<PAGE>

                                                                    Exhibit 10.2

                                                                  Execution Copy




                               FACILITY AGREEMENT
                                      for a
                            U.S.$275,000,000 Facility
                                       to
                            STENA INTERNATIONAL B.V.

                                   provided by
                            THE CHASE MANHATTAN BANK
                 (OR A SUCCESSOR OR NOMINATED AFFILIATE THEREOF)
                              NORDBANKEN AB (PUBL)
                         SVENSKA HANDELSBANKEN AB (PUBL)
                                  HSBC BANK PLC
                   LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE
                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
                               DEN NORSKE BANK ASA
                              SCOTIABANK EUROPE PLC
                     SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
                               ABN AMRO BANK N.V.
                              NEDSHIP BANK (NORDIC)

                                   arranged by
                                J. P. MORGAN PLC
                              NORDBANKEN AB (PUBL)
                         SVENSKA HANDELSBANKEN AB (PUBL)

                                      Agent
                         SVENSKA HANDELSBANKEN AB (PUBL)

                                 Security Agent
                         SVENSKA HANDELSBANKEN AB (PUBL)

                              Documentation Agents
                              NORDBANKEN AB (PUBL)
                         SVENSKA HANDELSBANKEN AB (PUBL)

                                  guaranteed by
                                    STENA AB





                           Sinclair Roche & Temperley
                                     London
                                Ref: JEF/90034685


<PAGE>



                                    CONTENTS



<TABLE>
<CAPTION>

CLAUSE            CONTENTS                                                                                 PAGE

<S>               <C>                                                                                       <C>
1.                PURPOSE AND DEFINITIONS....................................................................1
2.                THE COMMITMENTS...........................................................................45
3.                ADVANCES..................................................................................46
4.                INTEREST ON ADVANCES......................................................................47
5.                REPAYMENT, REDUCTION AND CANCELLATION.....................................................50
6.                FEES, COMMISSION, MARGIN AND EXPENSES.....................................................61
7.                PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS.............................................64
8.                GUARANTEE AND INDEMNITY...................................................................68
9.                REPRESENTATIONS AND WARRANTIES............................................................71
10.               UNDERTAKINGS..............................................................................76
11.               SHIP AND LINKSPAN COVENANTS : INSURANCE...................................................98
12.               SHIP AND LINKSPAN COVENANTS : OPERATION AND MAINTENANCE..................................105
13.               COVENANTS IN RESPECT OF THE PORTS........................................................110
14.               CONDITIONS...............................................................................115
15.               DEFAULT..................................................................................116
16.               INDEMNITIES..............................................................................119
17.               UNLAWFULNESS AND INCREASED COSTS.........................................................121
18.               SET-OFF AND PRO-RATA PAYMENTS............................................................123
19.               SECURITY.................................................................................125
20.               ASSIGNMENT, TRANSFER AND LENDING OFFICE..................................................131
21.               REFERENCE BANKS, CO-ARRANGERS, AGENT AND SECURITY AGENT..................................135
22.               NOTICES AND OTHER MATTERS................................................................147
23.               GOVERNING LAW AND JURISDICTION...........................................................149
</TABLE>




<PAGE>



SCHEDULES

SCHEDULE 1                 THE BANKS AND THEIR COMMITMENTS
SCHEDULE 2                 THE SHIPS
SCHEDULE 3                 COMMERCIAL DOCUMENTS
SCHEDULE 4                 FORM OF DRAWDOWN NOTICE
SCHEDULE 5                 CONDITIONS PRECEDENT
SCHEDULE 6                 FORM OF TRANSFER CERTIFICATE
SCHEDULE 7.1               FORM OF SHIPOWNER'S GUARANTEE
SCHEDULE 7.2               FORM OF PORT OWNER'S GUARANTEE
SCHEDULE 8                 FORM OF SWEDISH MORTGAGES
SCHEDULE 9                 FORM OF INSURANCE ASSIGNMENT
SCHEDULE 10                FORM OF STATUTORY MORTGAGE NARRATIVE
SCHEDULE 11.1              FORM OF DEED OF COVENANT
SCHEDULE 11.2              FORM OF DEED OF COVENANT
                                (M.V. "STENA CARISMA" AND HER RELATED LINKSPANS)
SCHEDULE 12                FORM OF CHARTERER'S INSURANCE ASSIGNMENT
SCHEDULE 13                FORM OF CHARTERER'S SUBORDINATION UNDERTAKING
SCHEDULE 14                FORM OF HOLYHEAD CHARGE
SCHEDULE 15                FORM OF STRANRAER CHARGE
SCHEDULE 16                FORM OF RECEIVABLES ASSIGNMENT (CREDIT SALE)
SCHEDULE 17                FORM OF RECEIVABLES ASSIGNMENT (HIRE PURCHASE)
SCHEDULE 18                FORM OF MANAGER'S SUBORDINATION UNDERTAKING
SCHEDULE 19                FORM OF STENA GERMANICA ASSIGNMENT
SCHEDULE 20                SPECIMEN CHARTER COVENANTS AND LOSS PAYABLE CLAUSES
SCHEDULE 21                FORM OF ASSET COVERAGE COMPLIANCE CERTIFICATE











