to exist (a) any arrangement or contract with any of its other Affiliates of a nature customarily entered into by Persons which are Affiliates of each other (including management or similar contracts or arrangements relating to the allocation of revenues, taxes and expenses or otherwise) requiring any payments to be made by the Borrower or the Guarantor to any Affiliate unless such arrangement is fair and equitable to the Borrower and the Guarantor; or (b) any other transaction, arrangement, contract with any of their other Affiliates which would not be entered into by a prudent Person in the position of the Borrower or the Guarantor with, or which is on terms which are less favorable than are obtainable from, any Person which is not one of its Affiliates, provided, however, nothing contained in this Section 9.15 shall prohibit the Borrower or the Guarantor from restricting payments otherwise permitted by Section 9.4 hereof. Business Activities. Neither the Borrower nor the Guarantor will engage in any business activity it is not otherwise engaged in on the Closing Date, and neither the Borrower nor the Guarantor will engage in any business activity in any jurisdiction in which it does not operate as of the Closing Date. FINANCIAL COVENANTS OF THE BORROWER. Interest Coverage. The Borrower will not permit the Interest Coverage Ratio, calculated as of the end of each fiscal quarter of the Borrower, to be less than (a) 2.50:1.00 for the period of the Closing Date through the fiscal quarter ending March 31, 1997, and (b) 3.00:1.00 for each fiscal quarter ending thereafter.

Debt Service. The Borrower will not permit the ratio of (a) Combined Operating Cash Flow to (b) Combined Financial Obligations as of the end of each fiscal quarter for the period of four (4) consecutive fiscal quarters then ending to be less than 1.20:1.00 for the period of the Closing Date through the fiscal quarter ending March 31, 1997 and 1.30:1.00 for each fiscal quarter ending thereafter. Liabilities to Worth Ratio. The Borrower will not permit the ratio of Combined Total Liabilities to Combined Tangible Net Worth to exceed 1.50:1.00 at any time from the Closing Date through December 31, 1996, and 1.25:1.00 at any time thereafter. Combined Tangible Net Worth. The Borrower will not permit Combined Tangible Net Worth at any time to be less than the sum of $20,000,000, plus, on a cumulative basis, 40% of positive Combined Net Income (without deduction for any year in which there is a net loss) for each fiscal year subsequent to the fiscal year ended December 31, 1994. Appraisal Ratio. The Borrower will not at any time permit the ratio of (a) the appraised market value of the Vessels (which appraised market value shall be determined in the Agent's sole discretion, by reference to the Appraisal or such other appraisals as are satisfactory to the Agent) as at the date of determination to (b) the Outstanding principal amount of the Advances as at the date of determination to be less than 1.50:1.00. CLOSING CONDITIONS. The obligations of the Banks to make the initial Construction Advance shall be subject to the satisfaction of the following conditions precedent on or prior to October 13, 1995: Loan Documents, etc. Loan Documents. Each of the Loan Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to each of the Banks. Each Bank shall have received a fully executed copy of each such document. Construction Documents. Each of the Construction Documents shall have been duly executed and delivered by the respective parties thereto, shall be in full force and effect and shall be in form and substance satisfactory to each of the Banks. The Borrower shall have obtained from the Builder a duly executed consent, in form and substance satisfactory to the Agent and the Banks, to the collateral assignment by the Borrower of all of its right, title and interest in and to the Contract pursuant to the Contract Collateral Assignment. Each Bank shall have received a fully executed copy of each such document. Certified Copies of Charter Documents. Each of the Banks shall have received from the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower, a copy, certified by a duly authorized officer of such Person to be true and complete on the Closing Date, of each of (a) its charter or other incorporation documents as in effect on such date of certification, and (b) its by-laws as in effect on such date. Corporate Action. All corporate action necessary for the valid execution, delivery and performance by the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower of this Credit Agreement and the other Loan Documents to which it is or is to become a party shall have been duly and effectively taken, and evidence thereof satisfactory to the Banks shall have been provided to each of the Banks. Incumbency Certificate. Each of the Banks shall have received from the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower an incumbency certificate, dated as of the Closing Date, signed by a duly authorized officer of the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower and giving the name and bearing a specimen signature of each individual who shall be authorized: (a) to sign, in the name and on behalf of each of the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower each of the Loan Documents to which the Guarantor, the Builder, the Shipbuilding Guarantor and the Borrower is or is to become a party; (b) in the case of the Borrower, to make Construction Advance Requests and Conversion Requests; and (c) to give notices and to take other action on its behalf under the Loan Documents.

Validity of Liens. The Security Documents shall be effective to create in favor of the Agent a legal, valid and enforceable first (except for Permitted Liens entitled to priority under applicable law) security interest in the Collateral. All filings, recordings, deliveries of instruments and other actions necessary or desirable in the opinion of the Agent to protect and preserve such security interests shall have been duly effected. The Agent shall have received evidence thereof in form and substance satisfactory to the Agent. Perfection Certificates and UCC Search Results. The Agent shall have received from the Borrower a completed and fully executed Perfection Certificate and the results of UCC searches with respect to its Collateral, indicating no liens other than Permitted Liens and otherwise in form and substance satisfactory to the Agent. Certificates of Insurance; Consent to Assignment of Insurance. (a) The Agent shall have received (a) a certificate of insurance from an independent insurance broker dated as of the Closing Date, identifying insurers, types of insurance, insurance limits, and policy terms, and otherwise describing the insurance obtained in accordance with the provisions of the Security Agreement, the Contract and the First Preferred Fleet Mortgage and (b) certified copies of all policies evidencing such insurance (or certificates therefore signed by the insurer or an agent authorized to bind the insurer). (b) the Borrower shall have obtained any and all necessary third party consents to the Assignment of Insurance, such consents to be in form and substance satisfactory to the Banks, and the Agent shall have received fully executed originals of such consents. Solvency Certificate Each of the Banks shall have received an officer's certificate of the Borrower and the Guarantor dated as of the Closing Date as to the solvency of the Borrower and the Guarantor following the consummation of the transactions contemplated herein and in form and substance satisfactory to the Banks. Permits. The Agent shall have received evidence that all necessary licenses and permits required for the commencement of construction on the Vessels shall have been obtained. Charter. The Agent shall have received evidence that the Charter has been executed and delivered, is in full force and effect and is in form and substance satisfactory to the Banks and shall have received a certified copy of the Charter. Shipbuilding Guaranty. The Agent shall have received the Contract which evidences that the Shipbuilding Guaranty has been executed and delivered by the Shipbuilding Guarantor, and assigned thereof to the Agent for the benefit of the Agent and the Banks. Opinions of Counsel. Each of the Banks and the Agent shall have received a favorable opinion addressed to the Banks and the Agent, dated as of the Closing Date, in form and substance satisfactory to the Banks and the Agent, from (a) William G. Gotimer, Jr., Esq., counsel to the Borrower and the Guarantor and (b) Gilmartin, Poster & Shafto, counsel to the Borrower as to the First Preferred Fleet Mortgage. Payment of Fees. The Borrower shall have paid to the Agent the Closing Fee. Naval Architect Letter C.R. Cushing & Co., Inc. shall have delivered to the Agent and the Banks a report to the effect that (a) the Plans and Specifications relating to the construction on the Vessels by the Builder pursuant to the Contract satisfactorily provide for the construction on the Vessels and (b) in the opinion of C.R. Cushing & Co., Inc., construction on the Vessels can be completed on or before the Conversion Date for an amount not greater than the Contract Price. CONDITIONS TO ALL BORROWINGS.

The obligations of the Banks to make any Advance, including the Construction Advances and to convert the Construction Loan to the Term Loan on the Conversion Date, in each case whether on or after the Closing Date, shall also be subject to the satisfaction of the following conditions precedent: Representations True; No Event of Default. Each of the representations and warranties of each of the Guarantor and the Borrower contained in this Credit Agreement, the other Loan Documents or in any document or instrument delivered pursuant to or in connection with this Credit Agreement, and each of the representations and warranties of each of the Builder and the Shipbuilding Guarantor contained in the Construction Documents shall be true as of the date as of which they were made and shall also be true at and as of the time of the making of or conversion of such Advances, with the same effect as if made at and as of that time (except to the extent of changes resulting from transactions contemplated or permitted by this Credit Agreement and the other Loan Documents and changes occurring in the ordinary course of business that singly or in the aggregate are not materially adverse, and to the extent that such representations and warranties relate expressly to an earlier date) and no Default or Event of Default shall have occurred and be continuing. No Legal Impediment. No change shall have occurred in any law or regulations thereunder or interpretations thereof that in the reasonable opinion of any Bank would make it illegal for such Bank to make or convert such Advances. Governmental Regulation. Each Bank shall have received such statements in substance and form reasonably satisfactory to such Bank as such Bank shall require for the purpose of compliance with any applicable regulations of the Comptroller of the Currency or the Board of Governors of the Federal Reserve System. Proceedings and Documents. All proceedings in connection with the transactions contemplated by this Credit Agreement, the other Loan Documents and all other documents incident thereto shall be satisfactory in substance and in form to the Banks and to the Agent and the Agent's Special Counsel, and the Banks, the Agent and such counsel shall have received all information and such counterpart originals or certified or other copies of such documents as the Agent may reasonably request. Events Relating to Construction. Loan Documents. The Borrower shall have delivered to the Agent a Construction Loan Advance Request pursuant to Section 2.6 hereof together with the required supporting documentation relating to the progress payment to the Builder to be funded thereby. Lien Waivers. The Borrower shall have delivered to the Agent and the Banks written lien waivers, in form and substance reasonably satisfactory to the Agent, from the Builder and from laborers, subcontractors and materialmen for work done or materials supplied by them, in each case in excess of $250,000, and in the aggregate in excess of $1,000,000. Construction Inspector's Letter. In the case of each Construction Advance Request requesting a Construction Advance to fund Project Costs, the Construction Inspector (or, in the case of a Construction Advance Request requesting a Construction Advance to achieve a Milestone which does not require review by the Construction Inspector, C.R. Cushing & Co., Inc.) shall have delivered to the Agent and the Banks a report to the effect that in its opinion, based on on-site observations and submissions by the Builder and C.R. Cushing & Co., Inc., the construction of the Vessels to the date thereof was performed in a good and workmanlike manner and in accordance in all material respects with the Plans and Specifications and stating that the Milestone relating to the Construction Advance has been achieved in compliance with the Contract and this Credit Agreement. Effectiveness of Contract, et. al. Each of the Contract, the Performance Bond (if obtained pursuant to Section 6 hereof) and the Shipbuilding Guaranty shall remain in full force and effect, and there shall not be any default, and no event of default shall have occurred and be continuing, under the Contract, the Performance Bond, or the Shipbuilding Guaranty. EVENTS OF DEFAULT; ACCELERATION; ETC.

Events of Default and Acceleration. If any of the following events ("Events of Default" or, if the giving of notice or the lapse of time or both is required, then, prior to such notice or lapse of time, "Defaults") shall occur: (a) the Borrower shall fail to pay any principal of any Advance when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; (b) the Borrower shall fail to pay any interest on any Advance, the commitment fee, or other sums due hereunder or under any of the other Loan Documents, when the same shall become due and payable, whether at the stated date of maturity or any accelerated date of maturity or at any other date fixed for payment; (c) the Borrower or the Guarantor shall fail to comply with any of its covenants contained in Section Section 8.1, 8.3 - 8.7, 8.9-8.10, 8.12 8.20, 9 or 10; (d) the Guarantor, the Shipbuilding Guarantor, the Builder or the Borrower shall fail to perform any term, covenant or agreement contained herein or in any of the other Loan Documents (other than those specified elsewhere in this Section 13) for fifteen (15) days after written notice of such failure has been given to the Borrower by the Agent; (e) any representation or warranty of the Guarantor, the Builder, the Shipbuilding Guarantor or the Borrower in this Credit Agreement, any of the other Loan Documents, the Construction Documents or in any other document or instrument delivered pursuant to or in connection with this Credit Agreement shall prove to have been false in any material respect upon the date when made or deemed to have been made or repeated; (f) the Guarantor or the Borrower shall fail to pay at maturity, or within any applicable period of grace, any obligation for borrowed money or credit received or in respect of any Capitalized Leases, or fail to observe or perform any material term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money or credit received or in respect of any Capitalized Leases for such period of time as would permit (assuming the giving of appropriate notice if required) the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof; (g) the Guarantor or the Borrower shall make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver of the Guarantor or the Borrower or of any substantial part of the assets of the Guarantor or the Borrower or shall commence any case or other proceeding relating to the Guarantor or the Borrower under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceeding shall be commenced against the Guarantor or the Borrower and the Guarantor or the Borrower shall indicate its approval thereof, consent thereto or acquiescence therein or such petition or application shall not have been dismissed within forty-five (45) days following the filing thereof; (h) a decree or order is entered appointing any such trustee, custodian, liquidator or receiver or adjudicating the Guarantor or the Borrower bankrupt or insolvent, or approving a petition in any such case or other proceeding, or a decree or order for relief is entered in respect of the Guarantor or the Borrower in an involuntary case under federal bankruptcy laws as now or hereafter constituted; (i) there shall remain in force, undischarged, unsatisfied and unstayed, for more than thirty days, whether or not consecutive, any final judgment against the Guarantor or the Borrower that, with other outstanding final judgments, undischarged, against the Guarantor or the Borrower exceeds in the aggregate $500,000; (j) if any of the Loan Documents shall be cancelled, terminated, revoked or rescinded or the Agent's security interests, mortgages or liens in any material portion of the Collateral shall cease to be perfected, or shall cease to have the priority contemplated by the Security Documents, in each case otherwise than in accordance with the terms thereof or with the express prior written agreement, consent or approval of the Banks, or any action at law, suit or in equity or other legal proceeding to cancel, revoke or rescind any of the loan documents shall be commenced by or on behalf of the Guarantor, the Shipbuilding Guarantor, the Builder or the Borrower party thereto or any of their respective stockholders, or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents is illegal, invalid or unenforceable in accordance with the terms thereof; (k) with respect to any Guaranteed Pension Plan, an ERISA Reportable Event shall have occurred and the Majority Banks shall have determined in their reasonable discretion that such event reasonably could be expected to result in liability of the Borrower to the PBGC or such Guaranteed Pension Plan in an aggregate amount exceeding $500,000 and such event in the circumstances occurring reasonably could constitute grounds for the termination of such Guaranteed Pension Plan by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Guaranteed Pension Plan; or a trustee shall have been appointed by the United States District Court to administer such Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to terminate such Guaranteed Pension Plan;

(l) the Guarantor or the Borrower shall be enjoined, restrained or in any way prevented by the order of any court or any administrative or regulatory agency from conducting any material part of its business and such order shall continue in effect for more than thirty (30) days; (m) there shall occur any material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo, condemnation, act of God or public enemy, or other casualty, which in any such case causes, for more than thirty (30) consecutive days, the cessation or substantial curtailment of revenue producing activities at any facility of the Guarantor or the Borrower if such event or circumstance is not covered by business interruption insurance and would have a material adverse effect on the business or financial condition of the Guarantor or the Borrower; (n) there shall occur the loss, suspension or revocation of, or failure to renew, any license or permit now held or hereafter acquired by the Guarantor or the Borrower if such loss, suspension, revocation or failure to renew would have a material adverse effect on the business or financial condition of the Guarantor or the Borrower; (o) the Guarantor or the Borrower shall be indicted for a state or federal crime, or any civil or criminal action shall otherwise have been brought or threatened against the Guarantor or the Borrower, a punishment for which in any such case could include the forfeiture of any assets of the Guarantor or the Borrower having a fair market value in excess of $100,000; or (p) Malcom P. McLean or his immediate family or estate shall at any time, legally or beneficially own less than sixty percent (60%) of the common stock of each of the Guarantor and the Borrower, as adjusted pursuant to any stock split, stock dividend or recapitalization or reclassification of the capital of such corporation; (q) the Agent shall have received a report by the American Bureau of Shipping or any other classification society, or by any marine engineer or surveyor following an inspection at the request of the Agent, that either Vessel is not in compliance with the requirements for the highest classification for vessels of like age and type or is not in compliance with the requirements of applicable law for use as intended under this Credit Agreement and action shall not have been commenced within fifteen (15) days after written notice thereof shall have been given by the Agent to the Borrower and such corrective action shall not be diligently prosecuted or completed in a manner and time schedule consistent with industry standards; (r) there shall have occurred any default or any event or default under the Contract, or any delay by any party in the performance of its obligations under the Contract shall have occurred, which in the case of any such default or delay has not been approved by the Majority Banks and will result in the termination or cancellation of, or will relieve the performance of any obligations of any other party, under the Contract; (s) the Construction Inspector shall, at any time prior to the Project Completion Date, certify to the Banks that either Vessel does not conform in any material respect to the Plans and Specifications; or (t) the Performance Bond, if obtained, shall be cancelled, terminated, revoked, rescinded or modified otherwise then in accordance with the provisions thereof or with the express written consent of the Banks; or the issuer of the Performance Bond shall dissolve or terminate its existence, or make an assignment for the benefit of creditors, or admit in writing its inability to pay or generally fail to pay its debts as they mature or become due, or shall petition or apply for the appointment of a trustee or other custodian, liquidator or receiver or shall commence any case or other proceeding under bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law of any jurisdiction, now or hereafter in effect, or shall take any action to authorize or in furtherance of any of the foregoing, or if any such petition or application shall be filed or any such case or other proceedings shall be commenced against it and shall indicate its approval thereof, consent thereto or acquiescence therein; then, and in any such event, so long as the same may be continuing, the Agent may, and upon the request of the Majority Banks shall, by notice in writing to the Borrower declare all amounts owing with respect to this Credit Agreement, the Notes and the other Loan Documents to be, and they shall thereupon forthwith become, immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided that in the event of any Event of Default specified in Section 13.1(g), 13.1(h) or 13.1(j) hereof, all such amounts shall become immediately due and payable automatically and without any requirement of notice from the Agent or any Bank. Termination of Commitments. If any one or more of the Events of Default specified in Section 13.1(g), Section 13.1(h) or Section 13.1(j) hereof shall occur, any unused portion of the credit hereunder shall forthwith terminate and each of the Banks shall be relieved of all obligations to make Advances to the Borrower. If any other Event of Default shall have occurred and be continuing, or if on any Drawdown Date the conditions precedent to the making of the Advances to be made on such Drawdown Date are not satisfied, the Agent may and, upon the request of the Majority Banks, shall, by notice to the Borrower, terminate the unused portion of the credit hereunder, and upon such notice being given such unused portion of the credit hereunder shall terminate immediately and each of the Banks shall be relieved of all further obligations to make Advances. If any such notice is given to the Borrower the Agent will forthwith furnish a copy thereof to each of the Banks. No termination of the credit hereunder shall relieve the Borrower of any of the Obligations or any of its existing obligations to any of the Banks arising under other agreements or instruments.

