EXHIBIT 99.4

                               DATED July 9, 2002
                               -------------------



                         STOLT COMEX SEAWAY FINANCE B.V.
                                  (as borrower)

                                     - and -

                               STOLT OFFSHORE S.A.
                                 (as guarantor)

                                     - and -

                                  CITIBANK N.A.
                               DEN NORSKE BANK ASA
                                  HSBC BANK PLC
                               ING CAPITAL LLC and
                             NORDEA BANK NORGE ASA,
                               Grand Cayman Branch
                                   (as banks)

                                     - and -

                             NORDEA BANK NORGE ASA,
                               Grand Cayman Branch
                    (as facility agent and security trustee)




                    -----------------------------------------

                             US$100,000,000 SECURED
                          MULTI-CURRENCY REVOLVING LOAN
                               FACILITY AGREEMENT
                    -----------------------------------------




                              STEPHENSON HARWOOD
                           One, St. Paul's Churchyard
                                 London EC4M 8SH
                               Tel: 020 7329 4422
                               Fax: 020 7606 0822
                                 (Ref: 822/268)

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                                    CONTENTS

                                                                            Page

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


2  The Facility and its Purpose..............................................17


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


4  Representations and Warranties............................................26


5  Currency..................................................................29


6  Repayment and Prepayment..................................................30


7  Interest..................................................................32


8  Guarantee and Indemnity...................................................33


9  Fees......................................................................38


10 Security Documents........................................................38


11 Agency and Trust..........................................................39


12 Covenants.................................................................48


13 Earnings..................................................................59


14 Events Of Default.........................................................60


15 Set-Off and Lien..........................................................64


16 Assignment and Sub-Participation..........................................66


17 Payments, Mandatory Prepayment, Reserve Requirements and Illegality.......68


18 Communications............................................................73


19 General Indemnities.......................................................74


20 Miscellaneous.............................................................76


21 Law and Jurisdiction......................................................80

SCHEDULE 1...................................................................82
        The Banks, the Commitments and the Proportionate Shares..............82

SCHEDULE 2...................................................................83
        The Shipowning Guarantors and the Vessels............................83

SCHEDULE 3...................................................................84

SCHEDULE 4...................................................................86
        Form of Transfer Certificate.........................................86

APPENDIX A...................................................................90

APPENDIX B...................................................................91

APPENDIX C...................................................................92

APPENDIX D...................................................................95
        Subordinated Note....................................................95

APPENDIX E...................................................................99
        Disclosure Letter....................................................99

<PAGE>

LOAN FACILITY AGREEMENT

Dated:  July 9, 2002

BETWEEN:-

(1)  STOLT COMEX SEAWAY FINANCE B.V. which is a company  incorporated  according
     to the  law  of  The  Netherlands  with  its  registered  office  at  Karel
     Doormanweg 25, Schiedam, 311 5JD, The Netherlands (the "Borrower"); and

(2)  STOLT OFFSHORE S.A. which is a company incorporated according to the law of
     Luxembourg with its registered  office at 26 rue Louvigny L-1946 Luxembourg
     (the "Guarantor"); and

(3)  the banks and  financial  institutions  listed in  Schedule  1, each acting
     through its office at the address  indicated against its name in Schedule 1
     (together "the Banks" and each a "Bank"); and

(4)  NORDEA BANK NORGE ASA,  Grand Cayman  Branch,  acting as facility agent and
     security trustee through its office at 437 Madison Avenue,  21st Floor, New
     York,  New York  10022,  United  States of America (in that  capacity  "the
     Agent").

WHEREAS:-

(A)  Each  of the  Vessels  is  registered  in the  name  and  ownership  of the
     Shipowning Guarantor under the flag of the country indicated in Schedule 2.

(B)  Each of the Banks has  agreed to  advance to the  Borrower  its  respective
     Commitment  of an  aggregate  principal  amount not  exceeding  one hundred
     million  Dollars  ($100,000,000)  or the  Equivalent  Amount in a Permitted
     Currency or Permitted  Currencies  (as  appropriate)  in order to allow the
     Borrower  and/or other members of the SO Group to recoup costs  expended in
     funding the acquisition of the Vessels and other  acquisitions  and capital
     expenditure made since 22 September 2000 or to be made in the future.

IT IS AGREED  as follows:-

1    Definitions and Interpretation

     1.1  Definitions

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          In this Agreement:-

          1.1.1     "the  Address for  Service"  means c/o Stolt  Offshore  M.S.
                    Limited  of  1st  Floor,   Dolphin  House,   Windmill  Road,
                    Sunbury-on-Thames,   Middlesex  TW16  7HT,  England  or,  in
                    relation to any of the Security Parties,  such other address
                    in England and Wales as that Security Party may from time to
                    time  designate by no fewer than ten Business  Days' written
                    notice to the Agent.

          1.1.2     "Additional Permitted Indebtedness" has the meaning ascribed
                    to it in Clause 12.3.1(e).

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

          1.1.4     the "Advance  Date",  in relation to any Drawing,  means the
                    date on which that  Drawing is  advanced by the Banks to the
                    Borrower pursuant to Clause 2.

          1.1.5     "the  Assignments"  means  the  deeds of  assignment  of the
                    Insurances, Earnings and Requisition Compensation in respect
                    of  each  Vessel   referred  to  in  Clause  10.2  (each  an
                    "Assignment").

          1.1.6     "the  Borrower's  Obligations"  means all of the liabilities
                    and obligations of the Borrower to the Finance Parties under
                    or pursuant to the Borrower's  Security  Documents,  whether
                    actual  or  contingent,   present  or  future,  and  whether
                    incurred  alone or jointly or jointly and severally with any
                    other  and  in   whatever   currency,   including   (without
                    limitation)  interest,  commission and all other charges and
                    expenses.

          1.1.7     "the  Borrower's  Security  Documents"  means  those  of the
                    Security  Documents  to which the  Borrower is or is to be a
                    party.

          1.1.8     "Break Costs" means all documented costs,  losses,  premiums
                    or penalties  incurred by any of the Finance  Parties in the
                    circumstances  contemplated by Clause 19.4 or as a result of
                    any of them  receiving any  prepayment of all or any part of
                    the Facility  (whether  pursuant to Clause 6.2 or otherwise)
                    or any other payment under or in relation to the Security

                                       2
<PAGE>

                    Documents  on a day other  than the due date for  payment of
                    the sum in question,  and includes (without  limitation) any
                    losses or costs  incurred  in  liquidating  or  re-employing
                    deposits from third  parties  acquired to effect or maintain
                    the  Facility,  and  any  liabilities,  expenses  or  losses
                    incurred by any of the  Finance  Parties in  terminating  or
                    reversing,  or otherwise in  connection  with,  any interest
                    rate  and/or  currency  swap,   transaction  or  arrangement
                    entered  into by any of the  Finance  Parties  to hedge  any
                    exposure arising under this Agreement,  or in terminating or
                    reversing,   or  otherwise  in  connection  with,  any  open
                    position arising under this Agreement.

          1.1.9     "Business  Day" means (a) a day on which  banks are open for
                    the  transaction of business of the nature  contemplated  by
                    this  Agreement  (and not authorised by law to close) in New
                    York City, United States of America;  London, England; Oslo,
                    Norway; and (b) in relation to the determination of interest
                    rates for  euros  only,  a day on which  the  Trans-European
                    Automated Real Time Gross Settlement Express System (TARGET)
                    is operating.

          1.1.10    "Certificate of Compliance"  means a certificate  materially
                    in the form set forth in  Schedule  3, signed by the finance
                    director or similar officer of the Guarantor.

          1.1.11    "Change of  Control"  means that SNSA shall  cease,  for any
                    reason whatsoever, to own or control directly or indirectly,
                    shares  of the  Guarantor  representing  at least 30% of all
                    votes  capable  of being  represented  in any  shareholders'
                    meeting of the Guarantor or if any  shareholder  or group of
                    shareholders  acting in concert outside SNSA at any time own
                    or  control,  directly  or  indirectly,  more of the  issued
                    voting  shares  determined,  on a per  vote  basis,  of  the
                    Guarantor than those owned by SNSA.

          1.1.12    "Commitment"  means, in relation to each Bank, the amount of
                    the  Facility  which  that  Bank  agrees to  advance  to the
                    Borrower as its several  liability as indicated  against the
                    name of that Bank in  Schedule  1, as  reduced  from time to
                    time in accordance with Clause 2.4.5,  or, where the

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<PAGE>

                    context permits, the amount of the Facility advanced by that
                    Bank and remaining outstanding.

          1.1.13    "Commitment  Commission" means the commitment  commission to
                    be paid by the Borrower to the Agent pursuant to Clause 9.2.

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

          1.1.15    "the  Communications  Address" means c/o Stolt Offshore M.S.
                    Limited  of  1st  Floor,   Dolphin  House,   Windmill  Road,
                    Sunbury-on-Thames,  Middlesex  TW16  7HT,  England,  fax no:
                    +(44)  1932  773701  marked  for the  attention  of  Jolanne
                    Le-Faye.

          1.1.16    "the Company" means, in relation to either Vessel and at any
                    given  time,  the  company   responsible  for  the  Vessel's
                    compliance  with the ISM Code pursuant to paragraph 1.1.2 of
                    the ISM Code.

          1.1.17    "Consolidated   Debt"  means  for  the   Guarantor  and  its
                    Subsidiaries  (on a  consolidated  basis) at any  time,  the
                    aggregate  value of (i) notes  payable  (whether  promissory
                    notes or otherwise),  plus (ii)  long-term  debt  (including
                    current portion of long-term debt),  plus (iii)  capitalised
                    lease  obligations  on  behalf  of  third  parties  and  all
                    contingent  liabilities  related to debt and  capital  lease
                    obligations  which,  according  to US GAAP,  are  considered
                    probable and estimable,  plus (iv)  subordinated  debt, less
                    (v) the amount of debt for which there is a restricted  cash
                    deposit which will repay all or part of such  financial debt
                    obligation.

          1.1.18    "Consolidated  Tangible Net Worth"  means for the  Guarantor
                    and its Subsidiaries  (on a consolidated  basis) at any time
                    (a)  the  sum,  to  the  extent  shown  on  the  Guarantor's
                    consolidated  balance sheet, of (i) the amount of issued and
                    outstanding share capital, less the cost of treasury shares,
                    plus (ii) the amount of surplus and retained earnings,  less
                    (b)  intangible  assets as determined in accordance  with US
                    GAAP.

          1.1.19    "converted"  means  actually or notionally  (as the case may
                    require)  converted  by the Agent,  at the rate at which the
                    Agent, in accordance with

                                       4
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                    its usual practice,  is able in the London  Interbank market
                    to purchase the Permitted  Currency in which the Facility or
                    part thereof is then denominated with the Permitted Currency
                    in which the Facility or part thereof is to be  denominated,
                    on the  second  Business  Day before the value date for that
                    conversion pursuant to Clause 5, and the words "convert" and
                    "conversion" shall be interpreted accordingly.

          1.1.20    "Currency of Account"  means,  in relation to any payment to
                    be made to a Finance  Party  pursuant to any of the Security
                    Documents, the currency in which that payment is required to
                    be made by the terms of the relevant Security Document.

          1.1.21    "Default  Rate" means the rate which is the aggregate of (i)
                    one per centum  (1%) per annum (ii) the  applicable  Margin,
                    above LIBOR and (iii) the Mandatory Cost.

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

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

          1.1.24    "Drawdown Notice" means a notice complying with Clause 2.3.

          1.1.25    "Drawing" means a part (or, if requested and available, all)
                    of the  Facility  advanced  by the Banks to the  Borrower in
                    accordance with Clause 2.

          1.1.26    "Drydock  Completion  Date"  means  the date on  which  m.v.
                    "SEAWAY  POLARIS" has (i)  completed her upgrade and special
                    survey in drydock at Portnet,  Cape Town,  South Africa (the
                    "Shipyard")  and (ii) been  re-delivered  to the  Shipowning
                    Guarantor and is no longer in the possession of the Shipyard
                    and/or the contractors, Dorbyl Marine.

          1.1.27    "Earnings" means all hires, freights,  pool income and other
                    sums  payable  to  or  for  the  account  of  the  Shipowing
                    Guarantor  in  respect  of the  Vessels  including  (without
                    limitation)   all   remuneration   for  salvage  and  towage
                    services,  demurrage and detention moneys,  contributions in
                    general average,  compensation in respect of any requisition
                    for hire and damages

                                       5
<PAGE>

                    and other payments (whether awarded by any court or arbitral
                    tribunal  or  by   agreement  or   otherwise)   for  breach,
                    termination  or variation of any contract for the operation,
                    employment or use of the Vessels.

          1.1.28    "EBITDA"  means the  consolidated  Earnings of the Guarantor
                    and its Subsidiaries  before interest,  Taxes,  depreciation
                    and amortisation,  at any time during the Facility Period as
                    determined in accordance  with US GAAP,  calculated on a pro
                    forma basis to include acquisitions.

          1.1.29    "Encumbrance"  means any  mortgage,  charge,  pledge,  lien,
                    assignment, hypothecation, preferential right, option, title
                    retention  or trust  arrangement  or any other  agreement or
                    arrangement which, in any of the  aforementioned  instances,
                    has the effect of creating security.

          1.1.30    "Equivalent  Amount"  means  the  amount  of  any  Permitted
                    Currency converted from the relevant amount of Dollars.

          1.1.31    "euro" means the currency of participating  Member States of
                    the European Monetary Union,  pursuant to Council Regulation
                    (EC) 974/98 of 3 May 1998,  (as changed from time to time by
                    the European Communities).

          1.1.32    "Event of Default" means any of the events set out in Clause
                    14.2.

          1.1.33    "Execution  Date" means the date on which this  Agreement is
                    executed by each of the parties thereto.

          1.1.34    "the  Existing  Loan"  means  the  aggregate   total  amount
                    outstanding under the Existing Loan Agreement.

          1.1.35    "Existing   Loan   Agreement"    means   the    $440,000,000
                    multicurrency  revolving credit agreement dated 22 September
                    2000 made  between  (inter  alios) the Borrower as borrower,
                    Stolt  Offshore SA as  guarantor,  the Banks and others,  as
                    lenders,  Den norske Bank ASA as facility agent and security
                    trustee and Den norske Bank ASA and others as arrangers.

          1.1.36    "Facility"   means  the   multi-currency   revolving  credit
                    facility  made  available  by  the  Banks  to  the  Borrower
                    pursuant to this Agreement.

                                       6
<PAGE>

          1.1.37    "the Facility  Outstandings"  at any time means the total of
                    all Drawings made at that time, to the extent not reduced by
                    repayments, prepayments and voluntary reductions.

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

          1.1.39    "the Fee Letter"  means the letter (in the form  attached at
                    Appendix  F) and the summary of terms from the Agent and the
                    Banks  as  agreed  and  accepted  by the  Borrower  and  the
                    Guarantor  setting out certain fees,  commissions  and other
                    sums  payable  by  the  Borrower  in  connection   with  the
                    Facility.

          1.1.40    "the Finance Parties" means the Banks and the Agent.

          1.1.41    "First  Reduction Date" means the date falling eighteen (18)
                    months after the Execution Date.

          1.1.42    "the  Guarantee"  means the  guarantee  and indemnity of the
                    Guarantor contained in Clause 8.

          1.1.43    "the Guarantor's  Liabilities"  means all of the liabilities
                    and  obligations  of the  Guarantor  to the Finance  Parties
                    under  or  pursuant  to  the  Guarantee  whether  actual  or
                    contingent, including (without limitation) Interest.

          1.1.44    "the  Indebtedness"  means the  Facility  Outstandings;  all
                    other sums of any nature  including costs (together with all
                    interest  on any of those  sums) which from time to time may
                    be payable by the Borrower to the Finance  Parties  pursuant
                    to the Security  Documents  and the Fee Letter;  any damages
                    payable as a result of any breach by the  Borrower of any of
                    the  Security  Documents;  and any  damages  or  other  sums
                    payable  as a  result  of  any  of  the  obligations  of the
                    Borrower under or pursuant to any of the Security  Documents
                    being  disclaimed by a liquidator  or any other person,  or,
                    where the context  permits,  the amount thereof for the time
                    being outstanding.

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<PAGE>

          1.1.45    an  "Instructing  Group"  means any one or more Banks  whose
                    combined  Proportionate  Shares  equal or  exceed  sixty per
                    centum (60%).

          1.1.46    "Insurances"  means all policies and  contracts of insurance
                    (including  but not  limited  to  hull  and  machinery,  all
                    entries   in   protection   and   indemnity   or  war  risks
                    associations)  which  are  from  time to time  taken  out or
                    entered into in respect of or in connection with the Vessels
                    or their increased value and (where the context permits) all
                    benefits  thereof,  including  all  claims of any nature and
                    returns of premium.

          1.1.47    "Interest" means interest at the Default Rate.

          1.1.48    "Interest  Payment  Date" means each date for the payment of
                    interest in accordance with Clause 7.

          1.1.49    "Interest Period" means each interest period selected by the
                    Borrower or agreed by the Agent pursuant to Clause 7.

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

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

          1.1.52    "LIBOR" means the rate,  rounded to the nearest four decimal
                    places  downwards  (if  the  digit  displayed  in the  fifth
                    decimal  place  is  1,2,3  or 4) or  upwards  (if the  digit
                    displayed  in the  fifth  decimal  place  is  5,6,7,8  or 9)
                    displayed on the telerate  page 3750 or, as the case may be,
                    3740 (or such other page or pages  which  replace(s)  either
                    such  page for the  purposes  of  display  offered  rates of
                    leading  banks,  for  deposits in the Currency of Account of
                    amounts  equal to the amount of the  relevant  Drawing for a

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<PAGE>

                    period equal in length to the relevant Interest Period or if
                    there  is no  such  display  rate  then  available  for  the
                    Permitted  Currency for an amount comparable to the Drawing,
                    the arithmetic mean (rounded upwards,  if necessary,  to the
                    nearest whole multiple of one-sixteenth  per centum (1/16%))
                    of the respective rates notified to the Agent by each of the
                    Reference Banks as the rate at which it is offered  deposits
                    in the  Currency of Account and for the  required  period by
                    prime banks in the London Interbank Market.