Remedies. In case any one or more of the Events of Default shall have occurred and be continuing, and whether or not the Banks shall have accelerated the maturity of the Advances pursuant to Section 13.1 hereof, each Bank, if owed any amount with respect to the Advances, may, with the consent of the Majority Banks but not otherwise, proceed to protect and enforce its rights by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Credit Agreement and the other Loan Documents or any instrument pursuant to which the Obligations to such Bank are evidenced, including as permitted by applicable law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of such Bank. No remedy herein conferred upon any Bank or the Agent or the holder of any Note is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of law. Distribution of Collateral Proceeds. In the event that, following the occurrence or during the continuance of any Default or Event of Default, the Agent or any Bank, as the case may be, receives any monies in connection with the enforcement of any the Security Documents, or otherwise with respect to the realization upon any of the Collateral, such monies shall be distributed for application as follows: (a) First, to the payment of, or (as the case may be) the reimbursement of the Agent for or in respect of all reasonable costs, expenses, disbursements and losses which shall have been incurred or sustained by the Agent in connection with the collection of such monies by the Agent, for the exercise, protection or enforcement by the Agent of all or any of the rights, remedies, powers and privileges of the Agent under this Credit Agreement or any of the other loan documents or in respect of the collateral and supports the provision of adequate indemnity to the Agent against all taxes or liens which by law shall have, or may have, priority over the rights of the Agent to such monies; (b) Second, to all other Obligations in such order or preference as the Majority Banks may determine; provided, however, that distributions in respect of such Obligations shall be made pari passu among Obligations owing to the Banks with respect to each type of Obligation such as interest, principal, fees and expenses, shall be made among the Banks pro rata; and provided, further, that the Agent may in its discretion make proper allowance to take into account any Obligations not then due and payable; (c) Third, upon payment and satisfaction in full or other provisions for payment in full satisfactory to the Banks and the Agent of all of the Obligations, to the payment of any obligations required to be paid pursuant to Section 9- 504(1)(c) of the Uniform Commercial Code of the Commonwealth of Massachusetts; and (d) Fourth, the excess, if any, shall be returned to the Borrower or to such other Persons as are entitled thereto. SETOFF. Regardless of the adequacy of any collateral, during the continuance of any Event of Default, any deposits or other sums credited by or due from any of the Banks to the Borrower and any securities or other property of the Borrower in the possession of such Bank may be applied to or set off by such Bank against the payment of Obligations and any and all other liabilities, direct, or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, of the Borrower to such Bank. Each of the Banks agrees with each other Bank that (a) if an amount to be set off is to be applied to Indebtedness of the Borrower to such Bank, other than Indebtedness evidenced by the Notes held by such Bank, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness evidenced by all such Notes held by such Bank, and (b) if such Bank shall receive from the Borrower, whether by voluntary payment, exercise of the right of setoff, counterclaim, cross action, enforcement of the claim evidenced by the Notes held by such Bank by proceedings against the Borrower at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, and shall retain and apply to the payment of the Note or Notes held by such Bank any amount in excess of its ratable portion of the payments received by all of the Banks with respect to the Notes held by all of the Banks, such Bank will make such disposition and arrangements with the other Banks with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall result in each Bank receiving in respect of the Notes held by its proportionate payment as contemplated by this Credit Agreement; provided that if all or any part of such excess payment is thereafter recovered from such Bank, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. THE AGENT. Authorization. The Agent is authorized to take such action on behalf of each of the Banks and to exercise all such powers as are hereunder and under any of the other Loan Documents and any related documents delegated to the Agent, together with such powers as are reasonably incident thereto, provided that no duties or responsibilities not expressly assumed herein or therein shall be implied to have been assumed by the Agent. The relationship between the Agent and the Banks is and shall be that of agent and principal only, and nothing contained in this Credit Agreement or any of the other Loan Documents shall be construed to constitute the Agent as a trustee for any Bank.

Employees and Agents. The Agent may exercise its powers and execute its duties by or through employees or agents and shall be entitled to take, and to rely on, advice of counsel concerning all matters pertaining to its rights and duties under this Credit Agreement and the other Loan Documents. No Liability. Neither the Agent nor any of its shareholders, directors, officers or employees nor any other Person assisting them in their duties nor any agent or employee thereof, shall be liable for any waiver, consent or approval given or any action taken, or omitted to be taken, in good faith by it or them hereunder or under any of the other Loan Documents, or in connection herewith or therewith, or be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Agent or such other Person, as the case may be, may be liable for losses due to its willful misconduct or gross negligence. No Representations. The Agent shall not be responsible for the execution or validity or enforceability of this Credit Agreement, the Notes, any of the other Loan Documents or any instrument at anytime constituting, or intended to constitute, collateral security for the Notes, or for the value of any such collateral security or for the validity, enforceability or collectability of any such amounts owing with respect to the Notes, or for any recitals or statements, warranties or representations made herein or in any of the other Loan Documents or in any certificate or instrument hereafter furnished to it by or on behalf of the Borrower, or be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or in any instrument at any time constituting, or intended to constitute, collateral security for the Notes or to inspect any of the properties, books or records of the Guarantor or the Borrower. The Agent shall not be bound to ascertain whether any notice, consent, waiver or request delivered to it by the Borrower or any holder of any of the Notes shall have been duly authorized or is true, accurate and complete. The Agent has not made nor does it now make any representations or warranties, express or implied, nor does it assume any liability to the Banks, with respect to the credit worthiness or financial conditions of the Guarantor or the Borrower. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank, and based upon such information and documents as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement. Payments. Payments to Agent. A payment by the Borrower to the Agent hereunder or any of the other Loan Documents for the account of any Bank shall constitute a payment to such Bank. The Agent agrees promptly to distribute to each Bank such Bank's pro rata share of payments received by the Agent for the account of the Banks except as otherwise expressly provided herein or in any of the other Loan Documents. Distribution by Agent. If in the opinion of the Agent the distribution of any amount received by it in such capacity hereunder, under the Notes or under any of the other Loan Documents might involve it in liability, it may refrain from making distribution until its right to make distribution shall have been adjudicated by a court of competent jurisdiction. If a court of competent jurisdiction shall adjudge that any amount received and distributed by the Agent is to be repaid, each Person to whom any such distribution shall have been made shall either repay to the Agent its proportionate share of the amount so adjudged to be repaid or shall pay over the same in such manner and to such Persons as shall be determined by such court. Delinquent Banks. Notwithstanding anything to the contrary contained in this Credit Agreement or any of the other Loan Documents, any Bank that fails (a) to make available to the Agent its pro rata share of any Advance or (b) to comply with the provisions of Section 14 hereof with respect to making dispositions and arrangements with the other Banks, where such Bank's share of any payment received, whether by setoff or otherwise, is in excess of its pro rata share of such payments due and to payable to all of the Banks, in each case as, when and to the full extent required by the provisions of this Credit Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be deemed a Delinquent Bank until such time as such delinquency is satisfied. A Delinquent Bank shall be deemed to have assigned any and all payments due to it from the Borrower, whether on account of Outstanding Advances, interest, fees or otherwise, to the remaining nondelinquent Banks for application to, and reduction of, their respective pro rata shares of all Outstanding Advances. The Delinquent Bank hereby authorizes the Agent to distribute such payments to the nondelinquent Banks in proportion to their respective pro rata shares of all Outstanding Advances. A Delinquent Bank shall be deemed to have satisfied in full a delinquency when and if, as a result of application of the assigned payments to all Outstanding Advances of the nondelinquent Banks, the Banks' respective pro rata shares of all Outstanding Advances have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency. Holders of Notes.

The Agent may deem and treat the payee of any Note as the absolute owner thereof for all purposes hereof until it shall have been furnished in writing with a different name by such payee or by a subsequent holder. Indemnity. The Banks ratably agree hereby to indemnify and hold harmless the Agent from and against any and all claims, actions and suits (whether groundless or otherwise), losses, damages, costs, expenses (including any expenses for which the Agent has not been reimbursed by the Borrower as required by Section 16 hereof), and liabilities of every nature and character arising out of or related to this Credit Agreement, the Notes, or any of the other Loan Documents or the transactions contemplated or evidenced hereby or thereby, or the Agent's actions taken hereunder or thereunder, except to the extent that any of the same shall be directly caused by the Agent's willful misconduct or gross negligence. Agent as Bank. In its individual capacity, FNBB shall have the same obligations and the same rights, powers and privileges in respect to its Commitment and the Advances made by it, and as the holder of any of the Notes, as it would have were it not also the Agent. Resignation. The Agent may resign at any time by giving sixty (60) days prior written notice thereof to the Banks and the Borrower. Upon any such resignation, the Majority Banks shall have the right to appoint a successor Agent. Unless a Default or Event of Default shall have occurred and be continuing, such successor Agent shall be reasonably acceptable to the Borrower. If no successor Agent shall have been so appointed by the Majority Banks and shall have accepted such appointment within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a financial institution having a rating of not less than A or its equivalent by Standard & Poor's Corporation. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After any retiring Agent's resignation, the provisions of this Credit Agreement and the other Loan Documents shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Agent. Notification of Defaults and Events of Default. Each Bank hereby agrees that, upon learning of the existence of a Default or an Event of Default, it shall promptly notify the Agent thereof. The Agent hereby agrees that upon receipt of any notice under this Section 15.10 it shall promptly notify the other Banks of the existence of such Default or Event of Default. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of producing and reproducing this Credit Agreement, the other Loan Documents and the other agreements and instruments mentioned herein, (b) any taxes (including any interest and penalties in respect thereto) payable by the Agent or any of the Banks (other than taxes based upon the Agent's or any Bank's revenue, net income) on or with respect to the transactions contemplated by this Credit Agreement (the Borrower hereby agreeing to indemnify the Agent and each Bank with respect thereto), (c) the reasonable fees, expenses and disbursements of the Agent's Special Counsel and any local counsel to the Agent incurred in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, each closing hereunder, and amendments, modifications, approvals, consents or waivers hereto or hereunder, (d) the fees, expenses and disbursements of the Agent incurred by the Agent in connection with the preparation, administration or interpretation of the Loan Documents and other instruments mentioned herein, including all surveyor, engineering and appraisal charges, (e) all reasonable out-of-pocket expenses (including without limitation reasonable attorneys' fees and costs, and reasonable consulting, accounting, appraisal, investment banking and similar professional fees and charges, and any fees and costs of marine consultants or the Construction Inspector) incurred by any Bank or the Agent in connection with (i) the enforcement of or preservation of rights under any of the Loan Documents against the Guarantor or the Borrower or the administration thereof after the occurrence of a Default or Event of Default and (ii) any litigation, proceeding or dispute whether arising hereunder or otherwise, in any way related to any Bank's or the Agent's relationship with the Guarantor or the Borrower and (f) all reasonable fees, expenses and disbursements of any Bank or the Agent incurred in connection with UCC searches, UCC filings or mortgage recordings. The covenants of this Section 16 shall survive payment or satisfaction of payment of amounts owing with respect to the Notes. INDEMNIFICATION. The Borrower agrees to indemnify and hold harmless the Agent and the Banks from and against any and all claims, actions and suits whether groundless or otherwise, and from and against any and all liabilities, losses, damages and expenses of every nature and character arising out of this Credit Agreement or any of the other Loan Documents or the transactions contemplated hereby including, without limitation, (a) any actual or proposed use by the Borrower of the proceeds of any of the Advances (b) the Guarantor or the Borrower entering into or performing this

Credit Agreement or any of the other Loan Documents or (c) with respect to the Guarantor or the Borrower and their respective properties and assets, the violation of any Environmental Law, the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Substances or any action, suit, proceeding or investigation brought or threatened with respect to any Hazardous Substances (including, but not limited to claims with respect to wrongful death, personal injury or damage to property), in each case including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding. In litigation, or the preparation therefor, the Banks and the Agent shall be entitled to select their own counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of such counsel. If, and to the extent that the obligations of the Borrower under this Section 17 are unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment in satisfaction of such obligations which is permissible under applicable law. The covenants contained in this Section 17 shall survive payment of satisfaction in full of all other obligations. SURVIVAL OF COVENANTS, ETC. All covenants, agreements, representations and warranties made herein, in the Notes, in any of the other Loan Documents or in any documents or other papers delivered by or on behalf of the Guarantor or the Borrower pursuant hereto shall be deemed to have been relied upon by the Banks and the Agent, notwithstanding any investigation heretofore or hereafter made by any of them, and shall survive the making by the Banks of the Advances, as herein contemplated, and shall continue in full force and effect so long as any amount due under this Credit Agreement or the Notes or any of the other Loan Documents remains Outstanding or any Bank has any obligation to make any Advances, and for such further time as may be otherwise expressly specified in this Credit Agreement. All statements contained in any certificate or other paper delivered to any Bank or the Agent at any time by or on behalf of the Guarantor or the Borrower pursuant hereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower or such Subsidiary hereunder. ASSIGNMENT AND PARTICIPATION. Conditions to Assignment by Banks. Except as provided herein, each Bank may assign to one or more Eligible Assignees all or a portion of its interests, rights and obligations under this Credit Agreement (including all or a portion of its Commitment Percentage and Commitment and the same portion of the Advances at the time owing to it) and the Notes held by it; provided that (a) each of the Agent and the Borrower shall have given its prior written consent to such assignment, which consent, in the case of the Borrower, will not be unreasonably withheld, (b) each such assignment shall be of a constant, and not a varying, percentage of all the assigning Bank's rights and obligations under this Credit Agreement, (c) each assignment shall be in an amount that is a whole multiple of $3,000,000, and (d) the parties to such assignment shall execute and deliver to the Agent, for recording in the Register (as hereinafter defined), an Assignment and Acceptance, substantially in the form of Exhibit N hereto (an "Assignment and Acceptance"), together with any Notes subject to such assignment. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof, (a) the assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Bank hereunder, and (b) the assigning Bank shall, to the extent provided in such assignment and upon payment to the Agent of the registration fee referred to in Section 19.3 hereof, be released from its obligations under this Credit Agreement. Certain Representations and Warranties; Limitations; Covenants. By executing and delivering an Assignment and Acceptance, the parties to the assignment thereunder confirm to and agree with each other and the other parties hereto as follows: (a) other than the representation and warranty that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, the assigning Bank makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant hereto or the attachment, perfection or priority of any security interest or mortgage; (b) the assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantors, the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Guarantor, the Borrower and its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations of any of their obligations under this Credit Agreement or any of the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; (c) such assignee confirms that it has received a copy of this Credit Agreement, together with copies of the most recent financial statements referred to in Section 7.4 and Section 8.4 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (d) such assignee will, independently and without reliance upon the assigning Bank, the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement;

(e) such assignee represents and warrants that it is an Eligible Assignee; (f) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Credit Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof or thereof, together with such powers as are reasonably incidental thereto; (g) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Credit Agreement are required to be performed by it as a Bank; and (h) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance. Register. The Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register or similar list (the "Register") for the recordation of the names and addresses of the Banks and the Commitment Percentage of, and principal amount of the Construction Loan owing to the Banks from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of this Credit Agreement. The Register shall be available for inspection by the Borrower and the Banks at any reasonable time and from time to time upon reasonable prior notice. Upon each such recordation, the assigning Bank agrees to pay to the Agent a registration fee in the sum of $3,000. New Notes. Upon its receipt of an Assignment and Acceptance executed by the parties to such assignment, together with each Note subject to such assignment, the Agent shall (a) record the information contained therein in the Register, and (b) give prompt notice thereof to the Borrower and the Banks (other than the assigning Bank). Within five (5) Business Days after receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Agent, in exchange for each surrendered Note, a new Note to the order of such Eligible Assignee in an amount equal to the amount assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank has retained some portion of its obligations hereunder, a new Note to the order of the assigning Bank in an amount equal to the amount retained by it hereunder. Such new Notes shall provide that they are replacements for the surrendered Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes. Within five (5) days of issuance of any new Notes pursuant to this Section 19.4, the Borrower shall deliver an opinion of counsel, addressed to the Banks and the Agent, relating to the due authorization, execution and delivery of such new Notes and the legality, validity and binding effect thereof, in form and substance satisfactory to the Banks. The surrendered Notes shall be cancelled and returned to the Borrower. Participations. Each Bank may sell participations to one or more banks or other entities in all or a portion of such Bank's rights and obligations under this Credit Agreement and the other Loan Documents; provided that (a) each such participation shall be in an amount of not less than $3,000,000 (b) any such sale or participation shall not affect the rights and duties of the selling Bank hereunder to the Borrower and (c) the only rights granted to the participant pursuant to such participation arrangements with respect to waivers, amendments or modifications of the Loan Documents shall be the rights to approve waivers, amendments or modifications that would reduce the principal of or the interest rate on any Construction Advances, extend the term or increase the amount of the Commitment of such Bank as it relates to such participant, reduce the amount of any commitment fees to which such participant is entitled or extend any regularly scheduled payment date for principal or interest. Disclosure. Each of the Guarantors and the Borrower agrees that in addition to disclosures made in accordance with standard and customary banking practices any Bank may disclose information obtained by such Bank pursuant to this Credit Agreement to assignees or participants and potential assignees or participants hereunder; provided that such assignees or participants or potential assignees or participants shall agree (a) to treat in confidence such information unless such information otherwise becomes public knowledge, (b) not to disclose such information to a third party, except as required by law or legal process and (c) not to make use of such information for purposes of transactions unrelated to such contemplated assignment or participation. Assignee or Participant Affiliated with the Borrower. If any assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for purposes of granting consents or waivers or for purposes of agreeing to amendments or other modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to Section 13.1 or Section 13.2 hereof, and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to such assignee Bank's interest in any of the Construction Advances. If any Bank sells a participating interest in any of the Construction Advances to a participant, and such participant is the Borrower or an Affiliate of the Borrower, then such transferor Bank shall promptly notify the Agent of the sale of such participation. A transferor Bank shall have no right to vote as a Bank hereunder or under any of the other Loan Documents for

purposes of granting consents or waivers or for purposes of agreeing to amendments or modifications to any of the Loan Documents or for purposes of making requests to the Agent pursuant to Section 13.1 or Section 13.2 hereof to the extent that such participation is beneficially owned by the Borrower or any Affiliate of the Borrower, and the determination of the Majority Banks shall for all purposes of this Agreement and the other Loan Documents be made without regard to the interest of such transferor Bank in the Construction Advances to the extent of such participation. Miscellaneous Assignment Provisions. Any assigning Bank shall retain its rights to be indemnified pursuant to Section 16 hereof with respect to any claims or actions arising prior to the date of such assignment. If any assignee Bank is not incorporated under the laws of the United States of America or any state thereof, it shall, prior to the date on which any interest or fees are payable hereunder or under any of the other Loan Documents for its account, deliver to the Borrower and the Agent certification as to its exemption from deduction or withholding of any United States federal income taxes. If any Reference Bank transfers all of its interest, rights and obligations under this Credit Agreement, the Agent shall, in consultation with the Borrower and with the consent of the Borrower and the Majority Banks, appoint another Bank to act as a Reference Bank hereunder. Anything contained in this Section 18 hereof to the contrary notwithstanding, any Bank may at any time pledge all or any portion of its interest and rights under this Credit Agreement (including all or any portion of its Notes) to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall release the pledgor Bank from its obligations hereunder or under any of the other Loan Documents. Assignment by Borrower. The Guarantors and the Borrower shall not assign or transfer any of its rights or obligations under any of the Loan Documents without the prior written consent of each of the Banks. NOTICES, ETC. Except as otherwise expressly provided in this Credit Agreement, all notices and other communications made or required to be given pursuant to this Credit Agreement or the Notes shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by telegraph, telecopy, telefax or telex and confirmed by delivery via courier or postal service, addressed as follows: (a) if to the Borrower or the Guarantor, at 500 Park Avenue, New York, New York 10021, Attention: Mr. John McCown, or at such other address for notice as the Borrower shall last have furnished in writing to the Person giving the notice; (b) if to the Agent, at 100 Federal Street, Boston, Massachusetts 02110, USA, Attention: Daniel O'Connor, Director, or such other address for notice as the Agent shall last have furnished in writing to the Person giving the notice; and (c) if to any Bank, at such Bank's address set forth on Schedule 1 hereto, or such other address for notice as such Bank shall have last furnished in writing to the Person giving the notice. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (a) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of the receipt thereof by such officer or the sending of such facsimile and (b) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. GOVERNING LAW. THIS CREDIT AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE GUARANTOR AND THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section 20 HEREOF. EACH OF THE GUARANTOR AND THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. HEADINGS. The captions in this Credit Agreement are for convenience of reference only and shall not define or limit the provisions hereof.