          1.1.53    "the Managers" means any member of the SO Group; and/or such
                    other commercial  and/or  technical  managers of the Vessels
                    nominated by the  Shipowning  Guarantors as the Agent may in
                    its discretion approve.

          1.1.54    "Management  Agreement"  means, in relation to either Vessel
                    which  is  leased  to a  party  outside  the SO  Group,  the
                    Management  Agreement  made  between  the  Managers  and the
                    Shipowning Guarantor.

          1.1.55    "Mandatory  Cost" means the addition to the interest rate to
                    compensate the Banks for the cost of compliance with (a) the
                    requirements  of the Bank of England  and/or  the  Financial
                    Services  Authority (or, in either case, any other authority
                    which replaces all or any of its  functions)  and/or (b) the
                    requirements  of the European  Central  Bank,  determined in
                    accordance with Appendix C.

          1.1.56    "Margin" based on the ratio of  Consolidated  Debt to EBITDA
                    for the preceding four fiscal quarters  ("D/EBITDA")  during
                    the Facility Period means:-

                    (i)       1.00% where D/EBITDA is less than 1;

                    (ii)      1.25% where D/EBITDA is equal to or greater than 1
                              but less than 2;

                    (iii)     1.375% where D/EBITDA is equal to or greater than
                              2 but less than 3;

                    (iv)      1.625% where  D/EBITDA is equal to or greater than
                              3.

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<PAGE>

                    Provided   however   that  each   applicable   Margin  shall
                    automatically  increase by fifty per cent (50%) in the event
                    of a Change of  Control,  unless  such  Change of Control is
                    acceptable to all the Banks.  The Margin shall be calculated
                    by the Agent as of 28/29 February,  31 May, 31 August and 30
                    November each year (each a "Margin Review Date")  commencing
                    31 May 2002 for the  succeeding  fiscal quarter and shall be
                    calculated based on the Consolidated Debt as of the previous
                    Margin Review Date over EBITDA for the four fiscal quarters,
                    the most  recent of which  shall have ended on the  previous
                    Margin Review Date.

          1.1.57    "the  Maximum  Facility  Amount"  means  the  amount  of the
                    aggregate  Commitments  (stated in  Dollars)  subject to any
                    reductions  effected in accordance with Clauses 2.4, 6.6 and
                    17.8.

          1.1.58    "the   Mortgagees'   Insurances"   means  all  policies  and
                    contracts of  mortgagees'  interest  insurance and any other
                    insurance from time to time taken out by the Agent on behalf
                    of the Banks in  relation  to the  Vessels  pursuant to this
                    Agreement.

          1.1.59    "the Mortgages" means the first preferred mortgages referred
                    to in Clause 10.1 (each a "Mortgage").

          1.1.60    "Norwegian  Kroner" means available and freely  transferable
                    and convertible  funds in the lawful currency of the Kingdom
                    of Norway.

          1.1.61    "Original  Dollar Amount"  means,  at any relevant time, the
                    amount  of  the   Facility   which   would  then  have  been
                    outstanding had the Facility at all times been  denominated,
                    drawn and repaid wholly in Dollars in accordance with Clause
                    6.

          1.1.62    "Permitted  Currency"  means Dollars,  the euro, each of the
                    lawful currencies of Norway (namely Norwegian  Kroner),  the
                    United  Kingdom  (namely  Pounds  Sterling)  and  any  other
                    eurocurrency  provided that each such  currency  selected by
                    the  Borrower  is  acceptable  to the  Banks  and is  freely
                    convertible,  transferable and available to the Banks in the
                    London Interbank market and in respect of which the Agent is
                    at all material times able to ascertain LIBOR.

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<PAGE>

          1.1.63    "Permitted Indebtedness" means the Existing Loan, Short Term
                    Permitted Indebtedness,  Subordinated Debt up to one hundred
                    million  Dollars  ($100,000,000)  and  Additional  Permitted
                    Indebtedness.

          1.1.64    "Permitted  Liens"  means  (i)  liens  for  salvage  and any
                    Encumbrance  created in favour of the Banks and/or the Agent
                    by the Security  Documents or which  otherwise has the prior
                    written  approval of the Agent acting upon the  instructions
                    of all the Banks,  (ii) any  Encumbrance  arising  either by
                    operation of law or in the  ordinary  course of the business
                    of the relevant  Security  Party which is  discharged in the
                    ordinary  course of business but in any event does not exist
                    for more than sixty (60) days, or (iii) Encumbrances created
                    pursuant to the Existing Loan  Agreement and existing on the
                    Execution Date.

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

          1.1.66    "Pounds  Sterling" means pounds sterling being the available
                    and freely  transferable and convertible funds in the lawful
                    currency of the United Kingdom.

          1.1.67    "Principal  Subsidiary"  means  any  member  of the SO Group
                    having  total  assets  exceeding  ten per cent  (10%) of the
                    consolidated assets of the SO Group and/or having during the
                    last four fiscal  quarters  accounted  for more than ten per
                    cent (10%) of the consolidated turnover of the SO Group.

          1.1.68    "Proceedings" means any suit, action or proceedings begun by
                    any of the Finance  Parties  arising out of or in connection
                    with the Security Documents.

          1.1.69    "Proportionate  Share" means,  for each Bank, the percentage
                    indicated  against  the name of that Bank in  Schedule 1, as
                    amended by any Transfer  Certificate  executed  from time to
                    time.

          1.1.70    "Pro Rata Insurance  Proceeds  Amount" means,  in respect of
                    each  Vessel,  a figure equal to (x) a fraction in which (i)
                    the  numerator  is  the

                                       11
<PAGE>

                    amount of the insurance  proceeds payable in respect of such
                    Vessel in the event of a Total Loss and (ii) the denominator
                    is the aggregate  market value of all the Vessels  (based on
                    the  Valuations)  multiplied  by (y)  the  Maximum  Facility
                    Amount.

          1.1.71    "Reduction  Date"  means the First  Reduction  Date and each
                    date  falling  at  consecutive  six  (6)  monthly  intervals
                    thereafter.

          1.1.72    "Reference Banks" means the Agent, Citibank N.A., Den norske
                    Bank ASA, HSBC Bank Plc and ING Capital LLC.

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

          1.1.74    "the  Security   Documents"   means  this   Agreement,   the
                    Mortgages,  the Assignments,  the Shipowner's Guarantee,  or
                    (where the context permits) any one or more of them, and any
                    other  agreement  or  document  which  may  at any  time  be
                    executed  by a member  of the SO Group as  security  for the
                    payment of all or any part of the Indebtedness.

          1.1.75    "Security  Parties" means the Borrower,  the Guarantor,  the
                    Shipowning  Guarantor  and any other  member of the SO Group
                    who may at any time  during  the  Facility  Period be liable
                    for,  or  provide  security  for,  all  or any  part  of the
                    Indebtedness, and "Security Party" means any one of them.

          1.1.76    "the Shipowner's Guarantee" means guarantee and indemnity of
                    the Shipowning Guarantor referred to in Clause 10.3.

          1.1.77    "the Shipowning  Guarantor"  means Class 3 Shipping  Limited
                    which  is a  company  incorporated  according  to the law of
                    Bermuda with its  registered  office at Clarendon  House,  2
                    Church Street, Hamilton HM 11, Bermuda.

          1.1.78    "Short Term Permitted  Indebtedness"  means any indebtedness
                    of  the  SO  Group  (other  than  the   Existing   Loan  and
                    intercompany  indebtedness  of the SO Group  and/or the SNSA
                    Group) incurred for working capital

                                       12
<PAGE>

                    and short term  liquidity in an amount of up to seventy five
                    million Dollars ($75,000,000).

          1.1.79    "SMC" in relation to m.v.  "SEAWAY  POLARIS",  means a valid
                    safety management  certificate  issued for that Vessel by or
                    on behalf of the  Administration  pursuant to paragraph 13.4
                    of the ISM Code.

          1.1.80    "SMS" in relation to m.v. "SEAWAY  POLARIS",  means a safety
                    management  system for that Vessel developed and implemented
                    in accordance with the ISM Code and including the functional
                    requirements,  duties and  obligations  required  by the ISM
                    Code.

          1.1.81    "SNSA"  means  Stolt-Nielsen  S.A.  a  company  incorporated
                    according  to the  law of  Luxembourg  with  its  registered
                    office at 23 Avenue Monterey, L-2086 Luxembourg.

          1.1.82    "SNSA Group" means SNSA and its Subsidiaries.

          1.1.83    "SO Group" means the Guarantor and its Subsidiaries.

          1.1.84    "Subordinated Debt" means any debt from any member(s) of the
                    SNSA Group upon the terms contained in a Subordinated Note.

          1.1.85    "Subordinated  Note" means a note  substantially in the form
                    of Appendix D.

          1.1.86    "Subsidiary" means a subsidiary  undertaking,  as defined in
                    section 258 Companies  Act 1985 or any analogous  definition
                    under any other relevant system of law.

          1.1.87    "Surety"  means any person  (other than the  Borrower or the
                    Guarantor)  who has given or who may in the  future  give to
                    the Finance  Parties or any of them any security,  guarantee
                    or   indemnity   for  or  in  relation  to  the   Borrower's
                    Obligations.

          1.1.88    "Synthetic   Leases"  means  any  leasing   structure   that
                    qualifies  as an  operating  lease for  financial  reporting
                    purposes but is considered a loan for  applicable  income or
                    corporation tax purposes.

                                       13
<PAGE>

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

          1.1.90    "the Termination Date" means the date falling four (4) years
                    after the Execution Date.

          1.1.91    "Total Loss", in relation to either Vessel means:-

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

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

                    (c)  the capture, seizure, arrest, detention or confiscation
                         of that  Vessel,  unless  the  Vessel is  released  and
                         returned to the possession of the Shipowning  Guarantor
                         within two months after the capture,  seizure,  arrest,
                         detention or confiscation in question.

          1.1.92    "Transfer Certificate" means a certificate materially in the
                    form  set  forth  in  Schedule  4  signed  by a  Bank  and a
                    Transferee whereby:

                    (a)  such  Bank  seeks  to  procure  the  transfer  to  such
                         Transferee  of all or a part of such Bank's  rights and
                         obligations  under this  Agreement  upon and subject to
                         the terms and conditions set out in Clause 16; and

                    (b)  such  Transferee  undertakes to perform the obligations
                         it  will  assume  as  a  result  of  delivery  of  such
                         certificate to the Agent as is  contemplated  in Clause
                         16.

          1.1.93    "Transfer   Date"   means,   in  relation  to  any  Transfer
                    Certificate,  the  date  for  the  making  of  the  transfer
                    specified in the schedule to such Transfer Certificate.

                                       14
<PAGE>

          1.1.94    "Transferee" means a bank or other financial  institution to
                    which a Bank seeks to  transfer  all or part of such  Bank's
                    rights and obligations under this Agreement.

          1.1.95    "the Trust Property" means:-

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

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

          1.1.96    "US GAAP" means the generally accepted accounting principles
                    in the  United  States  of  America,  from  time  to time in
                    effect,  subject  to any  changes  in the  rules of US GAAP,
                    consistently  applied always  provided that if the Guarantor
                    wishes to change accounting principles within the applicable
                    rules of US GAAP, the Borrower shall notify the Agent of the
                    intention together with an explanation of the effects on the
                    financial covenants contained in this Agreement.  Should the
                    Banks,  and/or the  Guarantor,  find that such  change  will
                    impact upon the result of the  calculation  of the financial
                    covenants  contained  in this  Agreement,  the  Banks  will,
                    following   consultation   with  the  Guarantor,   stipulate
                    amendments to the  financial  covenants so that the ratio of
                    SO Group's  performance in respect of the covenants reflects
                    the  position  which would have been the case had no changes
                    to the Guarantor's accounting principles taken place.

          1.1.97    "Valuation"  means in relation to a Vessel,  the  arithmetic
                    mean of the written  valuations of that Vessel  expressed in
                    Dollars  prepared  by two  firms  of  reputable  independent
                    shipbrokers,  one  appointed  by the  Agent  and  the  other
                    appointed by the  Borrower,  unless  either the Agent or the
                    Borrower  disagrees with such arithmetic  average,  in which
                    event the two  shipbrokers  shall  appoint  a third  firm of
                    reputable  independent  shipbrokers and the valuation of the
                    Vessel  shall  be the  arithmetic  mean  of all  three  such
                    valuations.   Such  valuations  shall  be  prepared  at  the
                    Borrower's expense,  without a physical  inspection,  on the
                    basis of a sale

                                       15
<PAGE>

                    for  prompt  delivery  for cash at arm's  length  between  a
                    willing  buyer and a willing  seller  without the benefit of
                    any charterparty or other engagement.

          1.1.98    "the  Vessels"  means the  vessels  listed in Schedule 2 and
                    everything  now or in the future  belonging to them on board
                    and ashore (each a "Vessel").

     1.2  Interpretation

          In this Agreement:-

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

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

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

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

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

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

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

                                       16
<PAGE>

          1.2.8     references  to  any  of  the  Finance  Parties  include  its
                    successors, Transferees and assignees; and

          1.2.9     references to times of day are to New York time.

     1.3  Joint and several liability

          1.3.1     All obligations, covenants, representations,  warranties and
                    undertakings  in  or  pursuant  to  the  Security  Documents
                    assumed, given, made or entered into by the Borrower and the
                    Guarantor shall,  unless otherwise  expressly  provided,  be
                    assumed, given, made or entered into by the Borrower and the
                    Guarantor jointly and severally.

          1.3.2     Each of the  Borrower  and the  Guarantor  agrees  that  any
                    rights  which it may have at any time  during  the  Facility
                    Period by reason of the performance of its obligations under
                    the Security  Documents to be indemnified by the other or by
                    any Surety and/or to take the benefit of any security  taken
                    by the Finance  Parties  pursuant to the Security  Documents
                    shall be  exercised  in such manner and on such terms as the
                    Agent may require.  Each of the  Borrower and the  Guarantor
                    agrees  to hold any sums  received  by it as a result of its
                    having  exercised  any such right on trust for the Agent (as
                    agent for the Banks) absolutely.

          1.3.3     Each of the Borrower and the  Guarantor  agrees that it will
                    not at any time during the Facility Period claim any set-off
                    or  counterclaim  against the other or against any Surety in
                    respect of any  liability  owed to it by the other or by any
                    Surety under or in connection  with the Security  Documents,
                    nor  prove  in  competition  with any  Finance  Party in any
                    liquidation  of (or analogous  proceeding in respect of) the
                    other or of any Surety in respect of any payment  made under
                    the  Security  Documents  or in  respect  of any  sum  which
                    includes the proceeds of realisation of any security held by
                    any  of  the  Finance  Parties  for  the  repayment  of  the
                    Indebtedness.

2    The Facility and its Purpose

     2.1  Agreement  to  lend  Subject  to the  terms  and  conditions  of  this
          Agreement,  and  in  reliance  on  each  of  the  representations  and
          warranties made or to be made in or in

                                       17
<PAGE>

          accordance  with  each of the  Security  Documents,  each of the Banks
          agrees to advance  to the  Borrower  its  Commitment  of an  aggregate
          principal  amount not exceeding the Maximum Facility Amount to be used
          by the Borrower for the purposes referred to in Recital (B).

     2.2  Drawings  Subject  to  satisfaction  by the Borrower of the conditions
          set out in Clause 3.1 (in  respect of the first  Drawing),  Clause 3.3
          (in respect of all  subsequent  Drawings),  and subject to Clauses 2.3
          and  2.10,  and  provided  that the  maximum  aggregate  amount of the
          Facility  Outstandings  at any given time during the  Facility  Period
          shall not exceed the Maximum  Facility  Amount,  each Drawing shall be
          advanced to the Borrower,  in each case by the Agent  transferring the
          amount of the Drawing to such  account of the Borrower as the Borrower
          shall notify to the Agent in the relevant Drawdown Notice by such same
          day method of funds transfer as the Agent shall select.

     2.3  Advance of Drawings   Each Drawing shall be advanced in Dollars, or in
          any other Permitted  Currency  selected in accordance with Clause 5.1.
          Each Drawing  shall be advanced on a Business  Day,  provided that the
          Borrower shall have given to the Agent not more than ten and not fewer
          than three Business Days' notice in writing materially in the form set
          out in  Appendix  A of the  required  Advance  Date of the  Drawing in
          question.  Each Drawdown  Notice once given shall be  irrevocable  and
          shall constitute a warranty by the Borrower that:-

          2.3.1     all  conditions  precedent  to the  advance  of the  Drawing
                    requested in that Drawdown  Notice will have been  satisfied
                    on or before the Advance Date requested;

          2.3.2     no Event of  Default  or  Potential  Event  of  Default  has
                    occurred or will then have occurred; and

          2.3.3     no Event of  Default  or  Potential  Event of  Default  will
                    result from the advance of the Drawing in question.

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

                                       18
<PAGE>

     2.4  Facility Reduction

          2.4.1     The amount of the  Facility  available  to the  Borrower for
                    drawing under this  Agreement  shall be one hundred  million
                    Dollars ($100,000,000) or the Equivalent Amount in any other
                    Permitted Currency during the period from the Execution Date
                    until the First  Reduction  Date. On each Reduction Date the
                    amount of the Facility available for drawing shall reduce by
                    ten million Dollars  ($10,000,000).  On the Termination Date
                    the  Facility  available  shall  be  reduced  to  zero.  The
                    mandatory reductions in the amount of the Facility available
                    for drawing required pursuant to this Clause will be made in
                    the  amounts and at the times  specified  (subject to Clause
                    2.4.2) whether or not the Maximum Facility Amount is reduced
                    pursuant to Clause 2.4.3, Clause 6.6 or Clause 17.8.