COUNTERPARTS. This Credit Agreement and any amendment hereof may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, and all of which together shall constitute one instrument. In proving this Credit Agreement it shall not be necessary to produce or account for more than one such counterpart signed by the party against whom enforcement is sought. ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents executed in connection herewith or therewith express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Credit Agreement nor any term hereof may be changed, waived, discharged or terminated, except as provided in Section 26 hereof. WAIVER OF JURY TRIAL. Each of the Guarantor and the Borrower hereby waives its right to a jury trial with respect to any action or claim arising out of any dispute in connection with this Credit Agreement, the Notes or any of the other Loan Documents, any rights or obligations hereunder or thereunder or the performance of such rights and obligations. Except as prohibited by law, each of the Guarantor and the Borrower hereby waives any right it may have to claim or recover in any litigation referred to in the preceding sentence any special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Each of the Guarantor and the Borrower (a) certifies that no representative, agent or attorney of any Bank or the Agent has represented, expressly or otherwise, that such Bank or the Agent would not, in the event of litigation, seek to enforce the foregoing waivers and (b) acknowledges that the Agent and the Banks have been induced to enter into this Credit Agreement, the other Loan Documents to which it is a party by, among other things, the waivers and certifications contained herein. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise expressly provided in this Credit Agreement, any consent or approval required or permitted by this Credit Agreement to be given by one or more or all of the Banks may be given, and any term of this Credit Agreement or of any other instrument related hereto or mentioned herein may be amended, and the performance or observance by the Borrower or the Guarantor of any terms of this Credit Agreement or such other instrument or the continuance of any Default or Event of Default may be waived (either generally or in a particular instance and either retroactively or prospectively) with, but only with, the written consent of the Borrower and the written consent of the Majority Banks. Notwithstanding the foregoing, the rate of interest on the Notes (other than interest accruing pursuant to Section 5.11.2 hereof following the effective date of any waiver by the Majority Banks of the Default or Event of Default relating thereto), the term of the Notes, the amount of the Commitments of the Banks, the amount of commitment fee hereunder and the release of Collateral with a value in excess of $1,000,000, may not be changed without the written consent of the Borrower and the written consent of each Bank affected thereby; the definition of Majority Banks may not be amended without the written consent of all of the Banks; and Section 15 hereof may not be amended without the written consent of the Agent. No waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing or delay or omission on the part of either Bank in exercising any right shall operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall entitle the Borrower to other or further notice or demand in similar or other circumstances. SEVERABILITY. The provisions of this Credit Agreement are severable and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Credit Agreement in any jurisdiction. IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as a sealed instrument as of the date first set forth above. KADAMPANATTU CORP.
By: /s/ John D. McCown Name: John D. McCown Title: President

TRAILER BRIDGE, INC.
By: /s/ John D. McCown Name: John D. McCown Title: Vice President

THE FIRST NATIONAL BANK OF BOSTON, individually and as Agent
By: /s/ Daniel O'Connor Name: Daniel O'Connor, Title: Director

EXHIBIT 10D(i) FIRST AMENDMENT TO CONSTRUCTION AND TERM LOAN AGREEMENT First Amendment dated as of May 9, 1996 to Construction and Term Loan Agreement (the "First Amendment"), by and among KADAMPANATTU CORP., a Delaware corporation (the "Borrower"), TRAILER BRIDGE, INC., a Delaware corporation (the "Guarantor"), THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on Schedule 1 to the Credit Agreement (as hereinafter defined) (the "Banks") and THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the "Agent"), amending certain provisions of the Construction and Term Loan Agreement dated as of October 13, 1995 (as amended and in effect from time to time, the "Credit Agreement") by and among the Borrower, the Guarantor, the Banks and the Agent. Terms not otherwise defined herein which are defined in the Credit Agreement shall have the same respective meanings herein as therein. WHEREAS, the Borrower, the Guarantor, the Banks and the Agent have agreed to modify certain terms and conditions of the Credit Agreement as specifically set forth in this First Amendment; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Amendment to Section 1 of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Project Costs" in its entirety and restating it as follows: Project Costs. The total cost to complete the Project, including the Contract Price, the costs and expenses under and associated with the Contract, architects' fees and miscellaneous fees and expenses as set forth in the Project Budget; provided, however, that in no event shall the aggregate amount of such Project Costs for (a) the Vessel known as the Jax-San Juan Bridge exceed $10,725,000 and (b) the Vessel known as the San Juan-Jax Bridge exceed $10,550,000. Section 2. Amendment to the Credit Agreement. Schedule 1.1(b) of the Credit Agreement is hereby amended by deleting Schedule 1.1(b) in its entirety and substituting in place thereof the Schedule 1.1(b) attached hereto. Section 3. Conditions to Effectiveness. This First Amendment shall not become effective until the Agent receives the following: (a) a counterpart of this First Amendment executed by the Borrower, the Guarantor, the Banks and the Agent; and (b) corporate resolutions of each of the Borrower and the Guarantor authorizing the transactions contemplated by this First Amendment. Section 4. Representations and Warranties. Each of the Borrower and the Guarantor hereby repeats, on and as of the date hereof, each of the representations and warranties made by it in Section 7 of the Credit Agreement, provided, that all references therein to the Credit Agreement shall refer to such Credit Agreement as amended hereby. In addition, each of the Borrower and the Guarantor hereby represents and warrants that the execution and delivery by the Borrower and the Guarantor of this First Amendment and the performance by the Borrower and the Guarantor of all of their agreements and obligations under the Credit Agreement as amended hereby are within the corporate authority of each of the Borrower and the Guarantor and have been duly authorized by all necessary corporate action on the part of each of the Borrower and the Guarantor. Section 5. Ratification, Etc. Except as expressly amended hereby, the Credit Agreement and all documents, instruments and agreements related thereto, including, but not limited to the Security Documents, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The Credit Agreement and this First Amendment shall be read and construed as a single agreement. All references in the Credit Agreement or any related agreement or instrument to the Credit Agreement shall hereafter refer to the Credit Agreement as amended hereby. Section 6. No Waiver. Nothing contained herein shall constitute a waiver of, impair or otherwise affect any Obligations, any other obligation of the Borrower, the Guarantor or any rights of the Agent or the Banks consequent thereon. Section 7. Counterparts. This First Amendment may be executed in one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. Section 8. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS). IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as a document under seal as of the date first above written. KADAMPANATTU CORP.
By: /s/ John D. McCown

Title:

President

TRAILER BRIDGE, INC.
By: /s/ John D. McCown Title: Chairman

THE FIRST NATIONAL BANK OF BOSTON, individually and as Agent
By: /s/ Daniel O'Connor Title: Managing Director

PREMIER BANK NA
By: /s/ Emile Dumesnil Title: Vice President

RATIFICATION OF GUARANTY The undersigned Guarantor hereby acknowledges and consents to the foregoing First Amendment as of May 9, 1996, and agrees that the Guaranty dated as of October 13, 1995 (as amended and in effect from time to time) from the Guarantor in favor of the Agent for the benefit of the Agent and the Banks remains in full force and effect, and the Guarantor confirms and ratifies all of its obligations thereunder. TRAILER BRIDGE, INC.
By: /s/ John D. McCown Title: Chairman

Schedule 1.1(b) Maximum Cumulative Advance Amounts
Maximum Cumulative Advance Amount $ 7,093,960 $ 8,123,960 $ 9,153,960 $10,698,960 $12,243,960 $13,788,960 $15,333,960 $16,878,960 $18,423,960 $20,483,960 $21,513,960 $22,543,960 $23,573,960 $24,603,960 $25,633,960 $26,055,960

Milestone No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Milestone Event Contract Signing Receipt of 1,000 short tons of steel Receipt of additional 1,000 short tons of steel Receipt of remaining tons of steel Complete fabrication of 500 ST of panels Complete fabrication of 1,000 ST of panels Complete fabrication of 1,500 ST of panels Complete fabrication of 2,000 ST of panels Start erecting hull on shipway Launch of hull module Begin cutting existing hull Complete cutting existing hull Begin inserting midbody Complete inserting midbody Redeliver completed vessel Payment for final finishing repairs on first Vessel

Milestone Amount $1,030,000 $ $ $ $ $ $ $ $ 515,000 515,000 772,500 772,500 772,500 772,500 772,500 772,500

$1,030,000 $ $ $ $ $ $ 515,000 515,000 515,000 515,000 515,000 422,000

$10,722,000 for first Vessel and $10,300,000 for second Vessel

EXHIBIT 10D(ii) SECOND AMENDMENT TO CONSTRUCTION AND TERM LOAN AGREEMENT Second Amendment dated as of July 10, 1996 to Construction and Term Loan Agreement (the "Second Amendment"), by and among KADAMPANATTU CORP., a Delaware corporation (the "Borrower"), TRAILER BRIDGE, INC., a Delaware corporation (the "Guarantor"), THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions listed on Schedule 1 to the Credit Agreement (as hereinafter defined) (the "Banks") and THE FIRST NATIONAL BANK OF BOSTON, as agent for the Banks (in such capacity, the "Agent"), amending certain provisions of the Construction and Term Loan Agreement dated as of October 13, 1995 (as amended and in effect from time to time, the "Credit Agreement") by and among the Borrower, the Guarantor, the Banks and the Agent. Terms not otherwise defined herein which are defined in the Credit Agreement shall have the same respective meanings herein as therein. WHEREAS, the Borrower, the Guarantor, the Banks and the Agent have agreed to modify certain terms and conditions of the Credit Agreement as specifically set forth in this Second Amendment; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Amendment to Section 1 of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended by deleting the definition of "Project Costs" in its entirety and restating it as follows: Project Costs. The total cost to complete the Project, including the Contract Price, the costs and expenses under and associated with the Contract, architects' fees and miscellaneous fees and expenses as set forth in the Project Budget; provided, however, that in no event shall the aggregate amount of such Project Costs for (a) the Vessel known as the Jax-San Juan Bridge exceed $10,725,000 and (b) the Vessel known as the San Juan-Jax Bridge exceed $11,500,000. Section 2. Amendment to the Credit Agreement. Schedules 1 and 1.1(b) of the Credit Agreement are hereby amended by deleting each of Schedule 1 and Schedule 1.1(b) in its entirety and substituting in place thereof the Schedule 1 and Schedule 1.1(b) attached hereto. Section 3. Conditions to Effectiveness. This Second Amendment shall not become effective until the Agent receives the following: (a) a counterpart of this Second Amendment executed by the Borrower, the Guarantor, the Banks and the Agent; (b) the duly executed replacement promissory notes payable to each of the Banks reflecting the increase in the Commitment of each Bank; (c) an originally executed First Amendment to the Preferred Fleet Mortgage, such First Amendment to be in form and substance satisfactory to the Banks and the Agent, duly executed by the Borrower; and (d) corporate resolutions of each of the Borrower and the Guarantor authorizing the transactions contemplated by this Second Amendment. Section 4. Representations and Warranties. Each of the Borrower and the Guarantor hereby repeats, on and as of the date hereof, each of the representations and warranties made by it in Section 7 of the Credit Agreement, provided, that all references therein to the Credit Agreement shall refer to such Credit Agreement as amended hereby. In addition, each of the Borrower and the Guarantor hereby represents and warrants that the execution and delivery by the Borrower and the Guarantor of this Second Amendment and the performance by the Borrower and the Guarantor of all of their agreements and obligations under the Credit Agreement as amended hereby are within the corporate authority of each of the Borrower and the Guarantor and have been duly authorized by all necessary corporate action on the part of each of the Borrower and the Guarantor. Section 5. Ratification, Etc. Except as expressly amended hereby, the Credit Agreement and all documents, instruments and agreements related thereto, including, but not limited to the Security Documents, are hereby ratified and confirmed in all respects and shall continue in full force and effect. The Credit Agreement and this Second Amendment shall be read and construed as a single agreement. All references in the Credit Agreement or any related agreement or instrument to the Credit Agreement shall hereafter refer to the Credit Agreement as amended hereby. Section 6. No Waiver. Nothing contained herein shall constitute a waiver of, impair or otherwise affect any Obligations, any other obligation of the Borrower, the Guarantor or any rights of the Agent or the Banks consequent thereon. Section 7. Counterparts. This Second Amendment may be executed in one or more counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. Section 8. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as a document under seal as of the date first above written. KADAMPANATTU CORP.
By: /s/ John D. McCown Title: President

TRAILER BRIDGE, INC.
By: /s/ John D. McCown Title: Chairman

THE FIRST NATIONAL BANK OF BOSTON, individually and as Agent
By: /s/ Daniel O'Connor Title: Managing Director

BANK ONE, LOUISIANA N.A.
By: /s/ Emile Dumesnil Title: Vice President

RATIFICATION OF GUARANTY The undersigned Guarantor hereby acknowledges and consents to the foregoing Second Amendment as of July __, 1996, and agrees that the Guaranty dated as of October 13, 1995 (as amended and in effect from time to time) from the Guarantor in favor of the Agent for the benefit of the Agent and the Banks remains in full force and effect, and the Guarantor confirms and ratifies all of its obligations thereunder. TRAILER BRIDGE, INC.
By: /s/ John D. McCown Title: Chairman

Schedule 1
Bank The First National Bank of Boston Bank One Louisiana, N.A. Commitment $15,900,000 $10,600,000 Commitment Percentage 60% 40%

Schedule 1.1(b) Maximum Cumulative Advance Amounts
Maximum Cumulative Advance Amount $ 7,093,960 $ 8,123,960 $ 9,153,960 $10,698,960 $12,243,960 $13,788,960 $15,333,960 $16,878,960 $18,423,960 $20,483,960 $21,513,960 $22,543,960 $23,573,960 $24,603,960 $25,633,960 $26,055,960 $26,570,960 $27,085,960 $27,665,960

Milestone No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Milestone Event Contract Signing Receipt of 1,000 short tons of steel Receipt of additional 1,000 short tons of steel Receipt of remaining tons of steel Complete fabrication of 500 ST of panels Complete fabrication of 1,000 ST of panels Complete fabrication of 1,500 ST of panels Complete fabrication of 2,000 ST of panels Start erecting hull on shipway Launch of hull module Begin cutting existing hull Complete cutting existing hull Begin inserting midbody Complete inserting midbody Redeliver completed vessel Payment for final finishing repairs on first Vessel Payment for certain finishing repairs on second Vessel Payment for final finishing repairs on second Vessel Miscellaneous Change Orders

Milestone Amount $1,030,000 $ $ $ $ $ $ $ $ 515,000 515,000 772,500 772,500 772,500 772,500 772,500 772,500

$1,030,000 $ $ $ $ $ $ $ $ $ 515,000 515,000 515,000 515,000 515,000 422,000 515,000 515,000 580,000

$10,722,000 for first Vessel and $11,330,00 for second Vessel

EXHIBIT 10E February 28, 1997 Mr. John D. McCown Trailer Bridge, Inc. 500 Park Avenue, 5th Floor New York, New York 10022 Dear Mr. McCown: Re: Secured Term Loan Facility We are pleased to confirm that The First National Bank of Boston (the "Bank of Boston") has agreed to extend credit to Trailer Bridge, Inc. (the "Company") in the form of a committed Chattel Mortgage Line of Credit (the "Line of Credit") for term loans (collectively the "Term Loans") made from time to time during the period specified below to finance the acquisition of new over-the-road tractors (the "Equipment"). Subject to the Company's satisfaction of the conditions to lending herein, the Bank of Boston will lend the Company Term Loans in an original principal amount not to exceed $7,100,000. The Line of Credit will remain available for drawdown for a period from the date of this Agreement (the "Closing Date") through December 31, 1997 (the "Availability Period"), provided no Default or Event of Default exists. If a Default or Event of Default occurs prior to the expiration of the Availability Period, any unused portion of the credit hereunder shall terminate and the Bank of Boston shall be relieved of any and all obligations to make Term Loans to the Company. No termination of the credit hereunder shall relieve the Company of any of its obligations hereunder or under the Notes. The Company may request Term Loans during the Availability Period by giving the Bank of Boston written notice of such request not later than 10:00 a.m. (Boston time) at least two (2) Business Days prior to the proposed drawdown date of such Term Loan, specifying the amount of the Term Loan requested, and the interest rate election (including interest period selected, if applicable) of the Company with respect thereto. Each such request, including the related interest rate election (including interest period selected, if applicable) shall be irrevocable. Each request for a Term Loan shall constitute a representation and warranty by the Company that all representations and warranties herein and in the Notes were true and correct when made and continue to be true and correct on the proposed drawdown date, all conditions to lending have been met and that no Default (as defined in the Notes) or Event of Default (as defined in the Notes) exists hereunder, under the Notes (as hereinafter defined) or under the Guaranty (as hereinafter defined). Each Term Loan will be secured by a first priority security interest in the Equipment acquired with the proceeds of such loan and will be cross-collateralized with the other Term Loans by all Equipment acquired with proceeds of Term Loans. In addition to standard terms and conditions applicable to all Term Loans, we will require that certain other conditions set forth below be satisfied prior to the making of each Term Loan. 1. Payments and Interest Rate. Each Term Loan will be in the amount requested by the Company, subject to the provisions of this Agreement, but in no event may the principal amount of a Term Loan exceed one hundred percent (100%) of the lesser of the net book value on the Company's books in accordance with generally accepted accounting principles of the Equipment being financed, or the purchase price of the Equipment being financed. Each Term Loan will be evidenced by a separate Secured Commercial Promissory Note substantially in the form of Exhibit A attached hereto (each a "Note," collectively the "Notes") delivered to the Bank of Boston at the time of each request. The principal amount of each Term Loan will be payable in thirty-six (36) consecutive monthly installments, the first thirty-five of which shall each be in an amount equal to two percent (2%) of the original principal amount of such Term Loan, and the final installment shall be in the remaining outstanding principal amount, payable on the first business day of each month, with a final maturity three (3) years from the date of drawdown. Accrued interest will be payable in arrears on the first day of each month for the preceding month. You hereby authorize the Bank of Boston to charge your demand deposit account with the Bank of Boston directly for all such payments of principal and interest. The Bank of Boston will maintain corresponding records of debits and credits as evidence of payments received under the Notes that, absent manifest error, shall be conclusive and binding. At the election of the Company, interest will accrue at (a) the Bank of Boston's Base Rate, (b) a rate of one and four tenths percent (1.4%) above the Bank of Boston's Eurodollar Rate, as adjusted for reserve requirements, for interest periods of 1, 2, 3 or 6 months, provided, that Eurodollar Rate interest periods may only be selected to end on the first day of any month, and not more than eight (8) Eurodollar Rate interest periods may be in effect at any time in the aggregate with respect to all of the Term Loans, or (c) a Fixed Rate of one and four tenths percent (1.4%) above the Bank of Boston's cost of funds (as determined by the Bank of Boston in its sole discretion), for interest periods of up to three (3) years. Interest will be computed on the basis of 360-day year and 30-day months and paid for the actual number of days elapsed. 2. Collateral and Guaranty Requirements. Each Term Loan will be secured by the grant of a first priority security interest in the Equipment being acquired with the proceeds of such Term Loan and all Equipment acquired with the proceeds of the other Term Loans pursuant to the security provisions contained in the Notes. Such security interest will also be evidenced by the delivery of the applicable certificate of title for each piece of Equipment to the Bank of Boston with the lien of the Bank of Boston noted on each such certificate. The Term Loans will be cross-collateralized by all of such Equipment. The Term Loans will be guaranteed by an unlimited guaranty from Kadampanattu Corp. (the "Guarantor") substantially in the form of Exhibit B attached hereto (the "Guaranty") delivered to the Bank of Boston on the Closing Date.

3. Basic Documentation Requirements. Concurrent with the establishment of this Line of Credit, you must deliver to the Bank of Boston the following: (i) this Line Agreement duly executed and delivered by the Company; (ii) the Guaranty duly executed and delivered by the Guarantor; (iii) Corporate Borrowing Resolutions of the Company and the Guarantor; (iv) a Secretary's Certificate with respect to charter documents, by-laws, corporate proceedings, incumbency and signatures of the Company and the Guarantor; (v) Good Standing Certificate of the Company and the Guarantor; and (vi) an opinion of counsel to the Company and the Guarantor in form and substance satisfactory to the Bank of Boston. Prior to our making each Term Loan under this Line of Credit you will deliver to the Bank of Boston the following: (i) the applicable Note duly executed and delivered by the Company; (ii) the manufacturer's statement of origin with respect to the Equipment being acquired; (iii) the original invoice with respect to such Equipment; (iv) the original certificate of title with respect to such Equipment, with the lien of the Bank of Boston duly noted thereon; or if the certificate is not yet available, a copy of the duly executed (and acknowledged, if necessary) application for the certificate of title, indicating the Bank of Boston's lien, in proper form for registration; (v) Uniform Commercial Code Financing Statements with respect to such Equipment; and (vi) a certificate of insurance with respect to such Equipment showing the Bank of Boston as loss payee and additional insured. If the certificate of title with the Bank of Boston's lien noted thereon referred to in clause (iv) is not available on the drawdown date of the applicable Term Loan, the Company shall deliver the same to the Bank of Boston within forty-five (45) days after the disbursement of such Term Loan. 4. Financial and other Reporting. You agree that, so long as any obligations remain outstanding hereunder or under any Note, you will provide the following: (i) as soon as available and in any event within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, the consolidated and consolidating balance sheets of the Company and the Guarantor and their subsidiaries as of the end of, and the related consolidated and consolidating statements of earnings and consolidated and consolidating statements of cash flow for, such quarter, in each case certified by the principal financial officer of the Company; (ii) as soon as available and in any event within ninety (90) days after the end of each fiscal year, the consolidated balance sheets of the Company and the Guarantor and their subsidiaries as of the end of, and the related consolidated statements of earnings and consolidated statements of cash flow for, such year, in each case, accompanied by a report and unqualified opinion of an independent certified public accountant reasonably satisfactory to the Bank of Boston; (iii) simultaneously with the delivery of the financial statements referred to in subsections (i) and (ii) above, a statement certified by the principal financial officer of the Company in substantially the form of Exhibit C attached hereto (each a "Compliance Certificate"); (iv) promptly upon request of the Bank of Boston from time to time, such evidence of registration and licensing of the equipment as the Bank of Boston may request; and (v) promptly upon request of the Bank of Boston from time to time, such other financial information regarding the Company and its subsidiaries and the Guarantor and its subsidiaries as the Bank of Boston may reasonably request. All financial statements required hereunder shall be in reasonable detail and prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior periods. The Company will also provide access to its facilities, books and records and collateral to the Bank of Boston and its employees and agents for the purposes of performing periodic commercial finance and credit examinations and collateral examinations.

5. Expenses. You agree to pay or reimburse the Bank of Boston for all reasonable expenses (including attorneys' fees of outside counsel or the allocated costs of in-house counsel and fees and expenses of brokers, appraisers, accountants, consultants and other professionals and experts) incurred or paid in connection with the preparation, interpretation, amendment, administration or enforcement of this Line Agreement, the Notes, or any other documents delivered in connection with the Term Loans, and the costs of periodic commercial finance and credit examinations which may be performed by the Bank of Boston from time to time. 6. Notices. Except as otherwise expressly provided in this Line Agreement or the Notes, all notices and other communications made or required to be given pursuant to this Line Agreement or the Notes shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier, or sent by facsimile and confirmed by delivery via courier, facsimile or postal service, addressed as follows: (a) if to the Company, at (i) 500 Park Avenue, 5th Floor, New York, New York 10022, Attention: John D. McCown and (ii) 9550 Regency Square Boulevard, Suite 500, Jacksonville, Florida 32225, Attention: Mark A. Tanner, Vice President - Finance, or at such other addresses for notice as the Company shall have furnished in writing to the Bank of Boston; (b) if to the Bank , at 100 Federal Street, 01-08-01, Boston, Massachusetts 02110, Attention: Transportation Division, or such other address for notice as the Bank of Boston shall have last furnished in writing to the Company. Any such notice or demand shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of receipt thereof by such officer or the sending of such facsimile and (ii) if sent by registered or certified first-class mail, postage prepaid, on the third Business Day following the mailing thereof. 7. Miscellaneous. This Line Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. This Line Agreement may be executed in several counterparts and by each party on a separate counterpart, each of which when so executed and delivered shall be an original, but all of which shall constitute one agreement. In proving this Line Agreement it shall not be necessary to account for more than one such counterpart signed by the party to be charged. This Line Agreement together with the related Notes and Guaranty express the entire understanding of the parties with respect to the transactions contemplated hereby. Neither this Line Agreement nor any term hereof may be changed, waived, terminated or discharged except in a writing executed by the Bank of Boston. If you agree with the foregoing, please execute and return the enclosed copy of this Line Agreement whereupon it will become a binding contract executed under seal between you and the Bank of Boston as of the Closing Date. Sincerely, THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Lisa W. Pattinson Title: Vice President

CONSENTED AND AGREED TO as of February 28, 1997: TRAILER BRIDGE, INC.
By: /s/ John D. McCown Title: Chairman Enclosures

EXHIBIT 10F VESSEL CONSTRUCTION CONTRACT FOR TWO VESSELS THIS CONTRACT is entered into as of this 30th day of December 1996 (the "Contract Date") between Halter of Louisiana, Inc., a corporation organized and existing under the laws of the state of Louisiana (the "Builder"), Halter Marine Group, Inc., a corporation organized and existing under the laws of the state of Delaware (the "Guarantor") and Coastal Ship, Inc., a corporation organized and existing under the laws of the state of Delaware (together with its successors and assigns, the "Purchaser"). WITNESSETH: WHEREAS, Purchaser desires to have Builder construct two 408'9" x 100' container deck barges (the "Vessels") at Builder's (or its affiliates') shipyards in Pearlington, Mississippi, Gulfport, Mississippi and New Orleans, Louisiana in accordance with this Contract; and WHEREAS, Builder's performance under this Contract will be guaranteed by the Guarantor; and WHEREAS, Purchaser will finance such construction pursuant to a Construction and Term Loan Agreement to come from a bank or other financial institution under terms acceptable to Purchaser in its sole discretion and to be entered into upon receipt of a Title XI guaranty commitment from the United States Maritime Administration under terms acceptable to Purchaser in its sole discretion (the "Loan Agreement"). This Contract is conditioned upon execution of a Loan Agreement that is satisfactory in all respects to the Purchaser. The initial payment under this contract shall be due in accordance with this Agreement by Purchaser to Builder within three days of execution of the Loan Agreement and the delivery and payment schedules of the Vessels shall be determined based on the date of that initial payment (the "Effective Date"). WHEREAS, Builder is willing to construct the Vessels for the consideration and under the other terms and provisions called for by this Contract and the Intercreditor Agreement (as hereinafter defined). NOW, THEREFORE, Purchaser and Builder agree as follows: ARTICLE I - DESCRIPTION OF WORK: Builder, for and in consideration of the obligations of Purchaser hereinafter set forth, agrees to build, equip, and complete, free and clear of any liens, claims and encumbrances, the Vessels, in accordance with the Contract Documents (as hereinafter defined). Purchaser and Builder acknowledge that certain portions of the construction of the Vessels will be performed at the Gulf Coast Fabrication, Inc. shipyard in Pearlington, Mississippi, the Halter Marine Shipyard in Gulfport, Mississippi and Equitable Shipyard in New Orleans, Louisiana all owned by affiliates of Builder (collectively, "Builder's Yard"). As set forth on Exhibit "A" to this Contract, "Contract Documents" are defined as: (a) This Contract; (b) Specifications, dated December 26, 1996 (Exhibit "A-1" to this Contract); and the Contract Guidance Drawings (the "Drawings") listed on Exhibit "A" to this Contract. Except for any Purchaser-furnished equipment as may be listed in the Contract Documents, Builder agrees to furnish all plant, labor, tools, equipment, dry docks and material necessary for the construction of the Vessels. The construction of the Vessels shall be performed in a workmanlike manner pursuant to the standards commonly obtained in first class shipyards and in accordance with the requirements of the Contract Documents. Purchaser and Builder acknowledge that the Vessels shall be constructed according to the design, specifications and engineering provided by Purchaser, its contractors (except Builder), subcontractors, employees, agents or architects as set forth in the Contract Documents (the "Purchaser's Design") as approved by the American Bureau of Shipping (the "Classification Society'). Builder shall have no responsibility whatsoever for the adequacy or suitability of such design. The Vessels shall meet the applicable requirements of the regulatory bodies as set forth in the Contract Documents and, to the extent required by the Contract Documents, certificates evidencing the required compliance of the Vessels shall be furnished by Builder to Purchaser. Builder shall indicate to Purchaser any changes from the Contract Guidance Drawings and shall furnish Purchaser with a full list of all such changes to Purchaser. Builder shall be responsible for any required stability test(s) and related activities necessary for securing the stability letter, all at Builder's cost and expense. Decisions of the Classification Society as to compliance or non-compliance with classification rules shall be binding and final upon both parties hereto, provided that Builder shall appeal any decision of the Classification Society as may be reasonably requested by Purchaser, at Purchaser's sole cost and expense. Disputes arising prior to delivery of each of the Vessels to Purchaser and concerning the Specifications, Drawings and other technical disputes related to the construction of the Vessels shall be resolved as set forth in this paragraph. Builder and Purchaser shall each appoint an impartial, disinterested arbitrator and such arbitrators shall select a third impartial, disinterested arbitrator (collectively the "Technical Arbitrators") and the Technical Arbitrators shall

then promptly arbitrate such dispute. Any expense of the Technical Arbitrators (excluding attorneys' fees) in connection with the resolution of such technical disputes shall be paid by the party against whom the adverse decision was rendered. The Vessels shall also comply with the rules, regulations and requirements of other regulatory bodies as described in the Contract Documents in effect as of the Effective Date, including but not limited to the rules and regulations of the United States Coast Guard (hereinafter "Coast Guard") applicable to documented United States vessels of the same type as the Vessels. Decisions by the Coast Guard or other such regulatory bodies as to the compliance or non-compliance with respect to the respective rules, regulations and requirements of such bodies shall be final and binding upon both parties, provided that the foregoing shall not prevent either party from exercising its right of appeal on petition to such body in respect of its decision. All fees and charges in compliance incidental to the classification of the Vessels and compliance with the above referred rules shall be paid as follows: (A) Builder shall be responsible for inspection by such Classification Society, the Coast Guard, and other regulatory bodies, including reasonable travel expenses of the inspectors, (B) Purchaser shall be responsible for all drawing review fees, costs and expenses of the Classification Society. Builder recognizes that compliance of the Vessels with the rules and regulations of the Coast Guard and the Classification Society is essential to Purchaser, and agrees accordingly that this Contract and the Contract Documents shall be construed without reference to any other rules or regulations, it being the intent of this provision that the standards to which the Vessels are to be built are those agreed upon by the Purchaser and Builder in this Contract and the other Contract Documents. In the event that after the Effective Date, any requirements as to class, or as to rules and regulations (or any interpretation or application thereof) to which the construction of the Vessels is required to conform are altered or changed by the Classification Society, the Coast Guard, or other regulatory bodies authorized to make such alterations or changes, the following provisions shall apply: a. If such alterations or changes are compulsory for the Vessels, either of the parties hereto, upon receipt of such information from the Classification Society, the Coast Guard, or such other regulatory bodies, shall promptly transmit the same to the other in writing, and the Builder shall thereupon incorporate such alterations or changes into the construction of the Vessels. The Builder and Purchaser shall agree by means of a change order ("Change Order") to adjustments reasonably requested by Builder in the Contract Price, Delivery Date and other terms and conditions of this Contract and the Contract Documents relating to the performance of the Vessels occasioned by or resulting from such alterations or changes, it being understood that the cost increase or cost savings to be reflected in such Change Order are to reflect the agreed costs, as set forth in the rate schedule in Article IV hereof, to the Builder, or savings, as the case may be, resulting from such alterations or changes. If Purchaser and Builder do not so agree, then Purchaser and Builder shall promptly submit the matter of such adjustment to arbitration in accordance with Article XIX hereof, but in any event, Builder shall promptly incorporate such changes or alterations into the Vessels without awaiting the result of any such arbitration, provided that Purchaser shall promptly deliver such Change Order in accordance with Article IV of this Contract specifically indicating the basis for any disagreement as to price or time of redelivery. Should Purchaser not (i) deliver such Change Order submitted by Builder, or (ii) submit such matter to arbitration, within fourteen (14) days of receipt from Builder of a compulsory Change Order, such Change Order shall be deemed effective against Purchaser with no further action by Builder. b. If such alterations or changes are not compulsory for the Vessel but the Purchaser desires to incorporate such alterations or changes into the construction of the Vessels, then, Purchaser shall notify Builder of such intention by means of a standard Change Order as provided Article IV of this Contract. Purchaser and Builder acknowledge that the Vessels shall be constructed according to the Purchaser's design and Specifications and that the Contract Price has been determined based on the Purchaser's Design and Specifications meeting the rules and regulations of the Classification Society, the Coast Guard and other regulatory bodies. Should the Purchaser's Design or equipment specified fail to meet the minimum requirement of the Classification Society, the Coast Guard, or other regulatory bodies with respect to the structural steel requirements of the Vessel only (any such failure, an "Original Design Change"), and require alterations or additions to the Vessels whereby the cost of the Vessels is increased or decreased and/or the time required for completion for the Vessels is increased or decreased and Builder notifies Purchaser of such Original Design Change, prior to the later of (i) two (2) months after receipt of approval by the Classification Society of the preliminary structural drawings or (ii) four (4) months after the Effective Date, Purchaser shall authorize, and pay for, if an increase, or receive a reduction if a decrease, as a Change Order under this Contract, any such alterations, additions, outfit and/or equipment, and shall grant Builder any extension of the Date of Delivery, as hereinafter defined, as may be required to comply with any such regulatory change. Should Change Orders directly related to such Original Design Changes aggregate an increase of more than one percent (1%) of the Contract Price, Purchaser shall have the right, at its option and upon ten (10) days notice to Builder, to elect to terminate this Contract by paying Builder all of Builder's actual direct costs (including a reasonable allocation of overhead and profit) to the date of such termination and all costs incurred for organizing and carrying out the stoppage of work on the Vessel, and the delivery to Purchaser of the work to date, if applicable, including yard overhead and general and administrative expenses incurred by Builder and any cancellation charges and penalties to Builder's subcontractors and suppliers. Builder shall, not later than thirty (30) days after the date it notifies Purchaser of such a Change Order which, together with all previous Change Orders necessitated by Original Design Changes in the aggregate would have a cost exceeding said one

percent (1%) of the Contract Price, specify to Purchaser an estimate of (i) the aggregate amount of its said actual direct costs, and (ii) costs incurred for organizing and carrying out the stoppage and delivery of work referred to in the preceding sentence. Builder and Guarantor represent and warrant that each of them (i) are in good corporate standing in their respective states of incorporation (ii) has taken all corporate action necessary to authorize the execution, delivery and performance of their respective obligations under this Contract and the Intercreditor Agreement (iii) has executed this Contract by officers properly authorized to do so, and (iv) are free to enter into this Contract without violating any restrictions in their certificate of incorporation, by-laws or any other agreements. Upon request of Purchaser, Builder and Guarantor will provide Purchaser with Officer's Certificates, Secretary's Certificates or other evidence of the same. Builder and Guarantor agree to immediately notify Purchaser and the Bank if any of the above representations and warranties cease to be true or are changed in any material respect. Guarantor, the parent company of Builder, hereby unconditionally guarantees the due and prompt performance of all of Builder's obligations hereunder as if such obligations were direct obligations of the Guarantor. All provisions, conditions or requirements contained in the Contract Documents and any other provision, condition or requirement inconsistent or in conflict with the provisions of this Contract are superseded by this Contract, it being the intent of the parties that the provisions of this Contract shall prevail. If there is any conflict or inconsistency between the Drawings and Specifications, the Specifications shall control. Builder shall not employ any major subcontractor to perform the construction of the Vessels, whether initially or as a substitute without notice to Purchaser or against whom Purchaser shall have a reasonable objection. ARTICLE II - PRICE AND PAYMENT: Purchaser, in consideration of the obligation of Builder under this Contract, agrees to pay Builder the sum of FIVE MILLION SEVEN HUNDRED SIXTY EIGHT THOUSAND EIGHT HUNDRED AND SIX AND NO/100 DOLLARS ($5,768,806.00) per Vessel, (hereinafter the "Contract Price") and a total of ELEVEN MILLION FIVE HUNDRED THIRTY SEVEN THOUSAND SIX HUNDRED TWELVE AND NO/100 DOLLARS ($11,537,612.00) for both Vessels. The schedule of payments to be made by Purchaser for each of the Vessels is set forth in Exhibit "A" to this Contract. Within fifteen (15) days from the receipt of the initial payment from Purchaser, Builder shall deliver to Purchaser a preliminary production schedule (the "Preliminary Production Schedule") which includes milestone payments. Should Builder believe that a revision to the Preliminary Production Schedule is required, Builder shall have the right to revise the Preliminary Production Schedule upon notice to Purchaser. In the event the initial payment due from Purchaser is not tendered to Builder in immediately available funds by the close of business on the third (3rd) business day after Purchaser has executed the Loan Agreement ( the "Condition Precedent") or if the Condition Precedent is not satisfied within forty five (45) days of the Contract Signing Date, either party shall have the right to cancel this Contract, in which event neither Builder nor Purchaser shall have any further obligation to the other. Builder shall submit invoices for each payment set forth on Exhibit "A" which payment shall be due and payable ten (10) days from the date of each such invoice, except for the initial payment from Purchaser, which is due as set forth above. Builder may, in its discretion, charge Purchaser interest on any amounts hereunder, if not paid when due, at the rate of two and one half (2-1/2 %) percent per annum above the Chase Manhattan Bank prime rate (the "Agreed Interest Rate"), accruing from the date such amount is due until paid in full. The full Contract Price for each Vessel, including any amounts or credits due for extras, change orders, other additional costs as provided in this Contract, and interest shall be paid in immediately available funds prior to the delivery of the Vessel to Purchaser. If any invoice for payment shall not be paid within five (5) days of the date when due, Builder may, in its discretion, suspend or reschedule progress of the construction of the Vessels with respect to either one or both of the Vessels (such right being in addition to any other right at law or in equity), and Purchaser shall then be obligated to Builder, in addition to other amounts becoming due hereunder, for any direct costs resulting from such suspension or rescheduling of the construction of the Vessels. In addition to any other remedies available to Builder at law or in equity, Builder shall be entitled to terminate this Contract upon ten (10) days notice to Purchaser. If Builder elects to terminate this Contract, Builder shall have the option, in its sole discretion, to (i) sue Purchaser for damages as a result of its breach and apply any deposits or other payments made hereunder toward those damages, or (ii) retain and/or obtain title to the Vessels, free of any claim of Purchaser. ARTICLE III - TIME AND CONDITIONS OF DELIVERY: The Vessels, after required tests and trials, completed in accordance with the Contract Documents, shall be delivered to Purchaser, on or before the date set forth on Exhibit "A" (the "Date of Delivery"), or on such later date or dates as provided for in Articles I, II, IV and V hereof (the "Extended Date of Delivery"). Within fourteen (14) days of receipt of (i) final approval by the Classification Society of the structural drawings, and (ii) the initial payment due from the Purchaser, Builder shall provide Purchaser with a notice setting forth the initial Date of Delivery. Builder shall Deliver the Vessels to Purchaser safely afloat at the Gulf Coast Fabrication shipyard in Pearlington, Mississippi (the "Place of Delivery") or such other location as may be mutually agreed by Builder and Purchaser (the "Alternate Place of Delivery"). Upon delivery of each Vessel, Builder and Purchaser shall execute a Certificate of Delivery and Acceptance in the form of Exhibit "B" to this Contract. The expenses of transporting the Vessels to the Place of Delivery shall be borne by and be the obligation of the Builder. Should Purchaser desire to