          2.4.2     The Borrower  may  voluntarily  reduce the Maximum  Facility
                    Amount  in  whole  or in part in  multiples  of two  million
                    Dollars ($2,000,000),  where applicable provided that it has
                    first  given to the Agent not fewer than three (3)  Business
                    Days' prior written notice expiring on a Business Day of its
                    desire to  reduce  the  Maximum  Facility  Amount.  Any such
                    reduction  in  the  Maximum  Facility  Amount  shall  not be
                    reversed.  Any voluntary  reduction in the Maximum  Facility
                    Amount  pursuant  to this  Clause  shall be  applied  to the
                    remaining  mandatory  reductions under Clause 2.4.1 on a pro
                    rata basis.

          2.4.3     In the event of a sale or disposal  of a Vessel  (subject to
                    the  penultimate  sentence  contained in Clause 12.2.21) the
                    Maximum  Facility  Amount shall reduce by an amount equal to
                    the  proportion  that a current  Valuation  for such  Vessel
                    bears  to  the   aggregate   total  amount  of  the  current
                    Valuations  for the remaining  Vessel and the Vessel sold or
                    disposed of pursuant to this Clause.

          2.4.4     To the extent that  repayments  or  prepayments  made by the
                    Borrower  to the Agent in  accordance  with  this  Agreement
                    reduce the  Facility  Outstandings  to less than the Maximum
                    Facility  Amount,  the  Borrower  shall again be entitled to
                    make Drawings in accordance with and subject to the terms of
                    this Agreement.

                                       19
<PAGE>

          2.4.5     Simultaneously  with each reduction of the Maximum  Facility
                    Amount in  accordance  with Clause  2.4.1,  Clause  2.4.2 or
                    Clause  2.4.3 (as the case may be), the  Commitment  of each
                    Bank  will  reduce so that the  Commitments  of the Banks in
                    respect of the reduced  Maximum  Facility  Amount  remain in
                    accordance with their respective Proportionate Shares.

     2.5  Restrictions on Drawings   The  Borrower shall not be entitled to make
          more than three Drawings on any Business Day and no more than ten (10)
          Drawings  may be  outstanding  at any one  time  during  the  Facility
          Period.  Each  Drawing  shall be of an  amount  of not less  than five
          million  Dollars  ($5,000,000)  or the Equivalent  Amount in any other
          Permitted  Currency.  If at any time  during the  Facility  Period the
          Original  Dollar  Amount  exceeds  the  Maximum  Facility  Amount then
          available or if a proposed  Drawing when added to the Original  Dollar
          Amount would result in the Maximum Facility Amount being exceeded then
          the Borrower shall immediately pay to the Agent on behalf of the Banks
          such amount as will ensure that the Original Dollar Amount is equal to
          or less than the Maximum Facility Amount then available.

     2.6  Termination   Date  No Bank shall be under any  obligation  to advance
          all or any part of its Commitment after the Termination Date.

     2.7  Several   obligations   The   obligations  of  the  Banks  under  this
          Agreement  are  several.   The  failure  of  a  Bank  to  perform  its
          obligations  under this Agreement  shall not affect the obligations of
          the  Borrower  to any  Finance  Party nor shall any  Finance  Party be
          liable  for  the  failure  of  another  Bank  to  perform  any  of its
          obligations under or in connection with this Agreement.

     2.8  Application of Facility   Without  prejudice to the obligations of the
          Borrower  under this  Agreement,  no Finance Party shall be obliged to
          concern itself with the application of the Facility by the Borrower.

     2.9  Loan facility and control  accounts   The Agent will open and maintain
          such loan facility account or such other control accounts as the Agent
          shall in its discretion  consider necessary or desirable in connection
          with the Facility.

     2.10 Additional   Restriction  on   Drawings   It  is  hereby  agreed  that
          notwithstanding  the provisions of this Clause 2 that the Borrower may
          not borrow more than

                                       20
<PAGE>

          eighty seven million four hundred thousand Dollars ($87,400,000) under
          the  Facility  until  such  time as the  Drydock  Completion  Date has
          occurred.  On the Drydock  Completion Date the Maximum Facility Amount
          shall be available  to the  Borrower for drawing  subject to the terms
          and conditions contained in this Agreement.

3    Conditions Precedent and Subsequent

     3.1  Conditions  Precedent - First  Drawing  Before any Bank shall have any
          obligation  to  advance  the first  Drawing  under the  Facility,  the
          Borrower  shall pay to the  Agent the  relevant  fees  referred  to in
          Clause 9 and the Fee Letter and deliver or cause to be delivered to or
          to the order of the Agent the following documents and evidence:-

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

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

          3.1.3     Officer's  certificate   A certificate  (i) signed by a duly
                    authorised  officer of each of the Security  Parties setting
                    out the names of the directors, officers and (other than the
                    Guarantor) shareholders of that Security Party

                                       21
<PAGE>

                    and (ii) issued by each Security  Party's  company  registry
                    confirming due  incorporation  and valid existence and (when
                    such information is maintained by the registry) the names of
                    its directors and shareholders.

          3.1.4     Power  of  attorney   The   power  of  attorney  (notarially
                    attested  and  legalised,  if  necessary,  for  registration
                    purposes)  of each of the Security  Parties  under which any
                    documents are to be executed or  transactions  undertaken by
                    that Security Party.

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

                    (a)  any time charterparty or bareboat charterparty for each
                         Vessel which will be in force on the first Advance Date
                         and which exceeds twelve (12) months  duration which is
                         entered  into with an  entity  which is not a member of
                         the SO Group;

                    (b)  the Management  Agreement relating to each Vessel which
                         is in force at the time of this Agreement; and

                    (c)  each  Vessel's  current  Safety  Construction,   Safety
                         Equipment, Safety Radio and Load Line Certificates;

                    (d)  if required by law and either  Vessel is  operating  in
                         the  waters  of the  United  States  of  America,  that
                         Vessel's     current     Certificate    of    Financial
                         Responsibility issued pursuant to the United States Oil
                         Pollution Act 1990;

                    (e)  the current SMC for m.v. "SEAWAY POLARIS"; and

                    (f)  where applicable, each Company's current DOC

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

          3.1.6     Evidence  of   ownership    In  respect   of  each   Vessel,
                    certificate(s)  of ownership and encumbrance (or equivalent)
                    issued by  the   Registrar of Ships (or equivalent official)
                    at the Vessel's port of registry confirming that such Vessel
                    is on  the  first  Advance  Date  owned  by  the  Shipowning
                    Guarantor and free of registered Encumbrances.

                                       22
<PAGE>

          3.1.7     Evidence of insurance   Evidence that each Vessel is insured
                    in the manner  required by the Security  Documents  and that
                    letters of undertaking will be issued in the manner required
                    by the Security Documents, together with (if required by the
                    Agent)  the  written   approval  of  the  Insurances  by  an
                    insurance adviser appointed by the Agent.

          3.1.8     Confirmation of class A Certificate of Confirmation of Class
                    for hull and  machinery  (dated  not more  than  seven  days
                    before the first Advance Date)  confirming  that each Vessel
                    is classed with the highest  applicable  class  necessary to
                    properly   operate  such  Vessel  of  Lloyd's   Register  of
                    Shipping,   Det  norske  Veritas,  the  American  Bureau  of
                    Shipping  or such  other  classification  society  as may be
                    acceptable to the Agent.

          3.1.9     Valuations   A  Valuation  of each Vessel  addressed  to the
                    Agent.

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

          3.1.11    Drawdown Notice   A Drawdown Notice.

          3.1.12    Process  agent   A  letter from Stolt Offshore M.S.  Limited
                    accepting their  appointment by each of the Security Parties
                    as agent for service of Proceedings pursuant to the Security
                    Documents.

          3.1.13    Managers'  subordination  confirmation letter    The written
                    confirmation  of the Managers  that they will (i) remain the
                    commercial and technical  managers of the Vessels throughout
                    the   Facility   Period  and  will  manage  the  Vessels  in
                    accordance with good standard ship  management  practice and
                    (ii) subordinate all their rights in relation to the Vessels
                    to those of the Finance Parties.

          3.1.14    The Fee Letter   The  Fee Letter  countersigned on behalf of
                    the Borrower and the  Guarantor by way of  acceptance of its
                    terms.

                                       23
<PAGE>

          3.1.15    Legal opinions   Confirmation satisfactory to the Agent that
                    all legal  opinions  required  by the Agent on behalf of the
                    Banks will be given  substantially  in the form  required by
                    the Agent on behalf of the Banks.

          3.1.16    Accounts   The (i)  consolidated  audited  accounts  of  the
                    Guarantor  for its  financial  year just ended and (ii) most
                    recent  unaudited  financial  statements of the Guarantor in
                    each case,  certified,  by a director or the chief financial
                    officer  of Stolt  Offshore  M.S.  Limited  as agent for the
                    Guarantor, as fair and accurate.

          3.1.17    Material  Adverse Change   Evidence that no material adverse
                    change has  occurred in the  business,  assets,  operations,
                    conditions  (financial  or  otherwise)  or  prospects of the
                    Guarantor or its  Subsidiaries  from those  disclosed in the
                    Guarantor's  most  recently  filed Form 20-F  Annual  Report
                    pursuant  to  Section  13 or  15(d)  of  the  United  States
                    Securities   Exchange   Act  1934,   or  in  the  facts  and
                    information regarding such entities as represented to date.

          3.1.18    Corporate  Structure    Evidence  of  the  actual  corporate
                    structure of the SO Group.

          3.1.19    Margin  Such evidence as the Agent shall require in order to
                    set the Margin.

     3.2  Conditions  Subsequent  The Borrower undertakes to deliver or to cause
          to be delivered to the Agent on, or as soon as practicable  after, the
          first Advance Date, the following  additional documents and evidence:-

          3.2.1     Evidence of registration   Evidence of  registration  of the
                    Mortgages,  in  each  case  with  first  priority  with  the
                    Registrar of Ships (or  equivalent  official) at the port of
                    registry of the Vessel concerned.

          3.2.2     Letters of  undertaking   Letters of undertaking as required
                    by the Security  Documents in form and substance  acceptable
                    to the Agent.

          3.2.3     Legal  opinions   Such legal opinions as the Agent on behalf
                    of the Banks shall require pursuant to Clause 3.1.15.

                                       24
<PAGE>

          3.2.4     Companies Act   registrations  Evidence that the  prescribed
                    particulars of the Security Documents have been delivered to
                    the  Registrar of  Companies of (i) England and Wales,  (ii)
                    Bermuda and (iii) the Isle of Man within the statutory  time
                    limit.

          3.2.5     Master's  receipts   The  master's  receipt for  each of the
                    relevant Mortgages.

          3.2.6     Management  Agreements  Within three months of the Execution
                    Date (or such later date as the Agent in its  discretion may
                    agree) Management  Agreements in relation to all the Vessels
                    where  such  agreements  were  not  delivered  to the  Agent
                    pursuant to Clause 3.1.5(b).

     3.3  Conditions  Precedent - Subsequent Drawings Before any Bank shall have
          any obligation to advance any subsequent  Drawings under the Facility,
          the  Borrower  shall  deliver or cause to be delivered to the order of
          the  Agent,  a Drawdown  Notice,  in  addition  to the  documents  and
          evidence  referred to in Clause 3.1 where such  documents and evidence
          have not already been delivered to and received by the Agent.

     3.4  No waiver   If the Banks in their sole discretion agree to advance any
          part of the Facility to the Borrower  before all of the  documents and
          evidence  required  by Clause  3.1 or Clause  3.3 (as the case may be)
          have been  delivered  to or to the order of the  Agent,  the  Borrower
          undertakes to deliver all outstanding  documents and evidence to or to
          the order of the Agent no later than the date  specified by the Agent,
          and the  advance of any part of the  Facility  shall not be taken as a
          waiver of the Agent's right to require production of all the documents
          and  evidence  required  by Clause  3.1 or Clause 3.3 (as the case may
          be).

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

          3.5.1     be in form and substance acceptable to the Agent;

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

                                       25
<PAGE>

          3.5.3     if  required  for  registration   purposes,   be  certified,
                    notarised,  legalised or attested in a manner  acceptable to
                    the Agent.

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

4    Representations and Warranties

     Each of the Borrower and the Guarantor  represents  and warrants to each of
     the Finance  Parties at the date of this Agreement and (by reference to the
     facts  and  circumstances  then  pertaining)  at the date of each  Drawdown
     Notice,  at each Advance Date and at each Interest  Payment Date as follows
     (except that the  representation  and warranty  contained at Clause 4.6 and
     Clause 4.13 shall only be made on the first Advance Date):-

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

     4.2  Solvency   None of the Security Parties is insolvent or in liquidation
          or administration or subject to any other insolvency procedure, and no
          receiver, administrative receiver, administrator,  liquidator, trustee
          or  analogous  officer  has been  appointed  in  respect of any of the
          Security  Parties  or all or any part of their  assets  except if such
          insolvency   should   arise  in  relation   to  a  Shipowner   in  the
          circumstances  where a demand  has been  made  under  the  Shipowner's
          Guarantee.  For this purpose a Security Party will be deemed insolvent
          if it is unable to pay its debts  within  the  meaning of S.123 of the
          Insolvency  Act 1986 save in relation to the exception  referred to in
          the previous sentence.

                                       26
<PAGE>

     4.3  Binding obligations   The Security  Documents  when duly  executed and
          delivered will constitute the legal, valid and binding  obligations of
          the Security  Parties  enforceable in accordance with their respective
          terms  subject  to  applicable  laws  regarding  creditors'  rights in
          general.

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

     4.5  Registrations and consents       With  the   exception   only  of  the
          registrations  referred  to in  Clause  3.2,  all (if  any)  consents,
          licences,  approvals and  authorisations  of, or registrations with or
          declarations  to, any governmental  authority,  bureau or agency which
          may  be  required  in  connection   with  the   execution,   delivery,
          performance, validity or enforceability of the Security Documents have
          been  obtained or made and remain in full force and effect and neither
          the Borrower nor the  Guarantor is aware of any event or  circumstance
          which could  reasonably  be expected  adversely to affect the right of
          any of the Security Parties (as the case may be) to hold and/or obtain
          renewal of any such consents, licences, approvals or authorisations.

     4.6  Disclosure of material facts    Neither the Borrower nor the Guarantor
          is aware of any material  facts or  circumstances  which have not been
          disclosed to the Agent and which might, if disclosed,  have reasonably
          been expected to adversely affect the decision of a person considering
          whether or not to make loan  facilities of the nature  contemplated by
          this Agreement available to the Borrower.

     4.7  No  material  litigation     Except  for those  matters  disclosed  in
          writing  to the Agent or listed in  Appendix  E,  there is no  action,
          suit,  arbitration or  administrative  proceeding nor any contemplated
          action, suit,  arbitration or administrative  proceeding pending or to
          its  knowledge  about to be  pursued  before any  court,  tribunal  or
          governmental  or other  authority  which would, or would be likely to,
          have a materially  adverse effect on the business,  assets,  financial
          condition or creditworthiness of the SO Group.

                                       27
<PAGE>

     4.8  No breach of law or contract The execution,  delivery and  performance
          of  the  Security   Documents  will  not  contravene  any  contractual
          restriction  or any law binding on any of the  Security  Parties or on
          any  shareholder  (whether legal or beneficial) of any of the Security
          Parties (other than the Guarantor), or the constitutional documents of
          any of the Security Parties, nor result in the creation of, nor oblige
          any of the Security Parties to create, any Encumbrance over all or any
          of its assets,  with the exception of the  Encumbrances  created by or
          pursuant to the Security Documents.

     4.9  No deductions Except as disclosed to the Agent in writing, that to the
          best of their knowledge belief and without undue enquiry,  none of the
          Security Parties is required to make any deduction or withholding from
          any  payment  which it may be  obliged  to make to any of the  Finance
          Parties under or pursuant to the Security Documents.

     4.10 No  established  place of  business  in the  United  Kingdom or United
          States  None  of the  Security  Parties  has,  at  the  date  of  this
          Agreement,  an established  place of business in the United Kingdom or
          the United States of America.

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

     4.12 Subsidiaries  Save as a result of any merger or amalgamation  effected
          pursuant to Clause 12.1.4, the Shipowning Guarantor is and will remain
          throughout the Facility  Period a directly or indirectly  wholly owned
          subsidiary of the Guarantor.

     4.13 Material  Adverse Change There has been no material  adverse change in
          the  financial  condition of the Borrower or the  Guarantor  from that
          disclosed  in the  Guarantor's  most  recently  filed Form 20-F Annual
          Report pursuant to Section 13 or 15(d) of the United States Securities
          Exchange Act 1934.

     4.14 Finance  company Status That (i) the Borrower  complies with and shall
          throughout  the  Facility  Period  continue  to comply  (to the extent
          applicable),  with the  regulations  of the  Netherlands  Ministry  of
          Finance  dated  1  July  2001   (Vrijstellingsregeling   Wet  Toezicht
          Kredietwezen  1992) with  respect to  finance  companies  and that the
          application of the Facility is and will throughout the Facility Period
          continue to be in accordance with such regulations and (ii) all

                                       28
<PAGE>

          notice  requirements to the Dutch central bank pursuant to the Foreign
          Financial  Relations Act ("Wet  Financiele  Betrekkingen  Buitenland")
          1994 (as the same may be amended from time to time) have been complied
          with and shall  throughout the Facility Period continue to be complied
          with.