have any of the Vessels delivered at the Alternative Place of Delivery, Purchaser shall accept the Vessel and execute an Acceptance Certificate in the form of Exhibit "B-1" to this Contract (the "Acceptance Certificate") prior to Builder transporting the Vessel from the Place of Delivery to the Alternative Place of Delivery. All costs and expenses of operating and/or transporting the Vessel to the Alternative Place of Delivery and delivering the Vessel at the Alternative Place of Delivery, including but not limited to all insurance premiums and taxes, shall be borne by and be the obligation of Purchaser. If a Vessel is redelivered at the Alternative Place of Delivery, the Vessel shall be deemed delivered upon the execution of the Acceptance Certificate for purposes of determining the bonus payment to Builder or liquidated damages pursuant to this Contract. Builder shall furnish Purchaser on delivery of each Vessel a Bill of Sale, a Builder's Certificate and a Declaration of Warranty of the Builder that the Vessel is delivered to Purchaser free and clear of any liens, claims or other encumbrances upon the Purchaser's title thereto, and, in particular, that the Vessel is absolutely free of all liabilities of the Builder to its sub-contractors, employees, and crew, of all liabilities arising from the operation of the Vessel in trial runs, or otherwise, prior to delivery and acceptance, excepting only those liens arising by or through the acts of the Purchaser, together with any other documents as may be required by the Contract Documents. Any cost or expense in connection with the documentation of the Vessels with (as opposed to inspection of the Vessels by) the U. S. Coast Guard or other governmental agency shall be paid by Purchaser. If completion and delivery of a Vessel shall be delayed beyond the Date of Delivery, or Extended Date of Delivery, it is agreed that Purchaser shall suffer damages which are difficult to ascertain, and the parties hereby agree that Purchaser shall sustain, and Builder agrees to pay, liquidated damages in the amount of THREE THOUSAND AND NO/100 DOLLARS ($3,000.00) for each calendar day that delivery is delayed beyond the Date of Delivery or Extended Date of Delivery up to a maximum amount of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) per Vessel for liquidated damages. Purchaser's right to such liquidated damages shall be Purchaser's sole and exclusive remedy for damages or loss due to late delivery of the Vessel, and except as expressly provided herein, Purchaser specifically waives all other rights or remedies at law or in equity therefor. Notwithstanding the foregoing, liquidated damages shall cease to accrue at such time that Builder tenders delivery of the Vessel if construction of the Vessel is fully completed in accordance with the Contract Documents, except for minor items which do not adversely affect the commercial utility or efficient and lawful operation of the Vessel and Builder has agreed to correct such minor items in a timely manner. Builder shall be entitled to a bonus payment of ONE THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($1,500.00) per day for each day that each Vessel is delivered in advance of the initial Date of Delivery, or the Extended Date of Delivery if such Date of Delivery is extended by an event of Force Majeure caused by Purchaser, Purchaser's contractors (except Builder), subcontractors, employees, architects or engineers, provided, however, Builder shall only be entitled to such bonus payment to the extent Purchaser takes delivery of the Vessel prior to the initial Date of Delivery or the extended Date of Delivery, as the case may be. Purchaser shall be under no obligation to accept delivery of the Vessel prior to the initial Date of Delivery. Builder shall be entitled to such bonus payments based on any extension of the Date of Delivery stemming from any event of Force Majeure not caused by Purchaser only to the extent of fifty (50%) percent of the aggregate of such delay. If (i) Builder provides Purchaser with forty five (45) days notice of the date that Builder anticipates to deliver a Vessel, and (ii) the Vessel is not removed from the Place of Delivery or the Alternative Place of Delivery, as the case may be, within five (5) days of receipt of written notice that the Vessel is complete and available for delivery in accordance with the Contract Documents, Purchaser shall pay Builder either (A) FIVE HUNDRED AND NO/100 DOLLARS($500.00) per day for wharfage, if a berth is available at the Gulf Coast Fabrication shipyard Pearlington, or (B) the actual cost to hire a berth at another location, together with costs to relocate the Vessel to such berth, if a berth is not available at the Gulf Coast Fabrication shipyard, plus the cost of maintaining Builder's Risk Insurance on the Vessel beyond the date on which redelivery was available. Should Purchaser fail to take delivery of a Vessel within twenty (20) days of receipt of written notice duly tendered in accordance herewith the Vessel is complete and available for redelivery in accordance with the Contract Documents, Purchaser shall be in default of this Contract, and Builder shall have the right to mitigate its damages and protect its rights and interests, including, but not limited to, the right to (i) sue for specific performance of this Contract; (ii) terminate this Contract upon ten (10) days notice to Purchaser; (iii) retain any deposits or other payments made hereunder toward Builder's damages; (iv) obtain and/or retain title to the Vessels (v) exercise its rights under any security interest, lien or privilege; and (vi) to sell the Vessels, upon commercially reasonable terms and conditions and apply any monies received as follows: a. In the event of default by Purchaser of this Contract as above described, the Builder shall have full right and power either to complete or not to complete the Vessel as it deems fit, and to sell the Vessels at a public or private sale, upon five (5) days' prior notice to the Purchaser upon commercially reasonable terms and conditions. b. In the event of the sale of any of the Vessels, the proceeds of the sale received by the Builder shall be applied first to payment of all expenses attending such sale and otherwise incurred by the Builder as a result of the Purchaser's default, and then to payment of all unpaid installments of the Contract Price plus interest on such installments at the rate provided in Article II of this Contract from the respective due dates to the date of application. Builder's exercise of the foregoing remedies, or any other remedies or rights, shall not be deemed a waiver or release by Builder of any other rights or remedies that Builder may have at law or in equity, including, but not limited to, the right to sue for any additional damages, costs, expenses or attorneys' fees incurred by Builder as a result of Purchaser's default. Notwithstanding any provision of this Contract to the contrary, should Purchaser default under the terms of this Contract, Builder shall have the option, in its sole discretion, to terminate this Contract with respect to any of the Vessels.

Should the delivery of a Vessel to Purchaser be delayed in excess of ninety (90) days beyond the Date of Delivery or the Extended Date of Delivery, as the case may be, based on delay by Builder, upon payment to Builder of all progress payments then due to Builder and all costs incurred to date by Builder in connection with the construction of the Vessels that are not included in the milestone events that constitute the progress payments due to Builder, provided that such amounts shall not exceed that percentage of the Contract Price that is equal to the percentage completion of the Vessels to date by Builder, Purchaser shall have right, at its option, to terminate this Contract by providing written notice to Builder and to have the Vessel completed by another shipyard. If so requested by Purchaser, Builder shall (a) in the least expensive manner, complete all work required to permit the Vessel to be safely removed from Builder's Yard, (b) remove its employees, agents and contractors, together with their equipment, and render all necessary assistance to the Vessel in leaving Builder's Yard at the earliest moment convenient to Builder. Once Purchaser has documented Purchaser's cost to complete the construction of the Vessels, Builder shall pay to Purchaser the difference, if any, between (a) Purchaser's reasonable auditable costs of completion, and (b) the Contract Price, as adjusted for Change Orders performed by Builder. If the unpaid balance of the Contract Price exceeds Purchaser's reasonable auditable costs of completion, such excess shall be paid to Builder. Should the Date of Delivery be extended pursuant to this Contract for more than one hundred eighty (180) days from the initial Date of Delivery based upon one or more events of Force Majeure pursuant to Article VI not caused by Purchaser, upon payment to Builder of (a) all progress payments then due to Builder; (b) all costs incurred to date by Builder in connection with the construction of the Vessels that are not included in the milestone events that constitute the progress payments due to Builder (including yard overhead and general and administrative expenses incurred by Builder and any cancellation charges and penalties to Builder's subcontractors and suppliers), and a profit of eight percent (8%), provided that such amounts shall not exceed that percentage of the Contract Price that is equal to the percentage completion of the Vessels to date by Builder, Purchaser shall have the right, at its option, to terminate this Contract by providing written notice to Builder. If so requested by Purchaser, Builder shall (a) in the least expensive manner, complete all work required to permit the Vessel to be safely removed from the Builder's Yard, (b) remove its employees, agents and contractors, together with their equipment, and (c) render all necessary assistance to the Vessel in leaving the Builder's Yard at the earliest moment convenient to Builder. Upon fulfilling the obligation in the previous sentence, Builder shall have no further obligation to Purchaser except as provided in the following paragraph. Notwithstanding anything contained in this Contract to the contrary, should Purchaser terminate this Contract pursuant to the two preceding paragraphs, Purchaser shall have ninety (90) days from such termination to notify Builder of any defective materials or workmanship which were both (i) included in the percentage completion of the construction of the Vessels to date by Builder and (ii) represented in the amount paid to Builder upon such termination. In no event shall Builder be liable to Purchaser for any sum in excess of the cost of repairs or replacements of the materials or workmanship, nor shall Builder be obligated to repair or replace any material or workmanship, where such repair or replacement is caused by Purchaser, its contractors (except Builder), subcontractors or employees. Builder shall have no responsibility whatsoever for such defective materials or workmanship if Purchaser does not notify Builder within the period set forth above in this paragraph. ARTICLE IV - CHANGES IN THE DRAWINGS AND SPECIFICATIONS: Purchaser has the right to request deletions or additions to the Drawings or Specifications for the construction of the Vessels and the Vessels upon notice in writing to Builder. A statement of the increase or decrease to the Contract Price and the number of days of extension, if any, to the Date of Delivery necessitated by the requested change and Builder's opinion as to whether any other changes will be necessitated by the requested change shall be submitted to Purchaser by Builder within fourteen (14) days of Purchaser's request and shall be approved by Purchaser in writing before Builder shall make any such change in the Drawings or Specifications unless Purchaser shall have agreed to arbitration as to the increase or decrease in Contract Price and/or number of days of extension and, if applicable, procured the letter of credit referred to in the last paragraph of this Article IV. Except as provided elsewhere in this Article IV, the cost increase or cost savings to be reflected in such Change Orders are to reflect the agreed costs, as set forth below, to the Builder, or savings, as the case may be, resulting from such alterations or changes: (i) labor shall be included at the following rates: $29.75 per hour during calendar year 1997 and $30.50 per hour during calendar year 1998, and (ii) material shall he included at one hundred two and six-tenths (102.6%) percent of the price paid by Builder for such material in order to compensate Builder for its costs in connection with purchasing, handling and storing said material. All credits to Purchaser for material shall be included at one hundred (100%) percent of the price paid by Builder for such material. In connection with increases in steel work on the Vessels as the result of an Original Design Change or a Change Order which are agreed upon prior to commencement of fabrication of the affected parts, the following shall apply: (x) additional fabricated mild steel in connection with shell plates and girders shall be included at a fixed price of $1.18 per pound (this price includes labor, material, fabrication and painting) and (y) all other additional fabricated mild steel, including, without limitation, brackets and stiffeners, shall be included at a fixed price of $1.75 per pound (this price includes, labor, material, fabrication and painting). Increases in fabricated mild steel that are agreed upon after commencement of fabrication of the affected parts shall be priced according to the labor and material schedule set forth above. Notwithstanding the foregoing, all labor and material supplied by any subcontractor of Builder in connection with a Change Order shall be included at one hundred two and six-tenths (102.6%) percent of the amount paid by Builder to the subcontractor for such labor and material; provided, however, Builder agrees that its subcontractors' prices in connection with increases in steel work as the result of a Change Order which is agreed upon prior to the commencement of fabrication of the affected parts shall be no greater than Builder's prices pursuant to this paragraph. All prices and changes in time for the completion agreed to by Builder and Purchaser and signed by the designated individual for each party, as provided herein, in a Change Order in the form of Exhibit "C" to this Contract, which shall be numbered sequentially by Builder, shall be firm and fixed unless specifically agreed to in writing.

All Change Orders shall be incorporated into this Contract by reference at the time the Change Order becomes effective as provided herein, and all prices agreed to shall be paid for in the following manner: Upon the next milestone event, Purchaser shall pay to Builder, a percentage of the Change Order price that is equal to the sum of the percentages of the Contract Price due as a result of the next milestone event and all prior milestone events. The remaining portion of the Change Order price shall be paid with each remaining milestone event with the percentage of the Change Order price being paid at each milestone event being the same percentage as the percentage of the Contract Price paid at such milestone event. Any costs associated with a Change Order, that are not incorporated into a Change Order, or subject to arbitration as provided in Article I of this Contract, shall be for the account of Builder. The Builder may make minor changes to the Drawings and Specifications, if found necessary for introduction of improved production methods provided that Builder shall first obtain Purchaser's approval which shall not be unreasonably withheld or delayed. Such approval or denial shall be confirmed by Purchaser within fourteen (14) business days after receipt in writing of Builder's request under this Article IV of this Contract. The parties hereto agree to negotiate in good faith to obtain a mutually acceptable price for all Change Orders; provided, however, if the parties do not agree on the price or the extension of the Date of Delivery in connection with such a Change Order, the dispute shall be referred to arbitration in accordance with the provisions of Article I of this Contract. If the dispute relates to the price of the Change Order, each party shall promptly submit to the other party the price that it believes is reasonable and all undisputed amounts shall be paid to Builder in accordance with this Article. If the dispute is not resolved at the time of delivery to Purchaser, then contemporaneously with delivery, Purchaser shall then procure a letter of credit in an amount equal to any disputed amount plus interest thereon at the Agreed Interest Rate for a one (1) year period. Such letter of credit shall be issued by a United States bank, and shall be in such form, as may be reasonably acceptable to Builder. Such letter of credit shall further provide that it will be drawable with a final arbitral award, court decree or statement signed by both parties in the event of a settlement prior to final arbitral award or court decree. If such letter of credit or replacement letter of credit is not renewed at least thirty (30) days prior to its expiration date, Builder shall have the right to draw (but only for the purpose of holding as security for final award and only until replaced by an acceptable letter of credit) the full amount of same. ARTICLE V - INSPECTION BY PURCHASER'S REPRESENTATIVE(S): Builder will furnish reasonable space at Builder's Yard for the duly authorized representative(s) of Purchaser who shall have reasonable access to the Vessels during all reasonable hours. Purchaser's representative(s) shall promptly inspect and accept all workmanship and material which is in conformity with the Contract Documents and shall, with equal promptness, reject all workmanship and material which does not comply with the Contract Documents, provided that the acceptance of such workmanship and material by Purchaser's representative shall not prejudice the rights of Purchaser under the provisions of Article VII hereof. Purchaser's representatives shall comply with all safety procedures of Builder then in effect in Builder's Yard and all laws and regulations of governmental bodies and standard reasonable norms of conduct. Purchaser's representative shall have, during the construction of the Vessels, the right to attend all tests and inspections of the Vessels. Builder shall give a written notice to Purchaser's representative reasonably in advance of the date and place of such tests and inspections to be attended by him for his convenience. Builder and its subcontractors shall render such assistance and give such information to Purchaser's representative as he may reasonably require to facilitate the performance of his duties and the exercise of Purchaser's rights under this Contract. Upon Purchaser's reasonable request, Builder shall promptly furnish Purchaser's representative with sufficient copies of the results of all tests required by the Specifications. ARTICLE VI - FORCE MAJEURE: The Date of Delivery of the Vessels shall be subject to extension by reason of Force Majeure, which term is hereby defined to include the following causes, provided such causes are beyond the reasonable control of Builder: strikes, lockouts or other industrial disturbances; acts of God; acts of the Purchaser, its officers, directors, employees, agents or contractors; war, preparation for war or the acts or interventions of naval or military executives or other agencies of government; blockade, sabotage, vandalism, malicious mischief, bomb scares, insurrection or threats thereof; landslides, floods, hurricanes and earthquakes; collisions or fires; non-delivery and/or late delivery of any Purchaser- furnished supplies, material, equipment or labor, including plans, drawings or engineering; delays due to changes in drawings or specifications. Rain shall not be considered a Force Majeure event unless its occurrence within two (2) months prior to the Date of Delivery requires a shut down of a substantial portion of Builder's Yard prior to 12:00 noon on a regularly scheduled work day and, for each such day, Builder shall be entitled to a one (1) day extension of the Delivery Date. Shortages of skilled labor shall not be considered a Force Majeure event. Within ten (10) days of knowledge of any Force Majeure event which may affect the Date of Delivery, Builder shall notify Purchaser in writing and within thirty (30) days shall furnish Purchaser with a Force Majeure notice in the form of Exhibit "D" to this Contract, which shall be numbered sequentially by Builder. Upon receipt of any such notice, Purchaser shall, within twenty-one (21) days, acknowledge the Force Majeure notice in writing and either agree that the event is to be treated as a Force Majeure event and approve Builder's request for an extension of the Date of Delivery, or state any objections and the reasons therefor. If Builder fails to timely notify Purchaser of a Force Majeure event, Builder shall be estopped from thereafter claiming an extension of the Date of Delivery as a result of the Force Majeure event for any

period of delay more than thirty (30) days prior to said notice. If Purchaser should fail to respond within twenty-one (21) days, the extension of the Date of Delivery shall be considered approved. If the completion of the Vessel is delayed by one or more events of Force Majeure, the Date of Delivery shall be extended by a period equal to one (1) day for each day, or portion thereof, by which the delivery of the Vessels was delayed by such events of Force Majeure. Notwithstanding any provision in this Contract to the contrary, an event of Force Majeure affecting any of the Vessels shall not extend the Date of Delivery for all subsequent Vessels hereunder unless that event of Force Majeure also effected subsequent Vessels, in which case a specific notice with explanation concerning the subsequent Vessels shall be given by Builder to Purchaser. ARTICLE VII - WARRANTY: During the Warranty Period, as hereinafter defined, Builder warrants that all labor furnished by Builder, its employees and subcontractors, all Builder furnished materials and all Vessels constructed under this Contract will be free from defects and shall conform to the requirements of the Contract Documents. Builder shall have no responsibility whatsoever with respect to any claim under this Warranty not reported in writing to Builder within three hundred sixty-five (365) days from the Delivery Date as specifically defined in this Article VII (such 365 day period being hereinafter referred to as the "Warranty Period"). For purposes solely of this Article VII, "Delivery Date" shall be defined as the earlier of the following: (1) fourteen (14) days after date of a written notice from Builder that the Vessel is complete in accordance to the Contract Documents and the Vessel is available for delivery, or (2) the date of actual delivery of the Vessel. In the event Purchaser timely notifies Builder of any claim covered under this Warranty, Builder shall correct the non-conforming work by making repairs or replacements at its option at a yard designated by Builder without expense to Builder for transporting the Vessel, or any component thereof, to or from that yard; provided, however, that if it is not practical to have the Vessel proceed to such yard, Purchaser may, with prior written consent of Builder, have such repairs or replacements made elsewhere, and, in such event, Builder shall reimburse Purchaser a sum equivalent to (i) one hundred twenty (120%) percent of the amount Builder would have expended at such yard at Builder's then prevailing rates, or (ii) the amount actually expended by Purchaser, whichever is less. In no event shall Builder be liable to Purchaser for any sum in excess of the cost of repairs or replacements as specified above, nor shall Builder be obligated to repair or replace any material or equipment, where such repair or replacement is caused by the negligent operation or maintenance of the Vessel, its equipment, or components. Notwithstanding anything contained in this Contract to the contrary, Builder makes no express or implied warranty that any new or rebuilt equipment, material or components purchased from suppliers or manufacturers and installed on the Vessels are free from manufacturers' defects; provided, however, Builder warrants that the installation of such equipment, material and components shall be conducted in a proper and workmanlike manner and that Builder shall use reasonable care to inspect, in accordance with Builder's usual and customary shipbuilding practice, such equipment material and components prior to installation. Builder agrees to utilize equipment, material and components with manufacturer's warranties where such warranties are customarily offered by manufacturers, provided, however, Builder shall have no obligation to (i) incur any expense in obtaining such warranty or (ii) purchase any extended warranty, unless Purchaser expressly requests such action, in which case all expenses in connection with Purchaser's request shall be at Purchaser's sole cost and expense. To the extent available, Builder agrees to transfer and assign to Purchaser, without warranty of Builder with respect thereto, any manufacturer's warranties covering equipment, material or components furnished by others and Builder further agrees to cooperate with Purchaser to enforce any such manufacturer's warranties, short of instituting legal action on Purchaser's behalf and/or incurring other legal fees or expenses. Builder represents that the Vessel and all equipment, material and components incorporated therein (except those specifically designated by Purchaser as aforesaid), shall be of first class marine quality. Except as otherwise provided herein with respect to the Builder's Design (as hereinafter defined), Builder has no responsibility whatsoever for the design or engineering of the Vessels. Builder shall obtain the approval of the Classification Society, where such approval is required, for the classification of the Vessels or as otherwise desired by Builder. Upon obtaining such approval by the Classification Society, Builder shall have no responsibility whatsoever for the design or engineering of the Vessels. Any design, working drawings or engineering provided by Builder (not duplicative of, and as opposed to, the Purchaser's Design) which has not been reviewed and approved by the Classification Society (the "Builder's Design") shall be performed diligently and in accordance with first class industry standards. With respect to paint, Builder warrants that it will purchase paint of good marine quality in accordance with the Contract Documents and that it will apply the paint in accordance with the manufacturer's specifications and recommendations, and Builder makes no warranty, express or implied, with respect to the paint or the manufacturer's specifications and recommendations. THE WARRANTY AND REMEDIES SET FORTH IN THIS ARTICLE VII ARE IN SUBSTITUTION OF AND IN LIEU OF ANY AND ALL OTHER WARRANTIES AND REMEDIES EXPRESSED OR WHICH MIGHT BE IMPLIED (INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE OR WORKMANLIKE SERVICES) WITH RESPECT TO THE CONSTRUCTION, DELIVERY AND SALE OF THE VESSELS, AND BUILDER SHALL,

FOLLOWING SAID DELIVERY AND SALE, IN NO EVENT BE LIABLE TO PURCHASER FOR THE BREACH OF ANY WARRANTY, GUARANTY, OR REMEDY, EXPRESSED OR IMPLIED, IN FACT OR IN LAW, EXCEPT AS SPECIFICALLY SET FORTH ABOVE. BUILDER SHALL AT NO TIME AND IN NO EVENT BE LIABLE TO PURCHASER OR TO ANYONE CLAIMING TO OR THROUGH PURCHASER FOR LOSS OR DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO, DIRECT, INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOSS OF PROFITS RESULTING FROM ANY CAUSE WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, ANY ACT, ERROR, OMISSION, NEGLIGENCE, STRICT LIABILITY, TORT, PRODUCT LIABILITY, OR OTHERWISE OF BUILDER, ITS EMPLOYEES OR SUBCONTRACTORS. THE PARTIES HERETO AGREE THERE ARE NO WARRANTIES GIVEN WHICH EXTEND BEYOND THE LANGUAGE OF THIS ARTICLE. Builder does not warrant any components, equipment, engineering, specifications, designs or plans specified or furnished by Purchaser, its contractors (except Builder), subcontractors, employees, architects or engineers, or any labor performed by others (other than Builder or Builder's subcontractors) at the direction or request of Purchaser or Purchaser's representative(s), and Builder specifically disclaims any warranties, express or implied, in connection therewith. To the extent Purchaser, its contractors (except Builder), subcontractors, employees, architects or engineers furnished any components, equipment, designs, plans, engineering or specifications, Purchaser agrees to protect, defend, indemnify and hold Builder, its subcontractors, employees, officers, directors, and its subsidiaries and affiliates (if more than 50% owned) harmless from and against any and all liability, obligations, claims, demands or actions of any nature for personal injury, death, or property damage, arising out any such components, equipment, design, plan, engineering or specification. ARTICLE VIII - INSURANCE: Until each Vessel has been completed, physically delivered at the Place of Delivery and accepted by Purchaser, Builder shall cause such Vessel and all materials, outfitting, equipment, and appliances to be installed in the Vessel including all materials, outfitting, equipment and appliances provided by Purchaser and delivered to Builder's Yard for the construction of the Vessels or in the construction thereof, to be declared under a Builder's Risk Policy(ies) the terms of which shall correspond to the American Institute Clauses or Institute of London Underwriters Clauses for Builders Risk in force and effect at the time that the construction of the Vessels is commenced when the Vessel's keel is laid, all at Builder's expenses. The amount of any payment under said Builder's Risk Policy(ies) shall be subject to policy(ies). Such Builder's Risk Policy(ies) shall name Purchaser and Purchaser's lender as joint loss payees, as their interests may appear; provided, however, Purchaser shall have no obligation to pay the premium for such Builder's Risk Policy(ies). Partial losses, if any, shall be payable to Builder and the proceeds thereof devoted by Builder to the repair and/or replacement of the damage satisfactory to the Classification Society and the regulatory bodies. Builder shall advise Purchaser promptly of any such occurrence. In the event that an "actual total loss" or a "constructive total loss" (as these terms are defined in the Builder's Risk Policy(ies)) should occur prior to the Vessels being complete and ready for delivery, the Builder shall, as the parties hereto shall mutually agree, either: (1) Proceed in accordance with the terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction of the damage to the affected Vessel, provided the parties hereto shall have first agreed in writing as to such reasonable postponement of the Date of Delivery and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or (2) Refund immediately to the Purchaser upon receipt of such insurance proceeds, and whether or not such proceeds shall be sufficient therefor, all installments paid to the Builder under this Contract including an amount equal to the value of any Purchaser's supplies or property which have become a total loss, whereupon this Contract shall be deemed to be rescinded and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith (except those that by their terms survive the termination of this Contract) and title to the Vessel that is accepted by the Builder's Risk underwriters to be an actual or total constructive loss shall revert to Builder. Builder shall retain all such insurance proceeds not payable to Purchaser pursuant to the terms of this paragraph. If the parties fail to reach such agreement within thirty (30) days after the Vessel is determined and is accepted by the Builder's Risk underwriters to be an actual or total constructive loss, the provisions of subparagraph 2 above shall apply. Builder shall also purchase and maintain, at its expense, during the life of this Contract, Worker's Compensation Insurance at statutory amounts, with Longshoreman & Harbor Workers Compensation Act coverage endorsement, Employer's Liability Insurance in the amount of at least Two Million Dollars ($2,000,000) and Public Liability Insurance against property damage, death and bodily injury in the amount of not less than Two Million Dollars ($2,000,000). A confirmation of insurance outlining the pertinent terms and conditions of the Builder's Risk Policy(ies) referred to in sub-paragraph A above shall be provided to Purchaser and Purchaser shall be furnished a certificate of insurance as to all other policies required hereunder. The original of the said Builder's Risk Policy shall be available in the Builder's or Guarantor's office. All of the policies of insurance and certificates referred to herein shall contain a provision requiring the insurer at risk to give Purchaser thirty (30) days' notice, in writing, prior to the cancellation of any such insurance. ARTICLE IX - TAXES:

Any transportation, sales, use or other tax which may be levied on, or imposed by any state, local, federal, municipal or other governmental agency in connection with the delivery or sale of the Vessels or any personal property tax which may be levied or imposed with respect to the transfer to Purchaser of title to the Vessel shall be paid by Purchaser. Builder agrees that it shall not pay any such tax on behalf of Purchaser, or concede any liability on behalf of Purchaser for same, without prior notice to Purchaser. To the extent any Vessel is subject to any waiver, exemption, suspension of, or exception to, sales, use or other tax of any government or agency, Purchaser shall provide Builder upon request with certificates or other documents as required by applicable law evidencing Purchaser's and/or the Vessels' entitlement to any such waiver, exemption, suspension or exception. Purchaser's obligations under this Article shall survive delivery of the Vessels to Purchaser and completion of this Contract. ARTICLE X - PATENTS: Builder agrees to defend, indemnify and hold harmless Purchaser against loss or damage sustained by Purchaser by reason of any alleged infringement of patent rights or other proprietary interests in any materials, processes, machinery, equipment, or hull form selected by Builder. Purchaser agrees to defend, indemnify and hold harmless Builder against loss or damage sustained by Builder by reason of an alleged infringement of patent rights or other proprietary interests in any materials, designs, processes, machinery, equipment, or hull form selected by Purchaser or required by the Contract Documents. ARTICLE XI - USE OF THE DRAWINGS AND SPECIFICATIONS: The Purchaser and its naval architect C.R. Cushing and Co. retain all rights with respect to the Specifications, the Drawings, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and the construction of the Vessels (the "Confidential Information"). It is understood that the Confidential Information has been produced by Purchaser for purposes of this paragraph and Builder undertakes not to disclose the Confidential Information or divulge any information contained therein, directly or indirectly, to anyone without the prior written consent of Purchaser. Builder acknowledges that Purchaser believes the Confidential Information contains proprietary design information, the release of which would harm Purchaser. In addition to maintaining the information in strict confidence, Builder agrees not to disclose the terms of this Agreement to any third party. The provisions of this Article XI shall survive and be binding upon Builder and Purchaser notwithstanding any rescission or other termination of this Contract. ARTICLE XII - BANKRUPTCY: If either party hereto shall be adjudicated as bankrupt or an order appointing a receiver of it or of the major part of its property shall be made, or an order shall be made approving a petition or answer seeking its reorganization under the Federal Bankruptcy Act, as amended, or if either party shall institute proceedings for voluntary bankruptcy or apply for or consent to the appointment of a receiver of itself or its property, or shall make an assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts generally as they become due for the purpose of seeking a reorganization under the Federal Bankruptcy laws, or otherwise, then, in any one or more of such events, the other party to this Contract shall have the option at its discretion to terminate this Contract by written notice. Termination of this Contract pursuant to the provisions of this Article by one party to this Contract shall not relieve the other party from any payment obligations hereunder due and owing as of the date of such termination or from any obligations due or which may become due under Article IX of this Contract. Should Purchaser terminate this Contract pursuant to this Article, Purchaser shall have the right, at its option, to have the Vessels completed by another shipyard. ARTICLE XIII - NOTICES: Notices required by this Contract shall be in writing and shall be delivered in person or by registered mail, return receipt requested or by overnight courier service with evidence of receipt. Notices to Builder shall be addressed to: Halter Marine of Louisiana, Inc. c/o Halter Marine Group, Inc. 13085 Seaway Road P.O. Box 3029 Gulfport, MS 39505 Attn: John Dane, III, President Notices to Guarantor shall be addressed to: Halter Marine Group, Inc. 13085 Seaway Road P.O. Box 3029

Gulfport, MS 39505 Attn: John Dane, III, President Notices to Purchaser shall be addressed to: Coastal Ship, Inc. Fifth Floor 500 Park Avenue New York, New York 10022 Attn: John D. McCown, President In all matters relating to this Contract, except warranty claims which are covered under Article VII, the parties shall be represented by none other than the following named representatives:
For Builder: Mr. John Dane, III

For Purchaser: Mr. John McCown Mr. Charles R. Cushing

Within thirty (30) days of the Effective Date, Purchaser will provide Builder with a listing of those individuals authorized to execute Change Orders an behalf of Purchaser. Such listing shall include the names of the authorized individuals and their monetary limitation on Change Orders that such individuals may execute on behalf of Purchaser. Each party agrees that at least one of its above-named representatives shall be available for consultation during normal working hours. Purchaser and Builder agree that no one other than their respective named representatives shall be considered as their authorized agent with power or authority to bind them, respectively. Except as may be herein authorized, no change or modification to this Contract or the Contract Documents shall be valid or enforceable unless in writing and signed by one of the above designated representatives of each party. Any other person may be designated to represent either Purchaser or Builder upon written notice of such designation accomplished in accordance with the notice provisions of this Article XIII. ARTICLE XIV - LENDER COOPERATION: Builder agrees to cooperate with Purchaser in complying with all reasonable provisions in the Loan Agreement without (i) adversely affecting any rights of Builder under this Contract, or (ii) altering any material provisions of this Contract; provided, however, that the lender shall enter into an Intercreditor Agreement (the "Intercreditor Agreement") with Builder in substantially the for of Exhibit "F" attached hereto. ARTICLE XV - CONSTRUCTION: The headings of the Articles, Exhibits or other provisions have been inserted as a convenience for reference only and are not to be considered in any construction or interpretation of this Contract. ARTICLE XVI- LAW APPLICABLE: This Contract shall be governed by and interpreted under the law of the State of Louisiana and, to the extent applicable, federal maritime law. ARTICLE XVII - ASSIGNMENT: Subject to the terms and conditions contained herein, this Contract may be assigned by Purchaser to any related or affiliated company of Purchaser (if more than 50% owned), provided that Purchaser shall execute a guaranty, in form and substance acceptable to Builder, in which Purchaser unconditionally guarantees the performance of all obligations of such assignee or transferee under this Contract. Purchaser may also assign this contract to a lender as described in Article XIV hereof. No other assignment by Purchaser of this Contract may be made without the prior written consent of Builder. All obligations of Builder herein are subject to compliance with all applicable laws and regulations of the United States government and agencies thereof and, if required, the prior approval of the Departments of Commerce, Transportation, Defense or State. ARTICLE XVIII - MISCELLANEOUS: The Contract Documents constitute the entire agreement between the parties and supersede all prior agreements and understandings, both written and oral. The invalidity or un-enforceability of any phrase, sentence, clause or article in this Contract shall not affect the validity or enforceability of the remaining portions of this Contract, or any part thereof.

ARTICLE XIX - DISPUTES PROVISION: Any dispute, difference or disagreement between Builder and Purchaser arising out of the performance of this Contract and not otherwise provided for in Article I or the last paragraph of this Article XIX, this Contract shall promptly be referred to arbitration as described in this Article XIX upon notice given by either party hereto. Within ten (10) days after the party instituting arbitration (the "Instituting Party") has so notified the other, the Instituting Party shall appoint one arbitrator and notify the other party of such appointment. Within ten (10) days after receipt of notice of selection of one arbitrator, the other party shall appoint one arbitrator, and the two arbitrators so selected shall then select a third arbitrator (collectively, the "Arbitrators"). The Arbitrators shall be business people. If within ten (10) days, the two arbitrators so selected shall not have selected a third arbitrator, either the Builder or Purchaser may request the American Arbitration Association to select such third arbitrator. The Arbitrators shall take an oath of impartiality, and the decision of a majority of the Arbitrators selected by either method aforementioned shall be final and binding upon both parties; provided, however, the Arbitrators shall be bound by the provisions of this Contract where applicable and shall have no authority to alter any such provision in any way. Any decision, award or remedy by the Arbitrators that is in contravention of the provisions of this Contract, including but not limited to the limitations on consequential damages, punitive damages, liquidated damages and warranty, shall not be binding on the parties hereto. Any such arbitration shall be conducted in New Orleans, Louisiana, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, provided, any arbitration instituted pursuant to this Article XIX shall be subject to the Federal Rules of Civil Procedure and the Federal Rules of Evidence, including the provisions of such rules governing production of evidence and discovery. Expedited arbitration shall be utilized wherever permitted by these rules. The arbitration decision shall be binding on the parties hereto. Unless otherwise provided in this Contract, pending final decision of a dispute under arbitration, the Builder and Purchaser shall respectively proceed diligently with the performance of the Contract. It is further agreed that performance of the obligations of the parties (including Purchaser's obligation otherwise to make progress payments) shall not be withheld pending final decision of any dispute. Irrespective of the foregoing, demand for arbitration shall be made within a reasonable time of the dispute giving rise to the arbitration. Arbitration instituted pursuant to this Article XIX shall be limited to those disputes relating to a particular Vessel arising prior to the earlier of (i) the actual date of delivery of the Vessel to Purchaser, or (ii) the date of notice to Purchaser that the Vessel is complete and available for redelivery in accordance with the Contract Documents (such date the "Completion Date"); provided, in no event may such demand for arbitration be made more than thirty (30) days subsequent to the Completion Date. ARTICLE XX TITLE: Builder and Purchaser agree that (a) title to the work for the Vessel shall vest in Purchaser as and when performed, (b) title to the materials shall vest in Purchaser as and when delivered to Builder or its subcontractor's yard; and (c) title to the components of the Vessel shall rest in Purchaser as and when fabricated. Builder shall ensure that such title is free and clear of all liens and claims of third parties other than liens or claims arising as a result of Purchaser's actions. Notwithstanding the transfer of ownership to Owner of all or any part of the Vessels or their materials or components, neither Owner, nor the Bank (or any party acting on behalf of Bank) shall be entitled to delivery of possession of the Vessels unless (a) they are in compliance with this Contract, (b) the conditions precedent to such delivery or possession set forth in the Intercreditor Agreement have been satisfied in full, and (c) Builder has received payment in accordance with this Contract. Builder shall mark or stamp on all materials the hull number of the Vessel of which such materials will form a part upon the delivery of such materials to the Builder's Yard or, alternatively, will maintain records which will identify with certainty all such materials with the hull number of the Vessel. Builder shall mark or stamp on all components the hull number of the Vessel of which such components will form a part, upon the commencement of the fabrication thereof, or, alternatively, will maintain records which will identify with certainty all such components with the hull number of the Vessels. IN WITNESS HEREOF, the parties hereto have executed this Contract as of the day and year first above written. BUILDER:
/s/ John Dane, III By: John Dane, III Title: President __________________________________ Witness

GUARANTOR:
/s/ John Dane, III By: John Dane, III Title: President __________________________________ Witness

PURCHASER:
/s/ John D. McCown By: John D. McCown __________________________________ Witness

Title: President

Exhibit CONTRACT DOCUMENTS: This Contract Specifications, dated December 26, 1996,

A

Exhibit "A-1"

Contract Guidance Drawings as listed in Table 1.9-1 of the Specifications in (b) above:
C.R. Cushing & Co., Inc. Drawing Number 2019-S1-3-1 2019-S11-11-0 2019-S11-11-1 2019-S11-6 2019-S11-5 2019-S11-17 2019-S5-0-1 2019-S5-0-2 2019-S5-0-3 2019-S12-1 2019-S62-1 Description General Arrangement Midship Section Transverse Sections Scantling Plan, Deck Transverse Bulkheads Scantling Plan, Profile Lines Plan, Forward Lines Plan, Aft Table of Offsets Mooring and Towing Fittings Electrical One Line Diagram

PRICE AND PAYMENT SCHEDULE The Contract Price for the Work is FIVE MILLION SEVEN HUNDRED SIXTY EIGHT THOUSAND EIGHT HUNDRED AND SIX AND NO/100 DOLLARS ($5,768,806.00) per Vessel 1. Payment Schedule for each Vessel (with no earlier than # of days from the Effective Date for the first Vessel; add 70 days for second Vessel to get no earlier than # of days):
PAYMENT NO. 1 2 3 4 DESCRIPTION Down Payment Receipt of approx. 1100 tons of steel (15) Start Fabrication (30) Completion of 40% of Hull Modules (not completely welded) (60) Receipt of an additional 1,100 tons (75) Start erection of Modules on Shipway (75) Setting of Bow Module (90) Setting of Stern Module (100) Launch (120) Delivery (130) AMOUNT 10% 10% 10% 10%

5 6 7 8 9 10

10% 10% 10% 10% 10% 10% - Balance

PLACE OF DELIVERY: The Vessels shall be delivered to Owner safely afloat at the Gulf Coast Fabrication shipyard in Pearlington, Mississippi or such other location to be mutually agreed by Builder and Owner in accordance with Article III of this Contract. DATE OF DELIVERY: The Date of Delivery for the first Vessel shall be two hundred and ten (210) days after the Effective Date. The Date of Delivery of the second Vessel shall be the earlier of seventy days from the date that the first Vessel was delivered or two hundred and eighty (280) after the Effective Date. V. LIQUIDATED DAMAGES:

As more specifically set forth in Article III of this Contract, liquidated damages are $3,000.00 per day with a total not to exceed FIVE HUNDRED THOUSAND AND NO/100 ($500,000.00) per Vessel.