     4.15 Guarantor's  company Status That the Guarantor operates as a financial
          holding company under Luxembourg law pursuant to the terms of a letter
          of the  "Administration de  l'Enregistrement  et des Domaines" dated 9
          September 1994.

5    Currency

     5.1  Selection of Permitted Currency  The Borrower may from time to time in
          accordance with this Clause select the Permitted  Currency in which it
          wishes a Drawing to be  denominated.  Any such  selection  made by the
          Borrower  shall be contained in the  Drawdown  Notice  relating to the
          Drawing in question. Once a Permitted Currency in respect of a Drawing
          is selected such Drawing shall remain  denominated  in such  Permitted
          Currency until its repayment in accordance with this Agreement.

     5.2  Conditions  precedent  to  denomination  in a Permitted  Currency  The
          denomination  of a Drawing in a  Permitted  Currency  pursuant to this
          Clause shall be subject to the following:-

          5.2.1     no Drawing  may at any time  during the  Facility  Period be
                    denominated  in more  than one  Permitted  Currency  and any
                    notice  requesting  denomination of the Drawing in more than
                    one Permitted Currency shall be of no effect; and

          5.2.2     denomination of a Drawing in the Permitted Currency selected
                    by the Borrower shall not be effected if the Agent certifies
                    by notice in writing to the Borrower,  which notice shall be
                    final  and  conclusive,   that  deposits  in  the  Permitted
                    Currency selected for the amount of the relevant Drawing and
                    for the Interest  Period  selected are not  available to the
                    Banks  in the  normal  course  of  business  in  the  London
                    Interbank market on the relevant date.

     5.3  Non-availability  of Permitted  Currency If, in any Permitted Currency
          selected,  deposits  of the  specified  amount  and for the  specified
          Interest  Period are not

                                       29
<PAGE>

          available to any of the Banks in the normal  course of business in the
          London Interbank market on the relevant date, or if the Borrower fails
          to specify a Permitted  Currency for a Drawing,  that Drawing shall be
          denominated  in Dollars  for the  duration  of the  relevant  Interest
          Period.

     5.4  Repayment   During  each  Interest   Period  in  which  a  Drawing  is
          denominated in a Permitted Currency other than Dollars, the obligation
          of the Borrower to repay the Drawing and to pay  interest  shall be an
          obligation  to repay that  Drawing and to pay interest on that Drawing
          in the  Permitted  Currency in which the Drawing is then  denominated,
          whether or not the Facility  Outstandings  or any part  thereof  shall
          have become repayable by acceleration or otherwise.

     5.5  Further assurance  The Borrower shall execute or procure the execution
          of such  further  documents as the Agent may  reasonably  require from
          time to time in order to preserve  and  maintain  the  validity of the
          Security   Documents  as  full  security  for  the  repayment  of  the
          Indebtedness.

     5.6  Currency  Fluctuations  If on the last day of an  Interest  Period the
          Agent shall determine that the Equivalent  Amount of any Drawing after
          repayment  is greater  than 100% of the Original  Dollar  Amount,  the
          Borrower shall immediately pay to the Agent, on behalf of the Banks an
          amount in the relevant  Permitted Currency equal to the excess of such
          Equivalent Amount over the Original Dollar Amount.

6    Repayment and Prepayment

     6.1  Repayment Each Drawing shall be repaid by the Borrower to the Agent on
          behalf of the Banks on the last day of its Interest  Period unless the
          Borrower  selects  a  further  Interest  Period  for that  Drawing  in
          accordance  with Clause 7,  provided  that the  Borrower  shall not be
          permitted  to  select  such  further  Interest  Period  if an Event of
          Default or  Potential  Event of Default has occurred and shall then be
          obliged  to repay  such  Drawing  on the last day of its then  current
          Interest  Period.  In addition,  the Borrower  shall from time to time
          repay to the Agent as agent for the Banks such amounts of the Facility
          Outstandings  as will ensure that the Original  Dollar Amount does not
          exceed the Maximum Facility Amount then available.  The Borrower shall
          on the Termination  Date repay to the Agent as agent for the Banks all
          Facility Outstandings.

                                       31
<PAGE>

     6.2  Prepayment  The Borrower may prepay the Facility Outstandings in whole
          or in part in multiples of two million  Dollars  ($2,000,000),  or its
          Equivalent  Amount in a Permitted  Currency where  applicable,  (or as
          otherwise may be agreed by the Agent) provided that it has first given
          to the Agent not fewer  than five (5)  Business  Days'  prior  written
          notice  expiring  on a  Business  Day of its  intention  to do so. Any
          notice pursuant to this Clause 6.2 once given shall be irrevocable and
          shall  oblige the Borrower to make the  prepayment  referred to in the
          notice on the Business Day specified in the notice,  together with all
          interest  accrued  on the  amount  prepaid  up to and  including  that
          Business Day.

     6.3  Prepayment indemnity  If the Borrower shall,  subject always to Clause
          6.2, make a prepayment on a Business Day other than the last day of an
          Interest Period,  it shall pay to the Agent on behalf of the Banks any
          amount which is necessary to compensate  the Banks for any Break Costs
          incurred  by  the  Agent  or  any  of the  Banks  as a  result  of the
          prepayment in question.

     6.4  Application of  prepayments  Any prepayment in an amount less than the
          Indebtedness  shall be applied in  satisfaction  or reduction first of
          any costs and other  expenses  outstanding;  secondly of all  interest
          accrued  with respect to the  outstanding  Drawings in the currency in
          which  the  prepayment  is to be  made;  thirdly  of  the  outstanding
          Drawings  in the  currency  in which the  prepayment  is to be made in
          inverse order of maturity, fourthly of all other interest accrued; and
          fifthly  of  all  other  outstanding  Drawings  in  inverse  order  of
          maturity.

     6.5  Reborrowing  of  prepayments  Any  amount  prepaid  pursuant  to  this
          Agreement  may be  reborrowed  in  accordance  with  Clause  2.4.4 and
          subject to compliance with Clause 12.2.2.

     6.6  Total Loss  In the event that either Vessel  becomes a Total Loss,  on
          the date of such Total Loss  occurring,  the Maximum  Facility  Amount
          shall reduce by the Pro Rata Insurance  Proceeds  Amount in respect of
          such Vessel.  Any such reductions in the Maximum Facility Amount shall
          not be  reversed.  If, as a result  of any  reduction  in the  Maximum
          Facility  Amount  pursuant to this Clause the Original  Dollar  Amount
          exceeds  the Maximum  Facility  Amount,  the  Borrower  shall,  on the
          earlier to occur of (a) the one  hundred and  eightieth  day after the
          date of such  Total  Loss  occurring  and (b) the  date on  which  the
          Shipowning  Guarantor receives the proceeds of such Total Loss, prepay
          such  amount of the  Original

                                       32
<PAGE>

          Dollar  Amount as will ensure that the Original  Dollar  Amount is not
          greater than the Maximum  Facility  Amount.  Any such prepayment shall
          not be reborrowed, and Clause 6.3 shall apply to any such prepayment.

7    Interest

     7.1  Interest  Periods  The  period  during  which  any  Drawing  shall  be
          outstanding   pursuant  to  this  Agreement   shall  be  divided  into
          consecutive  Interest  Periods  of  one,  two,  three  or six  months'
          duration,  as selected by the Borrower by written  notice to the Agent
          not later  than  11.00  a.m.  on the third  Business  Day  before  the
          beginning of the Interest  Period in question,  or such other duration
          as may be agreed by the Banks in their discretion.  No more than three
          one (1) month Interest Periods may be selected by the Borrower in each
          calendar year during the Facility Period.

     7.2  Beginning  and end of Interest Periods  The first  Interest  Period in
          respect  of each  Drawing  shall  begin  on the  Advance  Date of that
          Drawing and shall end on the last day of the Interest  Period selected
          in accordance with Clause 7.1. Any subsequent Interest Period selected
          in respect of each Drawing  shall  commence on the day  following  the
          last day of its previous Interest Period and shall end on the last day
          of its current Interest Period selected in accordance with Clause 7.1.
          However,  in respect of any Drawings  outstanding  on the  Termination
          Date, the Interest Period applicable to such Drawings shall end on the
          Termination Date.

     7.3  Interest rate  During each Interest  Period, interest  shall accrue on
          each Drawing at the rate  determined  by the Agent to be the aggregate
          of (a) the applicable  Margin,  (b) LIBOR and, if applicable,  (c) the
          Mandatory Cost for the remainder of the Facility Period, determined in
          each case, at or about 11.00 a.m. on the second  Business Day prior to
          the beginning of the Interest Period relating to that Drawing.

     7.4  Accrual and payment of interest  During the Facility  Period, interest
          shall accrue from day to day,  shall be  calculated  on the basis of a
          360 day  year  and the  actual  number  of days  elapsed  (or,  in any
          circumstance  where market  practice  differs,  in accordance with the
          prevailing  market  practice) and shall be paid by the Borrower to the
          Agent on behalf of the Banks on the last day of each  Interest  Period
          and  additionally,  during any Interest Period exceeding three months,
          on the

                                       33
<PAGE>

          last day of each successive  three month period after the beginning of
          that Interest Period.

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

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

     7.7  Determinations conclusive  Each determination of an interest rate made
          by the Agent in  accordance  with  Clause 7 shall (save in the case of
          manifest error or on any question of law) be final and conclusive.

8    Guarantee and Indemnity

     8.1  The Borrower's Obligations

          In  consideration  of the  agreement of the Banks to make the Facility
          available to the Borrower, the Guarantor:-

          8.1.1     irrevocably and  unconditionally  guarantees to discharge on
                    demand the Borrower's  Obligations,  including Interest from
                    the date of demand  until the date of  payment,  both before
                    and after judgement; and

          8.1.2     agrees, as a separate and independent  obligation,  that, if
                    any of the Borrower's  Obligations are not recoverable  from
                    the  Guarantor  under  Clause  8.1.1  for  any  reason,  the
                    Guarantor  will  be  liable  to  the  Finance  Parties  as a
                    principal  debtor by way of indemnity for the same amount as
                    that for which the  Guarantor  would  have been  liable  had
                    those Borrower's  Obligations been recoverable and agrees to
                    discharge  its  liability  under

                                       33
<PAGE>

                    this Clause 8.1.2 on demand  together with Interest from the
                    date of demand  until the date of  payment,  both before and
                    after judgement.

     8.2  Continuing Security

          The  Guarantee  is a  continuing  security  for the full amount of the
          Borrower's  Obligations  from time to time and  shall  remain in force
          notwithstanding  the  liquidation of the Borrower or any change in the
          constitution of the Borrower or of any Finance Party or the absorption
          of or amalgamation by any Finance Party in or with any other entity or
          the acquisition of all or any part of the assets or undertaking of any
          Finance Party by any other entity.

     8.3  Preservation of Guarantor's Liability

          8.3.1     The Banks may  without the  Guarantor's  consent and without
                    notice to the  Guarantor and without in any way releasing or
                    reducing the Guarantor's Liabilities:-

                    (a)  amend, novate,  supplement or replace all or any of the
                         Borrower's Security Documents;

                    (b)  increase  or reduce the amount of the  Facility or vary
                         the  terms  and   conditions   for  its   repayment  or
                         prepayment  (including,  without  limitation,  the rate
                         and/or method of calculation of interest payable on the
                         Facility);

                    (c)  allow to the  Borrower or to any other  person any time
                         or other indulgence;

                    (d)  renew,  vary,  release or refrain from enforcing any of
                         the   Borrower's   Security   Documents  or  any  other
                         security,  guarantee or  indemnity  which the Agent may
                         now or in the future hold from the Borrower or from any
                         other person;

                    (e)  compound with the Borrower or any other person;

                    (f)  enter  into,   renew,   vary  or  terminate  any  other
                         agreement or arrangement with the Borrower or any other
                         person; or

                                       34
<PAGE>

                    (g)  make any  concession  to the  Borrower or do or omit or
                         neglect  to do  anything  which  might,  but  for  this
                         provision,  operate to release or reduce the  liability
                         of the Guarantor under the Guarantee.

          8.3.2     The liability of the Guarantor under the Guarantee shall not
                    be affected by:-

                    (a)  the absence of or any defective, excessive or irregular
                         exercise of any of the powers of the Borrower or of any
                         Surety;

                    (b)  any  security  given  or  payment  made to the  Finance
                         Parties  or any of them by the  Borrower  or any  other
                         person being  avoided or reduced under any law (whether
                         English  or   foreign)   relating  to   bankruptcy   or
                         insolvency or analogous circumstance in force from time
                         to time;

                    (c)  the   liquidation,   administration,   receivership  or
                         insolvency of the Guarantor;

                    (d)  any other  security,  guarantee or indemnity  now or in
                         the future held by the  Finance  Parties or any of them
                         being defective, void or unenforceable,  or the failure
                         of  the  any  Finance   Party  to  take  any  security,
                         guarantee or indemnity;

                    (e)  any compromise or arrangement  under Part I or Part VII
                         of  the  Insolvency  Act  1986  or  section  425 of the
                         Companies  Act 1985 (or any statutory  modification  or
                         re-enactment  of either  of them for the time  being in
                         force) or under any analogous  provision of any foreign
                         law;

                    (f)  the novation of any of the Borrower's Obligations;

                    (g)  anything  which would not have  released or reduced the
                         liability of the  Guarantor to the Finance  Parties had
                         the liability of the Guarantor  under Clause 8.1.1 been
                         as a principal debtor of the Finance Parties and not as
                         a guarantor.

                                       35
<PAGE>

     8.4  Preservation of Banks' Rights

          8.4.1     The  Guarantee  is  in  addition  to  any  other   security,
                    guarantee  or  indemnity  now or in the  future  held by the
                    Finance  Parties in respect of the  Borrower's  Obligations,
                    whether  from  the  Borrower,  the  Guarantor  or any  other
                    person, and shall not merge with, prejudice or be prejudiced
                    by  any  such  security,   guarantee  or  indemnity  or  any
                    contractual or legal right of each Finance Party.

          8.4.2     Any release,  settlement,  discharge or arrangement relating
                    to the  liabilities  of the  Guarantor  under the  Guarantee
                    shall be  conditional  on no payment,  assurance or security
                    received by the Finance Parties in respect of the Borrower's
                    Obligations  being avoided or reduced under any law (whether
                    English or foreign)  in force from time to time  relating to
                    bankruptcy,  insolvency or any (in the opinion of the Agent)
                    analogous  circumstance  and  after  any such  avoidance  or
                    reduction the Finance  Parties shall be entitled to exercise
                    all of their rights, powers,  discretions and remedies under
                    or  pursuant  to the  Guarantee  and/or  any  other  rights,
                    powers,  discretions or remedies which they would  otherwise
                    have  been   entitled  to   exercise,   as  if  no  release,
                    settlement, discharge or arrangement had taken place.

          8.4.3     Following the discharge of the Borrower's  Obligations,  the
                    Finance  Parties  shall be entitled  to retain any  security
                    which  they may hold for the  liabilities  of the  Guarantor
                    under the Guarantee  until the Finance Parties are satisfied
                    in their  reasonable  discretion  that they will not have to
                    make any payment under any law referred to in Clause 8.4.2.

          8.4.4     Until all  claims of the  Finance  Parties in respect of the
                    Borrower's  Obligations  have been  discharged in full:-

                    (a)  the Guarantor  shall not be entitled to  participate in
                         any security held or sums received by any Finance Party
                         in  respect  of  all  or any  part  of  the  Borrower's
                         Obligations;

                    (b)  the  Guarantor  shall  not stand in the place of, or be
                         subrogated  for, any of the Finance  Parties in respect
                         of any  security nor take any

                                       36
<PAGE>

                         step to enforce any claim  against the  Borrower or any
                         Surety (or the  estate or  effects of any such  person)
                         nor  claim  or  exercise   any  right  of  set  off  or
                         counterclaim  against  the  Borrower  or any Surety nor
                         make any claim in the  bankruptcy or liquidation of the
                         Borrower  or any  Surety in respect of any sums paid by
                         the Guarantor to the Finance  Parties or any of them or
                         in respect of any sum which  includes  the  proceeds of
                         realisation  of any  security  at any time  held by the
                         Finance Parties or any of them in respect of all or any
                         part of the Guarantor's Liabilities; and

                    (c)  the  Guarantor  shall not take any steps to enforce any
                         claim  which it may have  against  the  Borrower or any
                         Security Party without the prior written consent of the
                         Agent,  and then only on such terms and subject to such
                         conditions as the Agent may impose.

          8.4.5     The  Guarantor's  Liabilities  shall be  continuing  for all
                    purposes  (including  Interest) and every sum of money which
                    may now or in the  future be or  become  due or owing to the
                    Finance Parties by the Borrower under the Security Documents
                    to which the Borrower is a party (or which would have become
                    due or owing had it not been for the bankruptcy, liquidation
                    or insolvency  of the Borrower)  shall be deemed to continue
                    due and owing to the Finance  Parties by the Borrower  until
                    such  sum  is  actually  repaid  to  the  Finance   Parties,
                    notwithstanding the bankruptcy, liquidation or insolvency of
                    the Borrower.

          8.4.6     The Finance Parties may, but shall not be obliged to, resort
                    for their own  benefit to any other  means of payment at any
                    time and in any order they think fit  without  releasing  or
                    reducing the Guarantor's Liabilities.

          8.4.7     The Finance Parties may enforce the Guarantee  either before
                    or  after  resorting  to  any  other  means  of  payment  or
                    enforcement and, in the latter case,  without  entitling the
                    Guarantor  to any  benefit  from or share in any such  other
                    means of payment for so long as the  Borrower's  Obligations
                    have not been discharged in full.

                                       37
<PAGE>

     8.5  Other Security

          The Guarantor confirms that it has not taken and will not take without
          the prior  written  consent  of the Agent (and then only on such terms
          and subject to such  conditions  as the Agent may impose) any security
          from the Borrower or from any Surety in connection  with the Guarantee
          and any  security  taken  by the  Guarantor  in  connection  with  the
          Guarantee  notwithstanding  this Clause shall be held by the Guarantor
          in trust for the Agent on behalf of the Finance Parties  absolutely as
          a continuing security for the Guarantor's Liabilities.

9    Fees

     9.1  The  Borrower  shall  pay to or to the  order of the  Agent  the fees,
          commissions  and  other  sums  referred  to in the Fee  Letter  in the
          amounts and on the dates set out in the Fee Letter.

     9.2  The Borrower shall pay to the Agent  Commitment  Commission in Dollars
          at the  rate  equal to forty  five  per cent  (45%) of the  applicable
          Margin  per  annum  on any  undrawn  part of the  Facility  after  the
          Execution Date. The Commitment  Commission will accrue from day to day
          on the basis of a 360 day year and the actual  number of days  elapsed
          and shall be paid  quarterly in arrears from the Execution  Date until
          the Termination  Date based upon the Margin in effect for the previous
          quarter with the first such payment  being due and payable on the date
          falling three months after the Execution  Date.  Where any  Commitment
          Commission  is due and  payable  prior to the first  Advance  Date the
          applicable  Margin  shall be the Margin that would have applied to the
          Facility if all or any part of the  Facility had been  advanced  under
          this Agreement.

10   Security Documents

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

     10.1 the Mortgages a first preferred mortgage over each Vessel;

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<PAGE>

     10.2 the Assignments a deed of assignment of the  Insurances,  Earnings and
          Requisition Compensation of each Vessel; and

     10.3 the   Shipowner's   Guarantee  the  guarantee  and  indemnity  of  the
          Shipowning Guarantor.

11   Agency and Trust

     11.1 Appointment  Each of the  Banks  appoints  the Agent its agent for the
          purpose of administering  the Facility and the Security  Documents and
          authorises the Agent and its directors, officers, employees and agents
          acting on the instructions from time to time of an Instructing  Group,
          and  subject  to  Clauses  11.4 and 11.19,  to  execute  the  Security
          Documents  on  its  behalf  and  to  exercise   all  rights,   powers,
          discretions  and remedies vested in the Banks under or pursuant to the
          Security Documents,  together with all powers reasonably incidental to
          them.

     11.2 Authority  Subject  to  Clause  11.4,  each of the  Banks  irrevocably
          authorises the Agent,  acting on the instructions from time to time of
          an Instructing Group:-

          11.2.1    to give or withhold any consents or approvals;

          11.2.2    to exercise,  or refrain from  exercising,  any discretions;
                    and

          11.2.3    to collect, receive, release or pay any money;

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

     11.3 Trust  The  Agent  agrees  and   declares,   and  each  of  the  Banks
          acknowledges,  that,  subject  to the  terms  and  conditions  of this
          Clause,  the Agent holds the Trust Property on trust for the Banks, in
          accordance with their  respective  Proportionate  Shares,  absolutely.
          Each of the Banks  agrees that the  obligations,  rights and  benefits
          vested in the  Agent in its  capacity  as  security  trustee  shall be
          performed and exercised in accordance  with this Clause.  The Agent in
          its capacity as

                                       39
<PAGE>

          security  trustee  shall have the benefit of all of the  provisions of
          this  Agreement  benefiting it in its capacity as agent for the Banks,
          and all the  powers  and  discretions  conferred  on  trustees  by the
          Trustee Act 1925 (to the extent not inconsistent with this Agreement).
          In addition:-

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

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

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

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

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

          11.4.2    except as  otherwise  provided  in the  Security  Documents,
                    agree to waive the  payment  of any sum of money  payable by
                    any of the Security  Parties  under the Security  Documents;
                    nor

          11.4.3    change the meaning of the  expression  "Instructing  Group";
                    nor

                                       40
<PAGE>

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

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

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

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

          11.4.8    agree to amend this Clause 11.4; nor

          11.4.9    agree to amend Clauses 1.1.56, 1.1.57, 13.1 and 19.2.3.

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

     11.6 Acknowledgement Each of the Banks acknowledges that:-

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

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

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

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<PAGE>

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

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

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

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

          11.7.2    the financial condition of any of the Security Parties;

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

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

     11.8 The Agent's rights The Agent may:-

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

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

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<PAGE>

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

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

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

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

     11.9 The Agent's duties The Agent shall:-

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

          11.9.2    inform the Banks  promptly  of any Event of Default of which
                    the Agent has actual knowledge; and

          11.9.3    inform  the Banks  promptly  of any  disclosures  in writing
                    received by the Agent pursuant to Clause 4.7.

    11.10 No  deemed  knowledge  The Agent  shall  not be deemed to have  actual
          knowledge of the falsehood or incompleteness of any  representation or
          warranty  made or deemed  repeated by any of the  Security  Parties or
          actual  knowledge  of  the

                                       43
<PAGE>

          occurrence  of any Event of  Default  or  Potential  Event of  Default
          unless a Bank or any of the Security  Parties shall have given written
          notice thereof to the Agent.

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

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

          11.12.1   all amounts payable by the Borrower to the Agent pursuant to
                    Clause 19 to the extent  that those  amounts are not paid by
                    the Borrower;

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

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

    11.14 Distribution  of payments The Agent shall pay promptly to the order of
          each of the  Banks  that  Bank's  Proportionate  Share of every sum of
          money received by the Agent pursuant to the Security  Documents or the
          Mortgagees'  Insurances  (with

                                       44
<PAGE>


          the exception of any amounts payable pursuant to Clause 9.1 and/or the
          Fee  Letter  and any  amounts  which,  by the  terms  of the  Security
          Documents, are paid to the Agent for the account of the Agent alone or
          specifically  for the  account of one or more Banks) and until so paid
          such amount  shall be held by the Agent on trust  absolutely  for that
          Bank.

    11.15 Reimbursement  The Agent shall have no  liability  to pay any sum to a
          Bank until it has itself  received  payment of that sum. If,  however,
          the  Agent  does  pay  any  sum to a Bank  on  account  of any  amount
          prospectively  due to it pursuant to Clause 11.14 before it has itself
          received  payment  of that  amount,  and the  Agent  does  not in fact
          receive payment within five Business Days after the date on which that
          payment was required to be made by the terms of the Security Documents
          or the  Mortgagees'  Insurances,  the recipient will, on demand by the
          Agent,  refund to the Agent an amount equal to the amount  received by
          it, together with an amount  sufficient to reimburse the Agent for any
          amount which the Agent may certify that it has been required to pay by
          way of  interest  on money  borrowed  to fund the  amount in  question
          during  the  period  beginning  on the date on which  that  amount was
          required  to be paid by the  terms of the  Security  Documents  or the
          Mortgagees'  Insurances  and  ending  on the date on which  the  Agent
          receives reimbursement.

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

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

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

          11.16.3   the Agent shall  treat that  payment as if it were a payment
                    by the Security Party in question on account of the sum owed
                    to the Banks as

                                       45
<PAGE>

                    aforesaid  and shall  account to the Banks in respect of the
                    Excess  Amount in  accordance  with the  provisions  of this
                    Clause.

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

    11.17 Rescission of Excess Amount If all or any part of any Excess Amount is
          rescinded or must otherwise be restored to any of the Security Parties
          or to any other third party, the Banks which have received any part of
          that Excess Amount by way of  distribution  from the Agent pursuant to
          this Clause shall repay to the Agent for the account of the Bank which
          originally  received or recovered the Excess Amount,  the amount which
          shall  be  necessary  to  ensure  that the  Banks  share  rateably  in
          accordance  with  their  Proportionate  Shares  in the  amount  of the
          receipt or payment retained,  together with interest on that amount at
          a rate  equivalent  to that (if any)  paid by the  Bank  receiving  or
          recovering the Excess Amount to the person to whom that Bank is liable
          to make payment in respect of such amount,  and Clause  11.16.3  shall
          apply only to the retained amount.

    11.18 Proceedings  Each of the Finance  Parties  shall notify one another of
          the proposed commencement of any Proceedings under any of the Security
          Documents  prior to their  commencement.  No such  Proceedings  may be
          commenced without the prior written consent of an Instructing Group.

    11.19 Instructions  Where  the Agent is  authorised  or  directed  to act or
          refrain from acting in accordance  with the  instructions of the Banks
          or of an  Instructing  Group each of the Banks shall provide the Agent
          with  instructions  within five Business  Days of the Agent's  request
          (which  request may be made orally or in writing).  If a Bank does not
          provide the Agent with instructions  within that period, (i) that Bank
          shall be bound by the decision of the Agent, (ii) that Bank shall have
          no vote  for the  purposes  of this  Clause  and  (iii)  the  combined
          Proportionate Shares of the other Banks who provided such instructions
          shall be deemed to contribute 100%. Nothing in this Clause shall limit
          the right of the Agent to take,  or refrain

                                       46
<PAGE>

          from taking,  any action  without  obtaining the  instructions  of the
          Banks  if the  Agent  in its  discretion  considers  it  necessary  or
          appropriate  to take, or refrain from taking,  such action in order to
          preserve  the  rights of the  Banks  under or in  connection  with the
          Security Documents.  In that event, the Agent will notify the Banks of
          the  action  taken by it as soon as  reasonably  practicable,  and the
          Banks agree to ratify any action  taken by the Agent  pursuant to this
          Clause.

    11.20 Communications  Any  Communication  under this Clause  shall be given,
          delivered,  made or served,  in the case of the Agent (in its capacity
          as Agent or as one of the Banks),  and in the case of the other Banks,
          at the  address  indicated  in Schedule 1 or such other  addresses  as
          shall be duly notified in writing to the Agent on behalf of the Banks.

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

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

          11.22.1   with the  consent of the  Borrower,  not to be  unreasonably
                    withheld,  the other Finance  Parties may within thirty days
                    after the date of the Agent's  notice appoint a successor to
                    act as agent and/or security  trustee or, if they fail to do
                    so with the consent of the Borrower,  not to be unreasonably
                    withheld,  the Agent may appoint any other bank or financial
                    institution as its successor;

          11.22.2   the   resignation   of   the   Agent   shall   take   effect
                    simultaneously  with the  appointment  of its  successor  on
                    written  notice  of  that  appointment  being  given  to the
                    Borrower and the other Finance Parties;

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

                                       47
<PAGE>

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

    11.23 No  fiduciary  relationship  Except as  provided  in Clauses  11.3 and
          11.14, the Agent shall not have any fiduciary  relationship with or be
          deemed to be a trustee of or for a Bank and nothing  contained  in any
          of the Security  Documents shall constitute a partnership  between any
          two or more Banks or between the Agent and any Bank.

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

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

12   Covenants

     Each of the Borrower and the Guarantor  covenants with the Finance  Parties
     in the following terms.

     12.1 Negative covenants

          Neither the Borrower nor the Guarantor, will:-

          12.1.1    no third  party  rights  without  the Banks'  prior  written
                    consent  permit  any  member  of the SO Group to  create  or
                    permit to arise or continue any  Encumbrance  on or over all
                    or any part of its assets or undertaking (including, without
                    limitation  accounts  receivable by that member)  except (i)
                    any  Encumbrance  existing on the date of this Agreement and
                    listed in  Appendix B or (ii) any  Encumbrance  relating  to
                    assets  which  become the property of the SO Group after the
                    date  of  this  Agreement   (including  accounts  receivable
                    attributable   thereto  where  such   accounts   receivables
                    security  interest is ancillary to the security  interest in

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<PAGE>

                    the  associated  fixed  costs  as  part  of an  asset  based
                    financing) and (iii) Permitted Liens; nor

          12.1.2    chartering   without  the  prior   written   consent  of  an
                    Instructing  Group,  (a)  charter  either  Vessel  or permit
                    either  Vessel to be chartered on any bareboat  charter,  or
                    otherwise  for a  period  exceeding  (or  inclusive  of  any
                    extension options, capable of exceeding) twelve (12) months)
                    provided that committing a Vessel for several periods,  each
                    of less than  twelve  months  but for an  aggregated  period
                    exceeding  (12) months or chartering a Vessel to a member of
                    the SO Group for a period in  excess of twelve  (12)  months
                    shall not be deemed to be a breach of this Clause  (together
                    the  "Permitted  Charters") or (b) following the  occurrence
                    and  during the  continuation  of an Event of  Default,  let
                    either  Vessel on charter  (including  a  Permitted  Charter
                    unless the same was entered into prior to the  occurrence of
                    any such Event of Default) or renew or extend any charter or
                    other  contract of  employment of any such Vessel (nor agree
                    to do so); nor

          12.1.3    no change in management without the prior written consent of
                    an Instructing Group, permit the appointment of anyone other
                    than the Managers as commercial or technical managers of the
                    Vessels,  nor  terminate or amend any  Management  Agreement
                    and/or the  arrangements  for the  commercial  or  technical
                    management  of the  Vessels  in a manner  which  is,  in the
                    reasonable opinion of the Agent, detrimental to the interest
                    of the  Finance  Parties  or any of  them,  nor  permit  the
                    Managers to  sub-contract  or  delegate  the  commercial  or
                    technical  management  of  any  Vessel  to any  third  party
                    outside of the SO Group  provided  that any  termination  or
                    amendment  of any  Management  Agreement  and/or  management
                    arrangements referred to above with a member of the SO Group
                    shall not be deemed to be  detrimental  to the  interests of
                    the  Finance  Parties or any of them  where any new  manager
                    (being  within the SO Group)  enters into an agreement  with
                    the Agent subordinating its rights in the Vessel to those of
                    the Banks in terms  substantially  the same as  contained in
                    those   agreements/arrangements   entered  into  immediately
                    before such amendment; nor

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<PAGE>

          12.1.4    merger or amalgamation  without the prior written consent of
                    an  Instructing  Group,  permit any  merger or  amalgamation
                    unless  (i) the  Guarantor,  the  Borrower  or a  Shipowning
                    Guarantor,  as the case may be, remains the surviving entity
                    following any such merger or amalgamation  (or if the merger
                    or  amalgamation  involves  more than one of the  Shipowning
                    Guarantors,  then one of the Shipowning  Guarantors  remains
                    the surviving  entity) and (ii) such surviving entity is not
                    divested of any material part of the assets or operations of
                    such  member  of the SO Group  and  (iii) in the case of the
                    Guarantor  only,  such  merger  or  amalgamation   has  been
                    approved  by a duly  passed  resolution  of the  Guarantor's
                    shareholders; nor

          12.1.5    no sale of  Vessels/Shipowning  Guarantors without the prior
                    written  consent  of the Banks  sell or cause to be sold or,
                    dispose  or  caused to be  disposed  of in whole or in part,
                    either Vessel or the Shipowning Guarantor nor agree to do so
                    except  where (i) the  Maximum  Facility  Amount is  reduced
                    pursuant to Clause  2.4.3 or (ii) the sale or  disposal,  in
                    whole or in part,  is made to a member  of the SO Group  who
                    will become a Shipowning  Guarantor upon the  acquisition of
                    such Vessel and who will  execute and deliver to the Agent a
                    Shipowner's  Guarantee,  a  Mortgage  and an  Assignment  in
                    respect of such  Vessel in  substantially  the same terms as
                    those Security  Documents  already executed in favour of and
                    delivered  to the Agent which shall be  accompanied  by such
                    corporate  documents  and  legal  opinions  as the Agent may
                    request  (and  upon any  sale or  disposal  of a  Shipowning
                    Guarantor   or  its  Vessel  such   Shipowning   Guarantor's
                    obligations  under the  Security  Documents to which it is a
                    party will  terminate  provided that no Event of Default has
                    occurred and the provisions of Clause  12.1.5(i) or (ii), as
                    the case may, be have been fully complied with) or (iii) any
                    such Vessel is replaced by a similar asset acceptable to the
                    Banks in their sole discretion of equal or greater value.

     12.2 Positive covenants

          12.2.1    Registration  of  Vessels  Each  of  the  Borrower  and  the
                    Guarantor  undertakes  to  procure  the  maintenance  of the
                    registration  of the Vessels

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<PAGE>

                    under the flags and  ownerships  indicated in Schedule 2 for
                    the  duration  of  the  Facility  Period  unless   otherwise
                    approved by an Instructing Group in writing.

          12.2.2    Additional  security If and so often as the aggregate of any
                    Valuations  of the Vessels plus the value of any  additional
                    security  (other  than cash) for the time being  provided to
                    the Banks (or to the Agent on their behalf) pursuant to this
                    Clause  shall be less than one hundred and twenty per centum
                    (120%) of the Original Dollar Amount (less the amount of any
                    cash  deposited  as  additional  security  pursuant  to this
                    Clause) the Borrower will, within thirty days of the request
                    of the Agent to do so, at the Borrower's option:-

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

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

                    (c)  prepay the amount of the Indebtedness which will ensure
                         that the  aggregate  of the  Valuations  of the Vessels
                         plus the value of any such  additional  security (other
                         than cash) is not less than one  hundred and twenty per
                         centum  (120%) of the Original  Dollar Amount (less the
                         amount of any cash  deposited  as  additional  security
                         pursuant to this Clause).

                    For the purpose of  determining  the value of a Vessel under
                    this Clause,  where such Vessel constitutes a Total Loss its
                    value  shall  be  deemed  to be the  lesser  of (i) the last
                    Valuation  in respect of that Vessel  prior to it becoming a
                    Total Loss or (ii) the amount of insurance proceeds expected
                    to be paid in respect of any insurance claim relating to the
                    Total Loss of such Vessel.