EXHIBIT 10F(i) ASSIGNMENT OF VESSEL CONSTRUCTION CONTRACT FOR TWO VESSELS dated December 30, 1996 THIS ASSIGNMENT, dated as of March 24, 1997, is between Coastal Ship, Inc. (the "Assignor") in favor of Trailer Bridge, Inc. (the "Assignee"). WITNESSETH THAT WHEREAS, the Assignor entered into a Vessel Construction Contract For Two Vessels dated as of the 30th day of December, 1996 by and between Assignor, Halter Marine, Inc. ("Builder") and Halter Marine Group, Inc. ("Guarantor") (the "Contract"); and WHEREAS, Assignor wishes to assign and Assignee wishes to accept assignment of the Contract. NOW, THEREFORE, the parties hereby agree as follows: 1. The Assignor hereby pledges, assigns and grants to the Assignee all of the Assignor's right, title and interest in the Contract between the Assignor and Builder and Guarantor. 2. The Assignee hereby accepts such assignment and assumes all obligations of Assignor under the Contract. 3. The assignment shall be binding upon and enure to the benefit of the respective successors and assigns of the Assignor and the Assignee. IN WITNESS WHEREOF, the Assignor and the Assignee have executed this instrument as of the date first written above. COASTAL SHIP, INC.
By: /s/ John D. McCown Name: John D. McCown Title: Vice President

TRAILER BRIDGE, INC.
By: /s/ John D. McCown Name: John D. McCown Title: Chairman

EXHIBIT 10F(ii) AMENDMENT No. 1 ("Amendment No.1") to the Vessel Construction Contract for Two Vessels dated as of the 30th day of December 1996 by and between Coastal Ship, Inc. ("Purchaser"), Halter Marine Inc. ("Builder") and Halter Marine Group, Inc. ("Guarantor") being made by the above parties as of this ____ day of April 1997. WITNESSETH: WHEREAS, as set forth in the Contract, a copy of which is attached hereto and incorporated as Exhibit A, the parties have agreed to the construction and purchase of two 408'9" x 100' container deck barges (individually, a "Vessel" and collectively the "Vessels") and the guaranty of Builder's performance pursuant to the Contract ; and WHEREAS, the parties hereto desire to enter into an amendment to the Contract to recognize the rights and obligations of Trailer Bridge, Inc., as assignee of the Contract, to clarify certain conditions and satisfy the requirements of The United States of America, represented by the Secretary of Transportation, acting by and through the Maritime Administration ("Marad") because Marad will finance the construction of the Vessels pursuant to Title XI of the Merchant Marine Act of 1936, as amended; NOW THEREFORE, for good and valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows: Notwithstanding anything to the contrary contained in the Contract, title to all work, materials and components, incorporated in, or to be incorporated in, each Vessel shall vest in Purchaser on the earliest of: a) when Purchaser pays Builder for such work, materials or components, or b) when (i) such work is performed on the hull of each Vessel, (ii) such materials are installed in the hull of each Vessel, or (iii) such components are fabricated and installed in the hull of each Vessel. Builder and Guarantor hereby agree and acknowledge that the obligations of Purchaser under the Contract with regard to the Vessels are separate, distinct and independent of any other obligation or agreement of Purchaser in favor of Builder or Guarantor, and that a default by Purchaser under such other obligation or agreement shall not in any way affect the obligations of Builder or Guarantor under the Contract with regard to the Vessels or permit Builder or Guarantor to exercise any right of set-off or other remedy (all of which Builder and Guarantor expressly agree not to assert) which could materially adversely affect the Contract, the Vessels or the construction thereof. Notwithstanding anything to the contrary contained in the Contract, the Contract shall not be amended, modified or terminated except in writing duly signed by the Builder, Guarantor and Purchaser with the prior written consent of Marad, provided that Marad's prior written consent shall not be necessary, but written notice to Marad shall be given, for (a) any mandatory change to the Contract as a result of any requirements of any governmental agency; or (b) any non-mandatory changes that Builder and Purchaser desire to make which do not, in the aggregate, exceed five (5%) percent of the Contract Price (as defined in the Contract) of the Vessels, and which do not cause the total Contract Price to be increased more than one (1%) percent or the delivery and completion date of the Vessels to be extended more than ten (10) days. Notwithstanding the foregoing, no change shall be made in the general dimensions and/or characteristics of the Vessels which would diminish the capacity of the Vessels to perform as originally intended by the Contract, without the prior written consent of Marad. Notwithstanding anything to the contrary contained in the Contract, Builder agrees to give Marad written notice, concurrent with any notice given to Purchaser under the Contract of any default by Purchaser or Builder and hereby grants Marad thirty (30) days from the receipt of any such notice to cure any default under the Contract, and Builder agrees to take no action to enforce its rights pursuant to the Contract until the elapse of said thirty (30) days. Builder warrants and agrees that all work under the Contract shall take place at the Builder's shipyard in Pearlington, Mississippi. Builder further agrees to cooperate with Marad and supply such information as may be reasonably required by Marad in connection with the Vessels. Builder acknowledges that such cooperation may include but is not limited to providing Marad 1) access to the Vessels and areas of the Shipyard where work related to the Vessels is being performed by the Builder, its contractors and subcontractors, at all reasonable times during normal working hours to inspect performance of the work and to observe trials and other tests, 2) copies of detailed production schedules for the Vessels along with changes to such schedules as they occur, 3) access to contract plans and specifications for the Vessels, 4) reasonable access to Builder's production manager or supervisor, and 5) access to progress payment and construction milestone information. Builder further agrees that requests or billings for periodic payments under this contract shall be submitted by the Builder to Marad in a form acceptable to Marad, based on payment milestones set forth in the Contract, after satisfactory performance is certified by Purchaser and Builder as to each payment. Notwithstanding anything to the contrary contained in the Contract, no changes to the payment milestones shall be made without Marad's prior written consent. Article VII of the Contract - INSURANCE shall be deleted and replaced with the following: ARTICLE VII - INSURANCE

Until each Vessel has been completed, physically delivered at the Place of Delivery and accepted by Purchaser, Builder shall cause such Vessel and all materials, outfitting, equipment and appliances to be installed in the Vessel including all materials outfitting, equipment and appliances provided by the Purchaser and delivered to Builder's Yard for the construction of the Vessels or in the construction thereof, to be declared under a full form Builder's Risk Policy under the latest American Institute Builder's Risk From in force and effect at the time that the construction of the Vessels is commenced when the Vessels' keel is laid, all at Builder's expense. Such policy(ies) shall name the Builder, the Purchaser and the United States of America as assureds. The policy(ies) shall provide that there shall be no recourse against the Purchaser and the United States of America for payment of premium; provided, however, the United States of America and Purchaser shall be subject to cancellation upon 30 days prior written notice as set forth below. The policy(ies) shall also provide a 30 day prior written notice of cancellation or material change in the policy to the Purchaser and the United States of America (U.S. Department of Transportation, Maritime Administration 400 Seventh St. S.W., Washington D.C. 20590 Attention, Chief, Division of Marine Insurance). The amounts, terms and conditions, deductibles and underwriters of the Builder's Risk Policy(ies) shall at all times be satisfactory to the Purchaser and the Secretary. The Builder's Risk policy(ies) shall provide that all losses in excess of $100,000 shall be paid to the Secretary of Transportation acting by and through the Maritime Administrator for distribution by him to himself, the Builder and the Purchaser in accordance with Section 2.07 c of the Title XI Security Agreement on the Vessel and the Intercreditor Agreement between the parties hereto and dated the date hereof. Builder shall also purchase and maintain, at its expense, during the life of this Contract, Worker's Compensation Insurance at statutory amounts, with Longshoreman & Harbor Workers Compensation Act coverage endorsements, Employer's Liability Insurance in the amount of at least Two Million Dollars ($2,000,000) and Public Liability Insurance against property damage, death and bodily injury in the amount of not less than Two Million Dollars ($2,000,000). A satisfactory confirmation of insurance outlining the pertinent terms and conditions of the Builder's Risk Policy(ies) referred to above shall be provided to Purchaser and the Secretary. The Purchaser shall be furnished a certificate of insurance for all other policies required hereunder. The original of the said Builder's Risk Policy shall be available in the Builder's or Guarantor's office. All of the policies of insurance and certificates referred to herein shall contain a provision requiring the insurer at risk to give Purchaser thirty (30) days' notice, in writing prior to cancellation of any such insurance. Builder and Purchaser agree to submit to Marad, upon Marad's request, one set of shipyard plans, in form and substance satisfactory to Marad, for the Vessels as built. Guarantor agrees to execute a separate guaranty in the form attached hereto as Attachment 1. Builder agrees to provide Purchaser upon delivery with a Certificate of No Liens and Release in the form attached hereto as Attachment 2. Any notice or other communication required or permitted to Marad hereunder shall be sent by certified mail, postage prepaid, by nationally recognized overnight courier service or by facsimile transmission, confirmed by certified mail postage prepaid, or nationally recognized overnight courier service, addressed as follows: United States Maritime Administration 400 Seventh St. S.W. Washington, D.C. 20590 Attention: Director Office of Ship Financing ARTICLE XVI - LAW APPLICABLE is amended to read as follows: "Builder agrees that notwithstanding the first "Whereas" clause of the Contract, the Vessels will be constructed in the State of Mississippi and the Contract shall be governed by and interpreted under the law of the State of Mississippi and, to the extent applicable, federal maritime law." All references in the Contract to the "Construction and Term Loan Agreement" are hereby deleted. Builder, and Guarantor consent to the assignment of all rights under this Contract from Purchaser to Trailer Bridge, Inc., appearing herein to accept the benefits and undertake the obligations of Purchaser under the Contract, and wherever the term "Purchaser" appears in the Contract, hereafter said term shall refer to Trailer Bridge, Inc. Builder and Guarantor agree that they have received a satisfactory guaranty in accordance with Article XVII of the Contract. This Amendment may be executed in several counterparts, all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed by their duly authorized representatives all as of the day and year first above written. BUILDER: Halter Marine, Inc.
/s/ John Dane, III _________________________________

By: John Dane, III Title: President

Witness

GUARANTOR: Halter Marine Group, Inc.
/s/ John Dane, III By: John Dane, III Title: President _________________________________ Witness

PURCHASER: Coastal Ship, Inc.
/s/ John D. McCown By: John D. McCown Title: President _________________________________ Witness

ASSIGNEE: Trailer Bridge, Inc.
/s/ John D. McCown By: John D. McCown Title: Chairman _________________________________ Witness

EXHIBIT 10G REAL ESTATE PROMISSORY NOTE $1,680,000.00 April _____, 1996 Jacksonville, Florida

(Date of Execution and Delivery)
LENDER: First Union National Bank of Florida (hereinafter termed "LENDER"), 225 Water Street, Post Office Box 2080, Jacksonville, Florida, 32231-0010 Trailer Bridge, Inc., a Delaware corporation authorized to transact business in Florida (hereinafter termed "BORROWER"), 9550 Regency Square Boulevard, Jacksonville, Florida, 322225 (No., Street or RFD, City, County, State, Zip Code)

BORROWER:

FOR VALUE RECEIVED: to wit, money loaned, the above named, the undersigned BORROWER(S) (hereinafter collectively termed "BORROWER"), jointly and severally (if more than one BORROWER), promise(s) to pay to the order of LENDER at its office in the above city, or wherever else LENDER may specify, the sum of One Million Six Hundred Eighty Thousand and No/100 Dollars ($1,680,000.00), with interest until paid. CONTRACT RATE OF INTEREST: A. Definitions: 1. "Banking Day" shall mean, with respect to Jacksonville, Florida or any other applicable city, any day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in that city. 2. "Interest Period" shall mean a period of one (1) month. 3. "LIBOR Rate" shall mean a rate per annum which is equivalent to two percent (2%) per annum (200 basis points) above the applicable rate identified below as the "USDA-LIBOR-BBA Rate" or the "USD-LIBOR-Only Reference Banks Rate". 4. "Reference Banks" shall mean four (4) major banks in the London Interbank Market. 5. "Representative Amount", for the purpose of determining the USD-LIBOR-Reference Banks Rate, shall mean an amount that is representative for a single transaction in the relevant market at the relevant time. 6. "Reset Date" shall mean the date upon which an adjustment is made by the Lender to the LIBOR Rate. 7. "USD-LIBOR-BBA Rate" shall mean the rate for deposits in U.S. Dollars for a period of one (1) month which appears on the Telerate Page 3750 as of 11:00 a.m. London Time, on the day that is two (2) London Banking Days preceding the Reset Date. If such rate does not appear on the Telerate Page 3750, the rate for that Reset Date shall be determined by reference to the "USD-LIBOR-Reference Banks Rate". 8. "USD-LIBOR-Reference Banks Rate" shall mean a rate that is determined on the basis of the rates at which deposits in U.S. Dollars are offered by the Reference Banks at approximately 11:00 a.m. London Time on the day that is two (2) London Banking Days preceding the Reset Date to major banks in the London Interbank Market for a period of one (1) month commencing on that Reset Date and in a Representative Amount. The Lender or its agent will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two (2) such quotations are provided, the rate for the Reset Date will be arithmetical mean of the quotations. If fewer than two (2) quotations are provided as requested, the rate for that Reset Date will be the arithmetical mean of the rates quoted by major banks in New York City, selected by the Lender or its agent, at approximately 11:00 a.m. New York City time on that Reset Date for loans in U.S. Dollars to leading European banks for a period of one (1) month commencing on that Reset Date and in a Representative Amount. B. Interest Rate. The principal balance of this Note outstanding from time to time shall bear interest at a rate which shall always be equal to the LIBOR Rate. The rate of interest shall be adjusted on each Reset Date. If, for any reason, the LENDER determines that the LIBOR Rate is no longer available as a rate index for this Note, the remaining principal balance hereof shall, from and after the date such rate becomes unavailable, bear interest at the PRIME RATE (as hereinafter defined) plus one- half of one percent (.5%) (50 basis points) per annum. TERMS OF PAYMENT:

A. Interest accrued at the rate aforesaid shall be payable on the eighteenth day of each month commencing May 18, 1996 (or the next Banking Day), thereafter until maturity. B. Commencing November 18, 2006, and continuing on the eighteenth day (or the next Banking Day thereafter) of each month thereafter until and including the payment due October 18, 2006, the principal balance of this Note shall be payable in consecutive monthly installments, each in an amount sufficient to reduce the principal balance by the amount designated "Notional Reduction" in the far right-hand column opposite the date of such payment as shown on Attachment I attached hereto and by this reference incorporated herein. C. Unless sooner paid, the entire remaining principal balance of this Note, plus accrued interest, shall be due and payable, in full, on October 18, 2006. BORROWER hereby further covenants, warrants and agrees as follows: Late Payment; Default Rate. The BORROWER agrees to pay a late charge equal to five percent (5%) of each payment of principal and/or interest which is not paid within ten (10) days of the date on which it is due. At LENDER'S option, the contract rate shall become the highest rate allowed by the law of the state of LENDER'S office as set forth herein, commencing with and continuing for so long as the loan or any portion thereof is in default (as hereinafter defined). Prepayment. This Note may be prepaid in full or in part without penalty or premium, provided that: (i) partial prepayment shall not interrupt or defer the installment payments due hereunder; (ii) any such prepayment (including a prepayment required under the section entitled "Disbursement for Construction of Improvements" on page 6 of this Note) shall, at the option of the LENDER, be accompanied by a corresponding buy-down under the SWAP Agreement (hereinafter defined) of an amount equivalent to the amount of such prepayment; and (iii)notwithstanding prepayment of this Note in full, nevertheless, the Mortgage shall continue to serve as collateral for the SWAP Agreement and all sums which may become due the LENDER thereunder under the expiration thereof or, if sooner terminated, the payment of all sums due by reason of such termination. Costs of Collection. Upon BORROWER'S default and where LENDER deems it necessary or proper to employ an attorney to enforce collection of any unpaid balance or to otherwise protect its interest hereunder; then BORROWER agrees to pay LENDER'S reasonable attorney's fee (including appellate costs, if any) and collection costs. Liability for reasonable attorney's fees and costs shall exist whether or not any suit or proceeding is commenced. Definition of Prime Rate and Computation Formulae. Interest is computed on the basis of a 360-day year for the actual number of days in the interest period (Actual/360 Computation). If the interest provision contained herein refers to "LENDER'S PRIME RATE", the LENDER'S PRIME RATE shall be that rate announced by LENDER from time to time as its "prime rate" and is one of several interest rate bases used by the LENDER. The LENDER lends at rates both above and below LENDER'S PRIME RATE, and BORROWER acknowledges that LENDER'S PRIME RATE is not represented or intended to be the lowest or most favorable rate of interest offered by LENDER. LENDER'S Actual/360 or 365/360 computation determines the annual effective interest yield taking the stated (nominal) interest rate for a year's period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the interest period. Application of such computation produces an annualized effective interest rate exceeding that of the nominal rate. All payments received during normal banking hours after 2:00 P.M. shall be deemed received at the opening of the next banking day. At LENDER'S option, any repayments of this Note, other than by U.S. currency, will not be credited to the outstanding loan balance of this Note until LENDER receives collected funds. If the scheduled payment amount is insufficient to pay accrued interest, BORROWER shall make an additional payment of the amount of the accrued interest in excess of the scheduled payment. Anything contained herein to the contrary notwithstanding, if for any reason the effective rate of interest on this Note should exceed the maximum lawful rate, the effective rate shall be deemed reduced to and shall be such maximum lawful rate, and any sums of interest which have been collected in excess of such maximum lawful rate shall be applied as a credit against the unpaid balance due hereunder. Collateral. Payment of this Note and all obligations of the undersigned BORROWER (hereunder "OBLIGATIONS") to LENDER, its successors and assigns, is secured, inter alia, (and includes the terms and obligations set forth therein) by a valid, subsisting mortgage (the "Mortgage") of even date herewith, executed and delivered by BORROWER to the LENDER, recorded or to be recorded in the county in which the real property described in the Mortgage (the "Property") is located, and is entitled to the benefits and protections thereof. If this Note is issued pursuant to a loan agreement between the LENDER and the BORROWER (the "Loan Agreement"), which term shall include any construction loan agreement or development loan agreement), the disbursement of the proceeds of the Note is subject to the additional terms and conditions thereof. SWAP Agreement. The BORROWER and LENDER have entered into that certain ISDA Master Agreement (with accompanying schedules and confirmations) dated effective April 15, 1996 (the "SWAP Agreement"), contemplating an exchange of interest rate payments based on a notional amount equal to the principal balance of this Note. All payments of interest and principal due under this Note are intended to coincide with interest payments due with reductions of the notional principal amount as contemplated in the SWAP Agreement. Should the SWAP