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<PAGE>

                    Clauses 6.3, 6.4 and 6.5 shall apply,  mutatis mutandis,  to
                    any prepayment made pursuant to this Clause and the value of
                    any  additional  security  provided  pursuant to this Clause
                    shall be determined by the Agent in its discretion. Provided
                    that,  where the Borrower has provided  additional  security
                    pursuant to this  Clause,  the Borrower may request that the
                    Agent  obtain new  Valuations  on a date falling not earlier
                    than six months after the date such additional  security was
                    provided.  Where  requested  by the  Borrower  to obtain new
                    Valuations  pursuant to this  Clause the Agent shall  obtain
                    such new Valuations at the cost and expense of the Borrower.
                    If the  aggregate of the new  Valuations of the Vessels plus
                    the value of any additional  security (other than cash) (the
                    "New  Security  Amount")  is greater  than one  hundred  and
                    twenty per cent (120%) of the Original  Dollar  Amount (less
                    the  amount of any cash  deposited  as  additional  security
                    pursuant to this Clause) (the "Security Maintenance Amount")
                    provided  that no  Event  of  Default  has  occurred  and is
                    continuing, the Agent (provided that the Agent shall firstly
                    release any cash  collateral  deposited  with it pursuant to
                    this  Clause)  shall  release  to  the  Borrower,  upon  the
                    Borrower's  written  request and at the Borrower's  expense,
                    any such additional security as the Agent selects, such that
                    after its release the New  Security  Amount will at least be
                    equal to the Security Maintenance Amount, provided, however,
                    that the value of such  security  to be released is not less
                    than  five  hundred  thousand  Dollars  ($500,000).  For the
                    purposes  of this Clause the  Borrower  shall at its expense
                    throughout  the  Facility  Period  deliver  to the  Agent  a
                    Valuation  in respect of each  Vessel (i) at least  annually
                    after  the  Execution  Date and (ii) at any time  reasonably
                    requested by the Agent.

          12.2.3    Financial  statements  The Borrower will supply to the Agent
                    without  request  (together in each case,  where the item is
                    generally  available  in  printed  form,  with  a  copy  for
                    distribution by the Agent to each of the Banks):-

                    (a)  its  annual  unaudited  financial  statements  for each
                         financial  year  of  the  Borrower  ending  during  the
                         Facility Period,  containing (amongst other things) the
                         Borrower's  profit and loss  account

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<PAGE>

                         for,  and  balance  sheet  at the  end  of,  each  such
                         financial  year,  prepared in accordance with generally
                         accepted accounting principles and practices applicable
                         to   companies    incorporated   in   the   Netherlands
                         consistently  applied,  in each case within one hundred
                         and  eighty  days of the end of the  financial  year to
                         which they relate and such financial  statements  shall
                         accurately and fairly represent the financial condition
                         of the Borrower; and

                    (b)  on a consolidated basis:-

                         (i)  the Guarantor's  annual audited accounts  prepared
                              in accordance  with US GAAP within one hundred and
                              eighty  days of the end of the  financial  year to
                              which they  relate and such  financial  statements
                              shall   accurately   and  fairly   represent   the
                              financial condition of the SO Group; and

                         (ii) the  Guarantor's   unaudited  quarterly  financial
                              statements  (including  cash  flow  analysis)  not
                              later than 90 days  after the end of the  relevant
                              fiscal quarter; and

                    (c)  the SO Group's  consolidated budget on an annual basis;
                         and

                    (d)  any financial information delivered by the Guarantor to
                         its shareholders; and

                    (e)  a cash flow projection for the following three years to
                         be provided  every  twelve  months  during the Facility
                         Period.

          12.2.4    Other  information  The Borrower will promptly supply to the
                    Agent copies of all  financial  and other  information  from
                    time to time given by the Guarantor to its  shareholders and
                    such  information and  explanations as an Instructing  Group
                    may from time to time reasonably  require in connection with
                    the  operation  of the  Vessels and the  Borrower's  and the
                    Guarantor's profit and liquidity,  and will procure that the
                    Agent  be  given  the  like   information  and  explanations
                    relating to all other Security Parties.

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<PAGE>

          12.2.5    Evidence of current  COFR Without  limiting  the  Borrower's
                    obligations under Clause 12.2.4, the Borrower will from time
                    to time on the  request of the Agent  provide the Agent with
                    such evidence as the Agent may reasonably  require that each
                    Vessel  operating  in the  waters  of the  United  States of
                    America has a valid and  current  Certificate  of  Financial
                    Responsibility  pursuant to the United  States Oil Pollution
                    Act 1990.

          12.2.6    ISM Code  compliance  In  respect of  "SEAWAY  POLARIS"  the
                    Borrower will:-

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

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

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

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

                    (e)  promptly  report  to  the  Agent  in  writing  (i)  any
                         accident  involving  a Vessel  which may result in that
                         Vessel's  insurers making payment directly to the Agent
                         in accordance with the relevant  Security  Documents or
                         (ii)  any  "major  non-conformity",  as  that  term  is
                         defined in the Guidelines on the  Implementation of the
                         International Safety Management Code by Administrations
                         adopted by the Assembly of the  International  Maritime
                         Organisation pursuant to Resolution  A.788(19),  and of
                         the steps being taken to remedy the situation; and

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

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<PAGE>

          12.2.7    Guarantor's  Public  Listing  Each of the  Borrower  and the
                    Guarantor  shall ensure that  throughout the Facility Period
                    the Guarantor  shall remain a public listed  company  unless
                    with the prior written  approval of the Banks it is owned by
                    significant and recognised corporate bodies with a corporate
                    rating of at least BBB as  defined  by  Standard & Poor's or
                    similar rating from a rating agency acceptable to the Banks.

          12.2.8    Insurances  The  Borrower  shall  ensure  that  each  of the
                    Vessels is fully insured upon the terms and  conditions  set
                    forth in the  Mortgages.  In addition,  each of the Borrower
                    and the Guarantor  shall ensure that its property and assets
                    are insured  against  such risks and in such  amounts as are
                    customary for companies engaged in similar businesses.

          12.2.9    Classification The Borrower shall ensure that each Vessel is
                    classed and  maintained  with the highest  applicable  class
                    necessary to properly operate such Vessel of Lloyds Register
                    of Shipping,  Det norske  Veritas,  the  American  Bureau of
                    Shipping or such other classification  society acceptable to
                    the Agent and that such  classification  is not  changed  or
                    impaired in any way during the Facility Period.

          12.2.10   Certificate  of  Compliance  The Borrower and the  Guarantor
                    shall  deliver to the Agent a duly executed  Certificate  of
                    Compliance  ninety  (90) days  after the end of each  fiscal
                    quarter  occurring  during the  Facility  Period  certifying
                    (inter  alia)  compliance  with the  covenants  contained in
                    Clauses 12.2.18 and 12.3.1.

          12.2.11   Inspection  of records The Borrower and the  Guarantor  will
                    each  permit the  inspection  of its  financial  records and
                    accounts  from  time to time  during  business  hours by the
                    Agent or its nominee.

          12.2.12   Notification  of Event of Default  Each of the  Borrower and
                    the Guarantor will  immediately  notify the Agent in writing
                    of the occurrence of any Event of Default or Potential Event
                    of Default  or any event  which  will  materially  adversely
                    affect the Borrower's or the Guarantor's  ability to perform
                    its  obligations  under this Agreement or the ability of any
                    of the other Security Parties or any Principal

                                       55
<PAGE>

                    Subsidiary to perform any of their  obligations under any of
                    the  Security  Documents  to  which  they are a party or may
                    become a party to.

          12.2.13   Additional Filings/Notification Each of the Borrower and the
                    Guarantor  shall  ensure  that  (i) any  and all  additional
                    filings  referred  to in the  proviso  to Clause 4.5 will be
                    made and/or effected promptly and within any applicable time
                    limits  imposed  by law and  (ii) the  Agent is  immediately
                    notified  if  any  of  the  Security   Parties  (a)  has  an
                    established  place of business in the United  Kingdom or the
                    United  States of  America at any time  during the  Facility
                    Period  or (b)  changes  the  place of its  Chief  Executive
                    office or principal  place of business in the United  States
                    of America.

          12.2.14   Pari  Passu Each of the  Borrower  and the  Guarantor  shall
                    ensure  that  their   respective   obligations   under  this
                    Agreement  shall at all times  rank at least pari passu with
                    all  of  their  other  present  and  future   unsecured  and
                    unsubordinated   indebtedness  with  the  exception  of  any
                    obligations   which  are   mandatorily   preferred   by  any
                    applicable laws to companies generally and not by contract.

          12.2.15   Corporate Existence Save as permitted by Clause 12.1.4, each
                    of  the  Borrower  and  the  Guarantor   shall  ensure  that
                    throughout the Facility Period each of the Security  Parties
                    shall (i) remain duly formed and validly  existing under the
                    laws of its respective  jurisdiction of  incorporation  (ii)
                    remain  authorised  to do  business in the  jurisdiction  in
                    which it transacts its business  (iii)  continue to have the
                    power to carry on its business as it is now being  conducted
                    and to enter  into and  perform  its  obligations  under the
                    Security  Documents to which it is a party and (iv) continue
                    to  comply  with  all   statutory,   regulatory   and  other
                    requirements relative to its business which could reasonably
                    be  expected  to  have  a  material  adverse  effect  on its
                    business, assets or operations, financial or otherwise.

          12.2.16   Admissibility  In  Evidence  Each of the  Borrowers  and the
                    Guarantor  shall on the  request  of the  Agent  obtain  all
                    necessary  authorisations,  consents,  approvals,  licences,
                    exemptions,   filings,    registrations,

                                       56
<PAGE>

                    recordings  and  notarisations   required  or  advisable  in
                    connection  with  the   admissibility  in  evidence  of  the
                    Security  Documents or any of them in Proceedings in England
                    or any other  jurisdiction  in which  Proceedings  have been
                    commenced.

          12.2.17   Finance   Company  Status  The  Borrower  will  ensure  that
                    throughout the Facility Period the Borrower will comply with
                    the regulations of the Netherlands Ministry of Finance dated
                    1 July 2001 (Vrijstellingsregeling Wet Toezicht Kredietwezen
                    1992)  with  respect  to  finance  companies  to the  extent
                    applicable and that the  application of the Facility will be
                    in accordance with such regulations.  The Borrower will also
                    ensure  that  throughout  the  Facility  Period  all  notice
                    requirements  to the  Dutch  Central  Bank  pursuant  to the
                    Foreign    Financial    Relations   Act   ("Wet   Financiele
                    Betrekkingen  Buitenland")  1994 (as the same may be amended
                    from time to time), are complied with.

          12.2.18   Permitted  Indebtedness The Borrower and the Guarantor shall
                    procure that  throughout  the  Facility  Period the SO Group
                    will have no indebtedness other than Permitted Indebtedness,
                    unless otherwise agreed by an Instructing Group.

          12.2.19   Short  Term  Permitted  Indebtedness  The  Borrower  and the
                    Guarantor  shall procure that throughout the Facility Period
                    the Short  Term  Permitted  Indebtedness  shall  not  exceed
                    seventy five million Dollars  ($75,000,000)  in aggregate or
                    the  equivalent  in any  other  currency,  unless  otherwise
                    agreed by an Instructing Group.

          12.2.20   Subordinated  Debt  The  Borrower  and the  Guarantor  shall
                    ensure that throughout the Facility Period any  Subordinated
                    Debt  shall be  provided  on the  terms of the  Subordinated
                    Note, unless otherwise agreed by an Instructing Group.

          12.2.21   Sale of Assets  Unless  otherwise  agreed by an  Instructing
                    Group,  the sale of assets of the SO Group  shall not at any
                    time during each fiscal  year  falling  within the  Facility
                    Period exceed fifty  million  Dollars  ($50,000,000)  or the
                    equivalent    in   any   other    currency   in   aggregate.

                                       57
<PAGE>

                    Notwithstanding the foregoing, unless otherwise agreed by an
                    Instructing Group, the maximum  cumulative  aggregate amount
                    for the sale of assets of the SO Group  during the  Facility
                    Period  shall not  exceed  one  hundred  and  fifty  million
                    Dollars  ($150,000,000)  or  the  equivalent  in  any  other
                    currency.  In this  Clause the sale of assets  includes  (i)
                    contributing assets to joint ventures and (ii) Vessels which
                    are  subject  to a  Mortgage  provided  that  where any such
                    Vessel is sold the Maximum  Facility Amount shall be reduced
                    by the proportionate  value specified in Clause 2.4.3 unless
                    any such Vessel is replaced by a similar  asset  (acceptable
                    to the Banks in their sole  discretion)  of equal or greater
                    value.  For the  purposes  of this  Clause  the value of any
                    asset sold or  disposed  of shall be deemed to be its market
                    value  whether or not such asset was sold on "an arms length
                    basis" and sales of assets  within the SO Group shall not be
                    counted.

          12.2.22   Synthetic  Leases Unless  otherwise agreed by an Instructing
                    Group,  throughout the Facility  Period the Borrower and the
                    Guarantor  shall  ensure  that the  total  aggregate  amount
                    outstanding under any Synthetic Lease shall not exceed fifty
                    million Dollars ($50,000,000).

     12.3 Guarantor's Financial Covenants

          12.3.1    Unless otherwise agreed by an Instructing Group,  throughout
                    the Facility Period the Guarantor shall:-

                    (a)  maintain a Consolidated  Tangible Net Worth of not less
                         than  $500,000,000  or  the  equivalent  in  any  other
                         currency  which shall be  increased  on an annual basis
                         calculated  as of the  end of  each  fiscal  year by an
                         amount equal to 50% of annual  consolidated  net income
                         (to the extent positive) from the Execution Date;

                    (b)  maintain a Consolidated  Debt to Consolidated  Tangible
                         Net Worth ratio of a maximum of 1.00:1.00 as calculated
                         at the end of each fiscal quarter;

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<PAGE>

                    (c)  on a rolling  four  fiscal  quarter  basis,  maintain a
                         D/EBITDA ratio of a maximum of:-


                         3.50:1  during the period  commencing  on the Execution
                         Date and ending on 30 November 2002;

                         3:00:1 during the period  commencing on 1 December 2002
                         and ending on the last day of the Facility Period; and

                    (d)  ensure that any inter-company debt due from SNSA or any
                         of its Subsidiaries (not including the SO Group) to the
                         SO Group does not at any one time exceed fifty  million
                         Dollars  ($50,000,000)  in aggregate or its  equivalent
                         amount in any other currency.

                    For the purposes of this Clause 12.3.1  Subordinated Debt in
                    an   amount   of  up  to   one   hundred   million   Dollars
                    ($100,000,000) or the equivalent in any other currency shall
                    not be included in the calculation of (i) Consolidated  Debt
                    to Consolidated Tangible Net Worth and (ii) D/EBITDA.

                    (e)  Notwithstanding  Clause 12.2.19, the Guarantor shall be
                         permitted to incur additional indebtedness ("Additional
                         Permitted  Indebtedness") (i) in an amount of up to the
                         difference  between  four  hundred  and  forty  million
                         Dollars   ($440,000,000)   and  the   total   available
                         commitments  of the  lenders  under the  Existing  Loan
                         Agreement at such time and (ii) for acquisitions and/or
                         capital  expenditure  if on a pro forma basis  D/EBITDA
                         does not exceed the ratios  specified in Clause  12.3.1
                         (c)  and  no  Event  of  Default  has  occurred  and is
                         continuing.

13   Earnings

     13.1 Remittance of earnings  Immediately upon the occurrence of an Event of
          Default, the Borrower shall procure that all Earnings are paid to such
          account(s)  as the Agent shall from time to time  specify by notice in
          writing to the Borrower.

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<PAGE>

14   Events Of Default

     14.1 The Agent's rights If any of the events set out in Clause 14.2 occurs,
          and such event remains  unremedied for fourteen (14) days after notice
          thereof  has  been  given  by the  Agent to the  Borrower  (except  in
          relation to any of the events  described  in Clauses  14.2.1,  14.2.2,
          14.2.4,  14.2.5, 14.2.6 and 14.2.18 where such remedy period shall not
          apply)  the Agent  may at its  discretion  by  notice to the  Borrower
          declare the Banks to be under no further  obligation  to the  Borrower
          under or pursuant to this Agreement and may declare all or any part of
          the  Indebtedness  (including  such  unpaid  interest  as  shall  have
          accrued) to be immediately payable, whereupon the Indebtedness (or the
          part of the  Indebtedness  referred  to in the Agent's  notice)  shall
          immediately  become due and  payable  without  any  further  demand or
          notice of any kind.

     14.2 Events of Default The events referred to in Clause 14.1 are:-

          14.2.1    payment  default if the Borrower  defaults in the payment of
                    any part of the Indebtedness when due; or

          14.2.2    other  default  if any  of the  Security  Parties  fails  to
                    observe  or  perform  any  of  the  covenants,   conditions,
                    undertakings,   agreements  or   obligations   on  its  part
                    contained in any of the  Security  Documents or shall in any
                    other  way be in breach of or do or cause to be done any act
                    repudiating  or  evidencing an intention to repudiate any of
                    the  Security   Documents   and  such  default  (if  in  the
                    reasonable  opinion  of the  Instructing  Group  capable  of
                    remedy)  is not  remedied  within  fourteen  (14) days after
                    notice of the default has been given to the Borrower; or

          14.2.3    misrepresentation    or   breach   of    warranty   if   any
                    representation,  warranty or  statement  made,  deemed to be
                    made, or repeated under any of the Security  Documents or in
                    any  accounts,   certificate,   notice  instrument,  written
                    statement or opinion  delivered by a Security Party under or
                    in connection with any Security Document is incorrect in any
                    material  respect when made,  deemed to be made or repeated;
                    or

          14.2.4    execution if a distress or  execution or other  process of a
                    court or  authority  is levied on any of the property of any
                    of the Security Parties

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                    or any of the Principal  Subsidiaries  before or after final
                    judgment or by order of any competent court or authority for
                    an amount in excess of ten million Dollars ($10,000,000) or,
                    its equivalent in any other currency and is not satisfied or
                    stayed (with a view to being contested in good faith) within
                    fourteen days of levy; or

          14.2.5    insolvency  events if any of the Security  Parties or any of
                    the Principal Subsidiaries:-

                    (a)  resolves to appoint, or applies for, or consents to the
                         appointment  of, a receiver,  administrative  receiver,
                         trustee,  administrator  or  liquidator of itself or of
                         all or part of its assets  other than for the  purposes
                         of a merger or amalgamation  pursuant to Clause 12.1.4;
                         or

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

                    (c)  makes  a  general   assignment   for  the   benefit  of
                         creditors; or

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

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

          14.2.6    insolvency  proceedings if any  proceedings are commenced or
                    threatened,  or any order or judgment is given by any court,
                    for the bankruptcy,  liquidation, winding up, administration
                    or  re-organisation of any of the Security Parties or any of
                    the  Principal  Subsidiaries  or for  the  appointment  of a
                    receiver, administrative receiver, administrator, liquidator
                    or  trustee  of any of the  Security  Parties  or any of the
                    Principal  Subsidiaries  or of all or part of the  assets of
                    any  of  the  Security  Parties  or  any  of  the  Principal
                    Subsidiaries,  or if any  person  appoints  or  purports  to
                    appoint    such    receiver,     administrative    receiver,
                    administrator, liquidator or trustee which proceeding is not
                    discharged within thirty (30) days of its commencement; or

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          14.2.7    impossibility  or illegality  unless covered by Clause 17.7,
                    if any event occurs  which would,  or would with the passage
                    of time, render performance of any of the Security Documents
                    impossible,  unlawful or  unenforceable  by the Banks or the
                    Agent; or

          14.2.8    conditions  subsequent if any of the  conditions  set out in
                    Clause  3.2 is not  satisfied  within  the  time  reasonably
                    required  by  the  Agent  with  respect  to  the  conditions
                    referred  to at  Clauses  3.2.1-3.2.5  inclusive  and within
                    twelve (12) months with respect to the condition referred to
                    at Clause  3.2.6 except  where such  condition  has not been
                    satisfied due to an act or omission on the part of a Finance
                    Party; or

          14.2.9    revocation or  modification of consents etc. if any material
                    consent,  licence, approval or authorisation which is now or
                    which  at  any  time  during  the  Facility  Period  becomes
                    necessary  to enable any of the  Security  Parties to comply
                    with any of their  obligations  in or pursuant to any of the
                    Security  Documents is revoked,  withdrawn  or withheld,  or
                    modified in a manner  which the Agent  reasonably  considers
                    is, or may be,  prejudicial to the interests of the Banks in
                    a  material  manner,  or  any  material  consent,   licence,
                    approval or authorisation ceases to remain in full force and
                    effect; or

          14.2.10   curtailment  of  business  if  the  business  of  any of the
                    Security  Parties is wholly or  partially  curtailed  by any
                    intervention by or under authority of any government,  or if
                    all or a substantial  part of the  undertaking,  property or
                    assets of any of the Security  Parties  (other than a Vessel
                    if it is  that  Security  Party's  only  asset)  is  seized,
                    nationalised,  expropriated or  compulsorily  acquired by or
                    under  authority of any  government  or any  Security  Party
                    disposes or  threatens to dispose of a  substantial  part of
                    its business or assets; or

          14.2.11   loss of Vessel if either  Vessel,  or any such other  vessel
                    which may from time to time be mortgaged to the Banks (or to
                    the Agent on their  behalf) as security for the repayment of
                    all or any part of the Indebtedness is destroyed, abandoned,
                    confiscated,  forfeited,  condemned  as prize  or  otherwise
                    becomes a Total Loss,  except that a Total Loss shall not be
                    an Event of Default if:-

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                    (a)  such  Vessel or such other  vessel (as the case may be)
                         is insured in accordance  with the Security  Documents;
                         and

                    (b)  no  insurer  has  refused to meet or has  disputed  the
                         claim  for  Total  Loss and it is not  apparent  to the
                         Agent  in its  discretion  that  any  such  refusal  or
                         dispute is likely to occur; and

                    (c)  payment  of all  insurance  proceeds  in respect of the
                         Total Loss (as required by Clause 6.6.) is made in full
                         to the Agent on behalf of the Banks in accordance  with
                         Clause 6.6; or

          14.2.12   acceleration of other indebtedness if any other indebtedness
                    or  obligation  for  borrowed  money of any of the  Security
                    Parties or any Principal  Subsidiary  becomes due or capable
                    of being declared due prior to its stated maturity by reason
                    of default on the part of that  Security  Party or Principal
                    Subsidiary  (as  the  case  may  be),  or is not  repaid  or
                    satisfied  on the due  date  for its  repayment  or any such
                    other loan,  guarantee or indebtedness  becomes  enforceable
                    save, in either case,  for amounts of less than five million
                    Dollars ($5,000,000) in aggregate,  or its equivalent in any
                    other currency, and claims contested in good faith; or

          14.2.13   reduction of capital if any of the Security  Parties  except
                    the Guarantor reduces its authorised or issued or subscribed
                    capital except reductions effected in compliance with Clause
                    12.1.4; or

          14.2.14   challenge  to  registration  if the  registration  of either
                    Vessel or either Mortgage becomes void or voidable or liable
                    to cancellation or termination; or

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

          14.2.16   notice of  termination  if the  Guarantor or the  Shipowning
                    Guarantor  gives  notice  to  the  Agent  to  determine  its
                    obligations   under  the   Guarantee   or  the   Shipowner's
                    Guarantee, as appropriate; or

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          14.2.17   claim  against the  Guarantor's  assets except for Permitted
                    Liens,  if a maritime  or other  lien,  arrest  distress  or
                    similar  charge is levied upon or against  either  Vessel or
                    any  substantial  part of the assets of the  Guarantor (on a
                    consolidated  basis)  and  such  is  not  discharged  within
                    fourteen  (14)  Business  Days after any  Security  Party or
                    Principal  Subsidiary  (as the case may be) has become aware
                    of the same; or

          14.2.18   Guarantor's  business  if all or a  substantial  part of the
                    Guarantor's  business  is  destroyed,   abandoned,   seized,
                    appropriated or forfeited for any reason; or

          14.2.19   ownership  if (i) the  Borrower  ceases to be 100%  directly
                    owned by Stolt Offshore A/S or 100% indirectly  owned by the
                    Guarantor  and (ii) the  Shipowning  Guarantor  ceases to be
                    100% directly or indirectly owned by the Guarantor; or

          14.2.20   final  judgements  if any of the Security  Parties  fails to
                    comply with any non appealable court order or fails to pay a
                    final unappealable  judgement against it, in either case, in
                    excess of ten million  Dollars  ($10,000,000)  which remains
                    unsettled for fourteen (14) days; or

          14.2.21   third party charters if either Vessel which is on charter to
                    a member of the SO Group is chartered for a period of twelve
                    (12)  months or more to a person  who is not a member of the
                    SO Group.

15   Set-Off and Lien

     15.1 Set-off Each of the Borrower and the Guarantor irrevocably  authorises
          the  Finance  Parties  at  any  time  after  all or  any  part  of the
          Indebtedness  shall  have  become due and  payable to set off  without
          notice any liability of the Borrower or the Guarantor (as the case may
          be) to any of the Finance Parties (whether  present or future,  actual
          or contingent,  and irrespective of the branch or office,  currency or
          place  of  payment)  against  any  credit  balance  from  time to time
          standing on any account of the Borrower or the  Guarantor (as the case
          may be) (whether  current or  otherwise  and whether or not subject to
          notice)  with any branch of any of the  Finance  Parties in or towards
          satisfaction  of the  Indebtedness  and,  in the name of that  Finance
          Party,  the Borrower or the  Guarantor (as the case may be), to do all

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          acts  (including,  without  limitation,  converting or exchanging  any
          currency)  and execute all  documents  which may be required to effect
          such application.

     15.2 Lien If an Event of  Default  has  occurred  and is  continuing,  each
          Finance  Party  shall  have a lien on and be  entitled  to retain  and
          realise as additional  security for the repayment of the  Indebtedness
          any cheques,  drafts,  bills,  notes or negotiable  or  non-negotiable
          instruments and any stocks,  shares or marketable or other  securities
          and property of any kind of the Borrower or the  Guarantor (or of that
          Finance  Party as agent or nominee of the  Borrower or the  Guarantor)
          from time to time held by that Finance Party, whether for safe custody
          or otherwise.

     15.3 Restrictions  on  withdrawal  Despite  any  term  to the  contrary  in
          relation to any  deposit or credit  balance at any time on any account
          of the Borrower or the  Guarantor (as the case may be) with any of the
          Finance  Parties,  no such  deposit or balance  shall be  repayable or
          capable of being assigned, mortgaged, charged or otherwise disposed of
          or dealt with by the  Borrower or the  Guarantor  (as the case may be)
          after an Event of Default has occurred and while such Event of Default
          is continuing,  but any Finance Party may from time to time permit the
          withdrawal  of all or any part of any such deposit or balance  without
          affecting the continued application of this Clause.

     15.4 Application  Whilst an Event of  Default  is  continuing,  each of the
          Borrower and the Guarantor  irrevocably  authorises the Agent to apply
          all sums which the Agent may receive:-

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

          15.4.2    by way of  payment to the Agent of any sum in respect of the
                    Insurances,   Earnings  or  Requisition  Compensation  of  a
                    Vessel; or

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

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

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16   Assignment and Sub-Participation

     16.1 Right to assign Each of the Banks may assign or transfer all or any of
          its rights  under or pursuant to the  Security  Documents to any other
          branch of that Bank or to any other bank or financial institution, and
          may  grant  sub-participations  in all or any  part of its  Commitment
          provided that the Borrower and the Agent consent to such assignment or
          transfer (such consent not to be unreasonably withheld or delayed) and
          such  assignment  or transfer  does not result in the  Borrower  being
          subject to any additional Tax or other financial or legal  obligations
          other than those  contemplated  by the terms of this  Agreement at the
          time of such assignment or transfer.

     16.2 Borrower's  co-operation  Each of the Borrower and the Guarantor  will
          co-operate  fully with the Banks in  connection  with any  assignment,
          transfer or  sub-participation  pursuant to Clause 16.1;  will execute
          and procure the  execution of such  documents as the Banks may require
          in  connection  therewith;  and  irrevocably  authorises  each  of the
          Finance  Parties to disclose to any proposed  assignee,  transferee or
          sub-participant  (whether before or after any assignment,  transfer or
          sub-participation  and  whether  or not any  assignment,  transfer  or
          sub-participation  shall take place) all  information  relating to the
          Security  Parties,  the Facility or the Security  Documents which each
          such  Finance  Party  may  in its  discretion  consider  necessary  or
          desirable (subject to any duties of confidentiality  applicable to the
          Banks generally).

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

     16.4 Transfer Certificates If any Bank wishes to transfer all or any of its
          Commitment  as  contemplated  in Clause 16.1 then such transfer may be
          effected  by the  delivery to the Agent of a duly  completed  and duly
          executed  Transfer  Certificate  in which  event,  on the later of the
          Transfer  Date  specified in such Transfer  Certificate  and the fifth
          Business Day after the date of delivery of such  Transfer  Certificate
          to the Agent:

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<PAGE>

          16.4.1    to the extent  that in such  Transfer  Certificate  the Bank
                    which is a party thereto seeks to transfer its Commitment in
                    whole,  the  Borrower  and such Bank shall be released  from
                    further  obligations towards each other under this Agreement
                    and their  respective  rights  against  each other  shall be
                    cancelled  other than existing  claims against such Bank for
                    breach  of  this  Agreement   (such  rights,   benefits  and
                    obligations  being  referred  to  in  this  Clause  16.4  as
                    "discharged rights and obligations");

          16.4.2    the Borrower  and the  Transferee  which is a party  thereto
                    shall assume obligations  towards one another and/or acquire
                    rights against one another which differ from such discharged
                    rights and obligations only insofar as the Borrower and such
                    Transferee have assumed and/or acquired the same in place of
                    the Borrower and such Bank; and

          16.4.3    the Agent,  the Transferee and the other Banks shall acquire
                    the same rights and benefits and assume the same obligations
                    between  themselves  as they would have acquired and assumed
                    had such Transferee been an original party to this Agreement
                    as a Bank  with  the  rights,  benefits  and/or  obligations
                    acquired or assumed by it as a result of such transfer.

     16.5 Power of Attorney In order to give effect to each Transfer Certificate
          the Finance  Parties and the  Borrower  each  hereby  irrevocably  and
          unconditionally appoint the Agent as its true and lawful attorney with
          full power to  execute  on their  respective  behalves  each  Transfer
          Certificate delivered to the Agent pursuant to Clause 16.4 without the
          Agent being under any obligation to take any further instructions from
          or give any prior notice to, any of the Finance Parties or, subject to
          the Borrower's  rights under Clause 16.1, the Borrower before doing so
          and the Agent  shall so  execute  each such  Transfer  Certificate  on
          behalf of the other Finance  Parties and the Borrower  immediately  on
          its receipt of the same pursuant to Clause 16.4.

     16.6 Notification  The  Agent  shall  promptly  notify  the  other  Finance
          Parties, the Transferee and the Borrower on the execution by it of any
          Transfer  Certificate together with details of the amount transferred,
          the Transfer Date and the parties to such transfer.

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17   Payments, Mandatory Prepayment, Reserve Requirements and Illegality

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

     17.2 No deductions or  withholdings  All payments  (whether of principal or
          interest or otherwise) to be made by the Borrower and/or the Guarantor
          pursuant to the Security Documents shall, subject only to Clause 17.3,
          be made free and clear of and without  deduction  for or on account of
          any Taxes or other deductions, withholdings,  restrictions, conditions
          or  counterclaims  of any nature,  and neither  the  Borrower  nor the
          Guarantor  will claim any equity in respect of any payment due from it
          to the  Banks  or to the  Agent  under  or in  relation  to any of the
          Security Documents.

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

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     17.4 Evidence  of  deductions  If at any time  either the  Borrower  or the
          Guarantor is required by law to make any deduction or withholding from
          any  payment  to be  made  by it  pursuant  to  any  of  the  Security
          Documents, the Borrower or the Guarantor (as the case may be) will pay
          the  amount  required  to be  deducted  or  withheld  to the  relevant
          authority  within the time allowed under the  applicable law and will,
          no later than thirty days after  making that  payment,  deliver to the
          Agent an original receipt issued by the relevant  authority,  or other
          evidence reasonably acceptable to the Banks, evidencing the payment to
          that authority of all amounts required to be deducted or withheld.  If
          the Borrower makes any deduction or withholding from any payment under
          or pursuant to any of the Security Documents,  and a Bank subsequently
          receives a refund or allowance from any tax authority  which that Bank
          identifies as being referable to that deduction or  withholding,  that
          Bank  shall,   as  soon  as   reasonably   practicable,   but  without
          substantially interfering with the businesses operations of that Bank,
          pay to the  Borrower  an amount  equal to the  amount of the refund or
          allowance  received,  if and to the  extent  that it may do so without
          prejudicing  its right to retain that refund or allowance  and without
          putting itself in any worse  financial  position than that in which it
          would have been had the deduction or withholding  not been required to
          have  been  made.  Nothing  in this  Clause  shall be  interpreted  as
          imposing any  obligation on any Bank unless  requested by the Borrower
          to apply for any refund or allowance nor as restricting in any way the
          manner in which any Bank organises its tax affairs, nor as imposing on
          any Bank any  obligation  to disclose to the Borrower any  information
          regarding its tax affairs or tax computations.  All costs and expenses
          incurred  by any Bank in  obtaining  or  seeking to obtain a refund or
          allowance from any tax authority  pursuant to this Clause shall be for
          the Borrower's account.

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

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<PAGE>

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

          17.6.1    any  Finance  Party (or the  holding  company of any Finance
                    Party)  shall be subject to any Tax with respect to payments
                    of all or any part of the Indebtedness; or

          17.6.2    the basis of Taxation  of  payments to any Finance  Party in
                    respect  of all or any  part of the  Indebtedness  shall  be
                    changed; or

          17.6.3    any  reserve  requirements  shall be  imposed,  modified  or
                    deemed  applicable  against assets held by or deposits in or
                    for the  account  of or loans by any  branch of any  Finance
                    Party or its direct or indirect holding company; or

          17.6.4    any ratio  (whether  cash,  capital  adequacy,  liquidity or
                    otherwise) which any Finance Party or its direct or indirect
                    holding  company is required or requested to maintain  shall
                    be affected; or

          17.6.5    there is imposed on any  Finance  Party (or on the direct or
                    indirect  holding  company of any  Finance  Party) any other
                    condition  in relation to the  Indebtedness  or the Security
                    Documents;

          and the result of any of the above  shall be to  increase  the cost to
          any Bank (or to the direct or indirect holding company of any Bank) of
          that Bank making or maintaining  its Commitment or its Drawing,  or to
          cause  any  Finance  Party to suffer  (in its  reasonable  opinion)  a
          material  reduction in the rate of return on its overall capital below
          the  level  which  it  reasonably  anticipated  at the  date  of  this
          Agreement  and which it would  have been able to  achieve  but for its
          entering into this Agreement and/or  performing its obligations  under
          this Agreement, the Finance Party affected shall notify the Agent and,
          on demand to the Borrower by the Agent,  the Borrower  shall from time
          to time pay to the Agent for the account of the Finance Party affected
          the amount which shall  compensate that Finance Party or the Agent (or
          the  relevant  holding  company) for such  additional  cost or reduced
          return. A certificate  signed by an authorised  signatory of the Agent
          or of

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          the Finance Party affected  setting out the amount of that payment and
          the basis of its  calculation  shall be  submitted to the Borrower and
          shall be conclusive evidence of such amount save for manifest error or
          on any question of law.