Agreement be terminated for any reason prior to the scheduled expiration, resulting in an "Early Termination" and defined therein, the BORROWER shall pay to the LENDER any and all sums then due thereunder. Any sums due BORROWER from LENDER under the SWAP Agreement by reason of an "Early Termination" thereof shall be applied to the unpaid balance of this Note. Any sums due to LENDER from BORROWER by reason of any such "Early Termination" shall be secured by the Mortgage. Remedies; Non Waiver of Default. The remedies of LENDER as provided herein, in the Mortgage and any Loan Agreement, shall be cumulative and concurrent, and may be pursued singly, successively or together, at the sole discretion of LENDER and may be exercised as often as occasion therefor shall arise. No act of omission or commission of LENDER, including specifically any failure to exercise any right, remedy or recourse, shall be effective as a waiver thereof unless it is set forth in a written document executed by LENDER and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to any subsequent event. Waivers. BORROWER and all sureties, endorsers and guarantors of this Note hereby (a) waive demand, presentment for payment, notice of nonpayment, protest, notice of protest and all other notices, filing of suit and diligence in collecting this Note, in enforcing any of the security rights of the LENDER or in proceeding against the Property; (b) agree to any substitution, exchange, addition or release of any of the Property or the addition or release of any party or person primarily or secondarily liable hereon; (c) agree that LENDER shall not be required first to institute any suit, or to exhaust its remedies against BORROWER or any other person or party to become liable hereunder or against the Property in order to enforce payment of this Note; (d) consent to any extension, modification, amendment, rearrangement, renewal or postponement of time of payment of this Note and to any other indulgence with respect hereto without further notice, consent or consideration to any of the foregoing (except the express written release by LENDER of any such person), and shall be and remain jointly and severally, directly and primarily, liable for all sums due under this Note, the Mortgage and the Loan Agreement. Completion of Blanks. In the event any provision(s) of this instrument shall be left blank or incomplete, BORROWER hereby authorizes and empowers LENDER to supply and complete the necessary information as a ministerial task consistent with the understanding between the parties. Setoff. Upon the occurrence of any of the "Events of Default", as hereinafter defined, LENDER is herewith expressly authorized to exercise its right of set-off or bank lien as to any monies deposited in demand, checking, time, savings or other accounts of any nature maintained in and with LENDER by any BORROWER, or any endorser or guarantor of this note, without advance notice. Said right of set-off shall also be exercised and applicable where LENDER is indebted to any signer hereof by reason of any certificate of deposit, note or otherwise. Events of Default. BORROWER shall be in default under this AGREEMENT upon the happening of any of the following events, circumstances or conditions; namely: 1. Default in the payment or performance of any of the OBLIGATIONS provided hereunder or in connection herewith or any other OBLIGATIONS of BORROWER or any affiliate (as defined in 11 U.S.C. 101(2), hereinafter "Affiliate") of BORROWER or any endorser, guarantor or surety for BORROWER to LENDER or any Affiliate of LENDER, howsoever created, primary or secondary, whether direct or indirect, absolute or contingent, now or hereafter existing, due or to be become due, or of any other covenant, warranty or undertaking expressed herein, therein, or in any other document establishing said endorsement, guaranty or surety, or any other document executed by BORROWER in conjunction herewith; 2. Any warranty, representation or statement made or furnished to LENDER by or on behalf of BORROWER, or any guarantor, endorser or surety for BORROWER in connection with the Note or to induce LENDER to make a loan to BORROWER which was false in any material respect when made or furnished or has become materially false, if such warranty of BORROWER or guarantor, endorser or surety for BORROWER was ongoing in nature; or 3. Death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver, custodian or trustee for any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against BORROWER or any guarantor, endorser or surety for BORROWER; or 4. BORROWER or any guarantor, endorser or surety for BORROWER shall allow the acquisition of substantially all of the business or assets of BORROWER or guarantor or surety for BORROWER or a material portion of such business assets if such a sale is outside BORROWER'S or guarantor's, endorser's or surety's ordinary course of business or more than fifty percent (50%) of the outstanding stock or voting power of BORROWER in a single transaction or a series of transactions, or acquire substantially all of the business or assets or more than fifty percent (50%) of the outstanding stock or voting power of any other entity, or enter into any transaction of merger or consolidation without prior written consent of LENDER; or 5. Failure of a corporate BORROWER or guarantor, endorser or surety for said BORROWER to maintain its corporate existence in good standing; or 6. Upon the entry of any monetary judgment or the assessment and/or filing of any tax lien against BORROWER or any guarantor, endorser or surety, or upon the issuance of any writ of garnishment, judicial seizure of, or attachment against any property of, debts due or rights of BORROWER or any guarantor, endorser or surety, in excess of $250,000.00 which is not discharged or superseded within thirty (30) days of

the date when issued or entered, to specifically include commencement of any action or proceeding to seize monies of BORROWER or any guarantor, endorser or surety on deposit in any bank account with LENDER; or 7. The BORROWER or any guarantor, endorser or surety for said BORROWER shall be a debtor, either voluntary or involuntary, under (and as the term debtor is defined in) the Federal Bankruptcy Code or should the BORROWER be generally not paying BORROWER'S debts as such debts become due; or 8. Failure of said BORROWER, guarantors, endorsers or sureties to furnish financial statements or other financial information reasonably requested by LENDER; or 9. Loss, theft, substantial damage, destruction, sale or encumbrance to or of any collateral for this Note, or the assertion or making of any levy, seizure, mechanic's or materialman's lien or attachment thereof or thereon; or 10. Should there occur any default in the performance of any continuing obligation of the BORROWER or any other obligated party under the Mortgage, the SWAP Agreement, any Loan Agreement, or any of them. Remedies on Default (Including Powers of Sale). Upon the occurrence of any of the foregoing events, circumstances or conditions of Default, all of the OBLIGATIONS evidenced herein and secured hereby shall at the option of the LENDER, immediately be due and payable without notice. Further, LENDER shall then have all the rights and remedies of a SECURED PARTY under the Uniform Commercial Code and the common law, as adopted by the state of LENDER'S office as set forth herein. In addition, and without limitation thereto, LENDER shall have the following specific rights and remedies: 1. To exercise all remedies available to the LENDER under the Mortgage and any Loan Agreement. 2. To enforce the provisions of this Note in any court of competent jurisdiction. 3. To exercise its rights of set-off by applying any monies of BORROWER on deposit with LENDER toward payment of the OBLIGATIONS evidenced or referred to herein or secured hereby, without notice. If any process is issued or ordered to be served on LENDER, seeking to seize BORROWER'S rights and/or interest in any bank account maintained with LENDER, the balance in any said account shall immediately be deeded to have been and shall be set-off against any and all OBLIGATIONS of BORROWER to LENDER, as of the time of issuance of any such writ or process, whether or not BORROWER and/or LENDER shall then have been served therewith. 4. To apply the proceeds realized from disposition of any collateral for this Note to satisfy the following terms, in the order here listed: (a) The expenses of taking, removing, maintaining, holding for sale, repairing or otherwise preparing for sale and selling of said collateral specifically including the LENDER'S reasonable attorney's fees (including appellate costs, if any) and both legal and collection expenses; next to (b) The expense of liquidating any liens, security interests, attachments or encumbrances upon the property encumbered by the Mortgage, whether inferior or superior to the security interest therein created; and finally to (c) The unpaid principal and all accumulated interest hereunder and to any other debt owed to LENDER by the BORROWER. Any surplus, after the satisfaction of the foregoing items (a) through (c) shall be paid to BORROWER or to any other PARTY lawfully entitled thereto and known to this LENDER. Further, if proceeds realized from disposition of the any collateral for this Note shall fail to satisfy any of the foregoing items (a) through (c), BORROWER shall forthwith pay deficiency balance to LENDER. Nothing herein shall be deemed to require the LENDER to pursue any particular remedy available hereunder prior to the pursuit of any other remedy. Nothing herein shall be deemed to require the LENDER to seek recourse against any collateral for this Note prior to the exercise of any other remedy available to the LENDER hereunder. Disbursements for Construction of Improvements. It is contemplated that a portion of the credit evidenced by this Note in the approximate amount of $419,910.00 shall be used for payment of costs associated with the renovation and repair of certain improvements (the "Improvements") upon the Mortgaged Property. Such loan proceeds have been disbursed to the BORROWER prior to LENDER'S receipt and review of an acceptable construction contract and plans and specifications regarding construction of the Improvements. BORROWER shall submit to LENDER copies of the subject construction contract and plans and specifications for the Improvements for approval by the LENDER prior to commencement of construction. BORROWER shall advise to the extent that a sum equal to 75% of approved costs of Improvements, when added to 90% of the purchase price of the Mortgaged Property ($1,260,090.00) is less than the face amount of this Note ($1,680,000.00), BORROWER shall pay such deficiency to LENDER, on or before December 31, 1996. The failure of BORROWER to pay such deficiency shall constitute an event of default hereunder and shall entitle LENDER to exercise all rights and remedies under this Note and each and every loan document executed and delivered in connection therewith. Additional Covenants of Borrower

At all times during the term of the loan evidenced by this Note, and any renewals, modifications or extensions thereof, the BORROWER shall: 1. Banking Relationship. Maintain a deposit banking account with LENDER. 2. Financial Information. Furnish or cause to be furnished to LENDER the following: (a) Within ninety (90) days of the end of each fiscal year of the BORROWER and each guarantor, an annual audited financial statement, including a balance sheet and reconciliation of surplus, an income statement and statement of profit and loss, all prepared in accordance with generally accepted accounting principles, prepared by an independent certified public accountant of recognized standing selected by the BORROWER and each guarantor and approved by the LENDER and certified by the chief financial officer of the BORROWER and each guarantor as being true and accurate. (b) Within thirty (30) days after the end of each of the first three quarterly accounting periods of the BORROWER'S fiscal year, a financial statement, including a balance sheet and reconciliation of surplus, an income statement and statement of profit of loss, for the period from the beginning of the then current fiscal year of the BORROWER to the end of such quarterly accounting period, all prepared in accordance with generally accepted accounting principles, certified by the chief financial officer of the BORROWER as being true and accurate. (c) Concurrently with the delivery of the annual and quarterly financial statements of the BORROWER to LENDER, a certificate showing the ratio of Total Liabilities to Tangible Net Worth (hereinafter defined), and the calculation thereof, certified by the chief financial officer of the BORROWER as being true and accurate. (d) BORROWER shall keep books and records reflecting its financial condition, including, but not limited to, the operation of the Property, all in accordance with generally accepted accounting principles. Lender shall have the right, from time to time, during normal business hours, to examine such books, records and accounts at the office of the BORROWER or other person or entity maintaining such books, records and accounts, and to make such copies of extracts thereof as requested by LENDER. 3. Ratio of Total Liabilities to Tangible Net Worth. Maintain a ratio of Total Liabilities (excluding loans from affiliates) to Tangible Net Worth (including loans to affiliates) of not more than 1.5:1. For purposes of the foregoing, "Total Liabilities" shall mean all liabilities, including capitalized leases and all reserves for deferred taxes and other deferred sums appearing on the liabilities side of a balance sheet of the BORROWER, in accordance with generally accepted accounting principles applied on a consistent basis. For purposes of the foregoing, "Tangible Net Worth" shall mean the capital surplus of the BORROWER, excluding the aggregate book value of intangible assets, such as organization expense, goodwill, going-concern value, franchises, licenses, patents, trademarks, trade names, copyrights, service marks and brand names, as determined in accordance with generally accepted accounting principles applied on a consistent basis. 4. Loans from Affiliates. Not make any payments of any loans to BORROWER from any parent, subsidiary or other affiliated organization, unless BORROWER has sufficient cash flow to make such payments (as determined on a cash basis) after payment of all indebtedness then due under present and future contractual obligations to financial institutions (including, without limitation, LENDER). 5. Loans and Advances. Not make loans or advances to any person or entity, except for business travel and expense advances incurred in the ordinary course of business, in an aggregate amount greater than $500,000.00. 6. Dividends. Not declare or pay dividends, except if earned. In no event shall BORROWER declare or pay a dividend if there shall exist an event of default, or a condition which with the passing of time and/or notice would become an event of default under this Note, or any other loan document executed and delivered in connection therewith or pursuant thereto. 7. Fiscal Year. Not change its fiscal year without the written consent of LENDER. 8. Guaranties. Not guaranty or otherwise become responsible for obligations of any other persons or entities in an aggregate amount in excess of $100,000.00, except for (a) the endorsement of checks and drafts for collection in the ordinary course of BORROWER'S business and (b) guaranties in connection with the purchase of equipment used by the BORROWER and owned by an affiliate of BORROWER. 9. Obligations for Money Borrowed. Not default on any material obligation of BORROWER when due, or in the payment or performance of any obligation of BORROWER to any other financial institution incurred for money borrowed. Miscellaneous Provisions No waivers, amendments or modifications shall be valid unless in writing. All terms and expressions contained herein which are defined in Articles 1, 3, 4 or 9 of the Uniform Commercial Code of the state of LENDER'S office set forth herein shall have the same meaning herein as in said Articles of said Code. All rights of LENDER hereunder shall inure to the benefit of its successors and assigns; and all obligations of BORROWER shall bind his heirs, executors, administrators, successors and/or assigns.

If more than one person has signed this Note, such parties are jointly and severally obligated hereunder. Further, use of the masculine pronoun herein shall include the feminine and neuter and also the plural. If any provision of this Note shall be prohibited or invalid under applicable law, such provision shall be ineffective but only to the extent of such prohibition of invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. As used herein, the words, "BORROWER" and "LENDER" shall be deemed to include BORROWER and LENDER as defined herein and their respective heirs, personal representatives, successors and assigns. This Note is executed and delivered at the place of execution and shall be construed and enforced in accordance with the laws of the State of Florida. BORROWER warrants that BORROWER does not have either a "record" or reputation for violating laws of the United States or of any state relating to liquor (as referred to in 18 U.S.CA 3617, et seq.) or narcotics and/or any commercial crimes. WAIVER OF JURY TRIAL. BORROWER (BY EXECUTION HEREOF) AND LENDER (BY ACCEPTANCE OF THIS NOTE) EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY AGREES, THAT: 1. NEITHER BORROWER NOR LENDER, ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF ANY OF THE SAME SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON THIS NOTE, ANY OTHER LOAN AGREEMENT OR ANY LOAN DOCUMENT EVIDENCING, SECURING OR RELATING TO THE OBLIGATIONS OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE PARTIES HERETO; 2. NEITHER THE BORROWER NOR LENDER WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED; 3. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS; 4. NEITHER THE BORROWER, NOR LENDER HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES; AND 5. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS TRANSACTION. IN WITNESS WHEREOF, the BORROWER, on the day and year first written above, has caused this Note to be executed under seal by (i) if a corporation, partnership or other entity its duly authorized officer(s) or partner(s), as applicable, or (ii) if by individuals, hereunto setting their hands and seals. TRAILER BRIDGE, INC., a Delaware corporation authorized to transact business in Florida
By: /s/ Ralph W. Heim Ralph W. Heim, President

ARTICLE 5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF TRAILER BRIDGE, INC. AS OF AND FOR THE YEARS ENDED 1994, 1995, 1996 AND THE FIRST QUARTERS OF 1996 AND 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS PRIMARY EPS DILUTED

YEAR DEC 31 1994 JAN 01 1994 DEC 31 1994 1,946,369 0 8,911,005 (1,125,285) 0 10,992,777 15,268,188 (4,149,616) 23,520,541 21,180,566 20,775,844 0 0 85,000 (2,941,014) 23,520,541 0 72,192,336 0 65,501,542 645,632 515,302 1,159,702 4,370,158 11,859 4,358,299 0 0 0 4,358,299 0 0

YEAR DEC 31 1995 JAN 01 1995 DEC 31 1995 498,328 0 9,564,858 (655,440) 0 10,018,975 14,704,344 (5,853,119) 20,225,533 14,715,938 13,461,866 0 0 85,000 2,588,170 20,225,533 0 62,531,365 0 53,594,020 491,720 158,995 822,558 7,464,072 67,316 7,396,765 0 0 0 7,396,765 0 0

YEAR DEC 31 1996 JAN 01 1996 DEC 31 1996 1,658,921 0 9,211,453 (905,581) 0 10,929,764 20,766,444 (8,254,314) 24,763,665 12,648,605 13,878,974 0 0 85,000 5,959,544 24,763,665 0 63,148,218 0 58,050,012 556,809 673,699 457,743 3,409,955 38,581 3,371,374 0 0 0 3,371,374 0 0

3 MOS 3-MOS DEC 31 1996 DEC-31-1997 JAN 01 1996 JAN-01-1997 MAR 31 1996 MAR-31-1997 1,373,422 2,246,206 00 8,386,884 9,431,172 (719,850) (1,178,737) 00 8,998,426 10,801,644 14,709,949 22,059,923 (6,520,773) (7,711,061) 18,556,576 26,440,270 12,710,633 13,664,629 11,084,928 15,242,109 00 00 85,000 85,000 3,290,638 6,228,587 18,556,576 26,440,270 00 14,568,079 16,446,066 00 13,496,265 14,577,754 112,800 172,016 106,063 120,413 143,182 91,400 709,769 1,484,483 7,301 29,690 702,468 1,454,793 00 00 00 702,468 1,454,793 00 00