     17.7 Illegality and  impracticality  Notwithstanding  anything contained in
          the  Security  Documents,  the  obligations  of a Bank to  advance  or
          maintain  the Facility  shall  terminate in the event that a change in
          any law or in the  interpretation  of any law by any authority charged
          with its  administration  shall  make it  unlawful  for  that  Bank to
          advance or maintain its  Commitment.  In such event the Bank  affected
          shall notify the Agent and the Agent shall,  by written  notice to the
          Borrower, declare the Banks' obligations to be immediately terminated.
          If all or any part of the  Facility  shall have been  advanced  by the
          Banks  to  the  Borrower,  the  Indebtedness  (including  all  accrued
          interest)  shall be prepaid  within  thirty days from the date of such
          notice.  Clause 6.3 shall apply to that  prepayment if it is made on a
          day other than the last day of an Interest Period. During that period,
          the affected  Bank shall  negotiate in good faith with the Borrower to
          find an  alternative  method or lending  base in order to maintain the
          Facility.

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

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

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

          17.8.3    the Agent in accordance with instructions from that Bank and
                    subject to that Bank's approval of any agreement between the
                    Agent and the Borrower,  will negotiate with the Borrower in
                    good  faith  with a view  to  modifying  this  Agreement  to
                    provide a substitute basis for that Bank's

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                    Commitment which is financially a substantial  equivalent to
                    the basis provided for in this Agreement.

          If,  within  thirty  days of the giving of the notice  referred  to in
          Clause 17.8.1,  the Borrower and the Agent fail to agree in writing on
          a  substitute  basis for such  Bank's  Commitment  the  Borrower  will
          immediately  prepay in the relevant  Permitted  Currency or Currencies
          the amount of such Bank's  Commitment and the Maximum  Facility Amount
          will automatically  decrease by the amount of such Commitment and such
          decrease  shall  not be  reversed.  Clause  6.3  shall  apply  to that
          prepayment  if it is made  on a day  other  than  the  last  day of an
          Interest Period.

     17.9 Non-availability  of currency  Subject to the  procedure  set forth in
          Clause  5.3, if a Bank is for any reason  unable to obtain  Dollars or
          any other Permitted Currency in the London Interbank market and is, as
          a result, or as a result of any other contingency affecting the London
          Interbank  market,  unable to advance or maintain  its  Commitment  in
          Dollars  or in any other  Permitted  Currency,  that Bank  shall  give
          notice to the Agent and the Agent  shall give  notice to the  Borrower
          and that  Bank's  obligations  to make the  Facility  available  shall
          immediately  cease.  In that event, if all or any part of the Facility
          shall have been  advanced by that Bank to the  Borrower,  the Agent in
          accordance with instructions from that Bank and subject to that Bank's
          approval of any  agreement  between the Agent and the  Borrower,  will
          negotiate with the Borrower in good faith with a view to  establishing
          a mutually  acceptable basis for funding the Facility or relevant part
          thereof from an alternative source and/or in an alternative  Permitted
          Currency.  If the  Agent  and the  Borrower  have  failed  to agree in
          writing on a basis for funding the  Facility or relevant  part thereof
          from an alternative source and/or in an alternative Permitted Currency
          by 11.00 a.m. on the second  Business Day prior to the end of the then
          current relevant Interest Period, the Borrower will (without prejudice
          to  its  other  obligations  under  or  pursuant  to  this  Agreement,
          including,  without limitation,  its obligation to pay interest on the
          Facility,  arising on the expiry of the then relevant Interest Period)
          prepay  the  Indebtedness  to the  Agent on behalf of that Bank on the
          expiry of the then current relevant Interest Period.

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18   Communications

     18.1 Method Except for Communications pursuant to Clause 11, which shall be
          made or given in accordance with Clause 11.20, any  Communication  may
          be given,  delivered,  made or served (as the case may be) under or in
          relation  to this  Agreement  by  letter  or fax and  shall  be in the
          English language and sent addressed:-

          18.1.1    in the case of any of the  Finance  Parties  to the Agent at
                    its address at the head of this  Agreement  (fax no: + (212)
                    421 4420) marked for the attention of:  Shipping  Offshore &
                    Oil Services; and

          18.1.2    in the case of the  Borrower  and/or  the  Guarantor  to the
                    Communications  Address  with a copy to  McLaughlin & Stern,
                    LLP,  260 Madison  Avenue,  New York,  NY 10016,  (fax no: +
                    (212) 448-6260) Attention: John E. Greenwood,  provided that
                    the failure to deliver such copy shall not affect the rights
                    of any party under this Agreement;

          or to such other  address or fax number as the  Finance  Parties,  the
          Borrower or the  Guarantor  may  designate  for  themselves by written
          notice to the others.

     18.2 Timing A  Communication  shall be  deemed  to have  been  duly  given,
          delivered,  made or served to or on, and  received  by a party to this
          Agreement:-

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

          18.2.2    if delivered to an officer of the relevant  party or (in the
                    case  of the  Borrower  and/or  the  Guarantor)  left at the
                    Communications  Address at the time of  delivery or leaving;
                    or

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

          Any  Communication  by fax shall be promptly  confirmed  in writing by
          post or hand delivery.

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19   General Indemnities

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

     19.2 Costs and expenses Each of the Borrower and the Guarantor will, within
          fourteen days of the Agent's written  demand,  reimburse the Agent (on
          behalf  of each of the  Finance  Parties)  for all  reasonable  out of
          pocket expenses including internal and external legal costs (including
          Value Added Tax or any similar or  replacement  tax if  applicable) of
          and incidental to:-

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

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

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

          19.2.4    the exercise of the rights, powers, discretions and remedies
                    of the Finance  Parties  under or  pursuant to the  Security
                    Documents.

     19.3 Events  of  Default  Each  of the  Borrower  and the  Guarantor  shall
          indemnify the Finance  Parties from time to time on demand against all
          losses and costs  incurred

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<PAGE>

          or sustained  by any Finance  Party as a  consequence  of any Event of
          Default, including (without limitation) any Break Costs.

     19.4 Funding costs Each of the Borrower and the Guarantor  shall  indemnify
          the Finance Parties from time to time on demand against all losses and
          costs  incurred or sustained  by any Finance  Party if, for any reason
          due to a default or other action by the  Borrower,  any Drawing is not
          advanced to the Borrower after the relevant  Drawdown  Notice has been
          given to the Agent, or is advanced on a date other than that requested
          in the  Drawdown  Notice,  including  (without  limitation)  any Break
          Costs.

     19.5 Protection  and  enforcement  Each of the Borrower  and the  Guarantor
          shall  indemnify  the  Finance  Parties  from  time to time on  demand
          against all losses,  costs and liabilities which any Finance Party may
          from time to time sustain,  incur or become liable for in or about the
          protection,  maintenance or enforcement of the rights conferred on the
          Finance Parties by the Security  Documents or in or about the exercise
          or  purported  exercise by the  Finance  Parties of any of the rights,
          powers, discretions or remedies vested in them under or arising out of
          the Security  Documents,  including  (without  limitation) any losses,
          costs and  liabilities  which any Finance  Party may from time to time
          sustain,  incur or become  liable for by reason of any  Finance  Party
          being mortgagees of any Vessel and/or a lender to the Borrower,  or by
          reason of any Finance  Party being deemed by any court or authority to
          be an operator or controller, or in any way concerned in the operation
          or  control,  of any  Vessel.  No such  indemnity  will be  given to a
          Finance Party where any such loss,  cost or liability has occurred due
          to gross  negligence or wilful  misconduct on the part of that Finance
          Party  however  this shall not  affect the right of any other  Finance
          Party to receive any such indemnity.

     19.6 Liabilities of Finance  Parties Each of the Borrower and the Guarantor
          will from time to time reimburse the Finance Parties on demand for all
          sums which any Finance Party may pay on account of any of the Security
          Parties or in connection  with any Vessel (whether alone or jointly or
          jointly  and  severally  with any  other  person)  including  (without
          limitation)  all sums which any  Finance  Party may pay or  guarantees
          which any  Finance  Party may give in respect of the  Insurances,  any
          expenses  incurred  by  any  Finance  Party  in  connection  with  the
          maintenance or repair of any Vessel or in discharging  any lien,  bond
          or other claim  relating in any

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<PAGE>

          way to any  Vessel,  and any sums which any  Finance  Party may pay or
          guarantees  which they may give to procure  the  release of any Vessel
          from arrest or detention.

     19.7 Taxes Each of the  Borrower and the  Guarantor  shall pay all Taxes to
          which  all or any  part  of the  Indebtedness  or any of the  Security
          Documents  may be at any time subject and shall  indemnify the Finance
          Parties on demand against all liabilities,  costs, claims and expenses
          resulting  from any omission to pay or delay in paying any such Taxes.
          The indemnity  contained in this Clause shall survive the repayment of
          the Indebtedness.

20   Miscellaneous

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

     20.2 No oral  variations  No  variation or amendment of any of the Security
          Documents shall be valid unless in writing and signed on behalf of the
          Finance Parties and the relevant Security Party.

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

     20.4 Successors  etc.  The  Security  Documents  shall  be  binding  on the
          Security Parties and on their successors and permitted transferees and
          assignees,  and shall inure to the benefit of the Finance  Parties and
          their respective  successors,  transferees and assignees.  Neither the
          Borrower nor the Guarantor may assign or transfer any of its rights or
          duties under or pursuant to any of the Security  Documents without the
          prior written consent of the Banks.

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

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

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

     20.8 Delegation  The Finance  Parties may at any time and from time to time
          delegate to any person any of their rights,  powers,  discretions  and
          remedies  pursuant  to  the  Security  Documents,  other  than  rights
          relating to actions to be taken by an

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<PAGE>

          Instructing  Group or the  Banks as a group on such  terms as they may
          consider appropriate (including the power to sub-delegate).

     20.9 Rights etc.  cumulative  Every  right,  power,  discretion  and remedy
          conferred  on the Finance  Parties  under or pursuant to the  Security
          Documents  shall be  cumulative  and in addition to every other right,
          power,  discretion or remedy to which they may at any time be entitled
          by law or in equity.  The Finance  Parties may exercise  each of their
          rights, powers, discretions and remedies as often and in such order as
          they deem  appropriate  subject to obtaining the prior written consent
          of an Instructing Group. The exercise or the beginning of the exercise
          of any right, power,  discretion or remedy shall not be interpreted as
          a waiver of the right to exercise any other right,  power,  discretion
          or remedy either simultaneously or subsequently.

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

    20.11 Continuing security The security constituted by the Security Documents
          shall be  continuing  and shall not be satisfied  by any  intermediate
          payment or satisfaction  until the Indebtedness shall have been repaid
          in full and none of the  Finance  Parties  shall be under any  further
          actual or  contingent  liability to any third party in relation to the
          Vessels, the Insurances,  Earnings or Requisition  Compensation or any
          other matter referred to in the Security Documents.

    20.12 Security cumulative The security constituted by the Security Documents
          shall be in addition to any other  security  now or in the future held
          by the Finance  Parties or any of them for or in respect of all or any
          part of the Indebtedness,  and shall not merge with or prejudice or be
          prejudiced  by any such  security  or any other  contractual  or legal
          rights  of  any  of  the  Finance   Parties,   nor   affected  by  any
          irregularity,  defect or informality,  or by any release,  exchange or
          variation of any such security.  Section 93 of the Law of Property Act
          1925 and all provisions  which the Agent considers  analogous  thereto
          under the law of any other  relevant  jurisdiction  shall not apply to
          the security constituted by the Security Documents.

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<PAGE>

    20.13 Re-instatement If any Finance Party takes any steps to exercise any of
          its rights,  powers,  remedies or discretions pursuant to the Security
          Documents and the result shall be adverse to the Finance Parties,  the
          Borrower,  the Guarantor and the Finance  Parties shall be restored to
          their former positions as if no such steps had been taken.

    20.14 No liability None of the Finance Parties, nor any agent or employee of
          any Finance Party,  nor any receiver  and/or manager  appointed by the
          Agent,  shall be  liable  for any  losses  or any  special,  indirect,
          consequential  or punitive  damages which may be incurred  under or in
          connection   with  the   Security   Documents   or  the   transactions
          contemplated thereunder, nor liable as mortgagee in possession for any
          loss on  realisation  or for any  neglect or default of any nature for
          which a mortgagee in possession  might otherwise be liable unless such
          Finance  Party's  action   constitutes   gross  negligence  or  wilful
          misconduct.  Each of the Borrower and the Guarantor  waives,  releases
          and agrees (for itself and on behalf of its  Subsidiaries)  not to sue
          on any such  claim  for any such  losses  or  damages  whether  or not
          accrued  and  whether or not known or expected to exist in its favour,
          except in the event that such party alleges gross negligence or wilful
          misconduct.

    20.15 Rescission of payments etc. Any discharge,  release or reassignment by
          any of the Finance  Parties of any of the security  constituted by, or
          any of the  obligations of any Security Party contained in, any of the
          Security  Documents  shall be (and be deemed always to have been) void
          if any act (including, without limitation, any payment) as a result of
          which such  discharge,  release or  reassignment  was given or made is
          subsequently  wholly or partially rescinded or avoided by operation of
          any  law,  unless  such  Finance  Party's  action   constitutes  gross
          negligence or wilful misconduct.

    20.16 Subsequent Encumbrances If the Agent receives notice of any subsequent
          Encumbrance (other than any Encumbrance permitted by the terms of this
          Agreement)  affecting  either  Vessel,  or  all  or  any  part  of the
          Insurances, Earnings or Requisition Compensation, the Agent may open a
          new account in its books for the Borrower.  If the Agent does not open
          a new account,  then (unless the Encumbrance is permitted by the terms
          of this Agreement or the Agent gives written notice to the contrary to
          the  Borrower)  as from the time of  receipt by the Agent of notice of
          such subsequent  Encumbrance,  all payments made to the

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          Agent shall be treated as having been credited to a new account of the
          Borrower   and  not  as  having  been  applied  in  reduction  of  the
          Indebtedness.

    20.17 Releases  If any  Finance  Party  shall at any time in its  discretion
          release  any  party  from  all or  any  part  of  any of the  Security
          Documents or from any term, covenant,  clause, condition or obligation
          contained in any of the Security Documents, the liability of any other
          party to the Security Documents shall not be varied or diminished.

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

    20.19 Survival of  representations  and warranties The  representations  and
          warranties  on the  part  of each of the  Borrower  and the  Guarantor
          contained  in this  Agreement  shall  survive  the  execution  of this
          Agreement and the advance of the facility or any part thereof.

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

    20.21 Third Party Rights  Notwithstanding  the  provisions  of the Contracts
          (Rights  of Third  Parties)  Act 1999,  no term of this  Agreement  is
          enforceable by a person who is not a party to it.

21   Law and Jurisdiction

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

     21.2 Jurisdiction  For the exclusive  benefit of the Finance  Parties,  the
          parties to this Agreement irrevocably agree that the courts of England
          are to have jurisdiction to settle any disputes which may arise out of
          or in connection  with this Agreement and that any  Proceedings may be
          brought  in  those  courts.  Each of the  Borrower  and the  Guarantor
          irrevocably  waives  any  objection  which it may now or in the future
          have to the  laying  of the  venue  of any  Proceedings  in any  court
          referred to

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<PAGE>

          in this Clause, and any claim that those Proceedings have been brought
          in an inconvenient or inappropriate forum.

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

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

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

                                       81
<PAGE>

SIGNED by /s/ CHARLES R. DELAMATER                   )
Charles R. Delamater                                 )
Managing Director                                    )
Senior Credit Officer                                )
duly authorised for and on behalf                    )
of  CITIBANK N.A.                                    )
(as a Bank)                                          )
in the presence of:-/s/ CLAUDIO MATOS                )
                      Claudio Matos
                      288 Greenwich, 23rd Floor
                      New York, NY 10013

SIGNED by  /s/ SHEILA OBHRAI                         )
Sheila Obhrai                                        )
ATTORNEY-IN-FACT                                     )
duly authorised for and on behalf                    )
of  DEN NORSKE BANK ASA                              )
(as a Bank)                                          )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH

SIGNED by /s/ HC LUTENER                             )
duly authorised for and on behalf                    )
of  HSBC BANK PLC                                    )
(as a Bank)                                          )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH

SIGNED by /s/ SHEILA OBHRAI                          )
Sheila Obhrai                                        )
ATTORNEY-IN-FACT                                     )
duly authorised for and on behalf                    )
of ING CAPITAL LLC                                   )
(as a Bank)                                          )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH
<PAGE>

SIGNED by /s/ SHEILA OBHRAI                          )
Sheila Obhrai                                        )
ATTORNEY-IN-FACT                                     )
duly authorised for and on behalf                    )
of NORDEA                                            )
BANK NORGE ASA, Grand Cayman Branch                  )
(as a Bank)                                          )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH

SIGNED by /s/ SHEILA OBHRAI                          )
Sheila Obhrai                                        )
ATTORNEY-IN-FACT                                     )
duly authorised for and on behalf                    )
of NORDEA                                            )
BANK NORGE ASA, Grand Cayman Branch                  )
(as the Agent and Security Trustee)                  )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH

SIGNED by /s/ JOLANNE LE-FAYE                        )
duly authorised for and on behalf                    )
of  STOLT COMEX                                      )
SEAWAY FINANCE B.V.                                  )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH

SIGNED by /s/ JOLANNE LE-FAYE                        )
duly authorised for and on behalf                    )
of  STOLT OFFSHORE S.A.                              )
in the presence of:- /s/ SIMON ELPHICU               )
                      Simon Elphicu
                      Trainee Solicitor
                      Stephenson Harwood
                      One, St. Paul's Churchyard
                      London
                      EC4M 8SH