<PAGE>


THIS AGREEMENT is dated                               2001 and is made BETWEEN:-

(1)      STENA INTERNATIONAL B.V. as Borrower;

(2)      J. P. MORGAN PLC, NORDBANKEN AB (PUBL) AND SVENSKA HANDELSBANKEN AB
         (PUBL) as Co-Arrangers (for whom Nordbanken AB (publ) and Svenska
         Handelsbanken AB (publ) act as Documentation Agents);

(3)      the banks and financial institutions whose names and addresses are set
         out in Schedule 1 as Banks;

(4)      SVENSKA HANDELSBANKEN AB (PUBL) as Agent;

(5)      SVENSKA HANDELSBANKEN AB (PUBL) as Security Agent; and

(6)      STENA AB as guarantor.

IT IS AGREED as follows:-

1.       PURPOSE AND DEFINITIONS

1.1      Purpose

         This Agreement sets out the terms and conditions upon and subject to
         which the Banks agree, according to their several obligations, to make
         available to the Borrower a multipurpose corporate facility of up to
         $275,000,000 to be used for the purpose of enabling the Borrower partly
         to refinance the Stena Line Revolving Credit Facility.

1.2      Definitions

         In this Agreement, unless the context otherwise requires:-

         "ABN STANDBY FACILITY AGREEMENT"
         means the facility agreement dated        2001 made between Stena Line
         Scandinavia as borrower and ABN AMRO Bank N.V. as lender pursuant to
         which ABN AMRO Bank N.V. has agreed to make available to Stena Line
         Scandinavia an unsecured standby and overdraft facility in the amount
         of $10,000,000 to be applied partly towards refinancing the existing
         indebtedness of Stena Line in respect of certain standby facilities
         provided to it under the Stena Line Revolving Credit Facility;

         "ADVANCE"
         means each borrowing of a proportion of the Commitments by the Borrower
         under Clause 3 or (as the context may require) the principal amount of
         such borrowing for the time being outstanding;

         "AFFILIATE"
         of any specified person means any other person directly or indirectly
         controlling or controlled by or under direct or indirect common control
         with any specified person and "AFFILIATES" of Stena AB or any of its
         Subsidiaries includes, without limitation, any Subsidiary of Stena AB
         (other than a Wholly Owned Subsidiary of Stena AB) and any Unrestricted
         Subsidiary so that neither Stena AB nor any Wholly Owned

<PAGE>

                                     - 2 -

         Subsidiary of Stena AB shall be deemed an "AFFILIATE" of Stena AB or
         any Wholly Owned Subsidiary of Stena AB;

         "AGENT"
         means Svenska Handelsbanken AB (publ) or such other person as may be
         appointed agent for the Banks, the Co-Arrangers and the Security Agent
         pursuant to this Agreement;

         "APPROVED BROKERS"
         means, in relation to a Ship or Linkspan, such firm of insurance
         brokers (if any), appointed by the relevant Shipowner as may from time
         to time be approved in writing by the Agent for the purposes of this
         Agreement (such approval not to be unreasonably withheld or delayed);

         "APPROVED FLAG STATE"
         has the meaning attributed thereto in Clause 19.5(I);

         "APPROVED MANAGER"
         means, in relation to a Ship or Linkspan, Northern Marine Management
         Limited and/or any other member of the Stena AB Group or such other
         manager as may be approved by the Agent (such approval not to be
         unreasonably withheld or delayed) and includes any manager or
         sub-manager to whom Northern Marine Management Limited or other
         applicable member of the Stena AB Group or other manager so approved
         may delegate all or part of its management functions on terms, inter
         alia, that the manager so delegating such functions remains wholly
         responsible as principal to the relevant Shipowner or demise charterer
         in respect of the Ship or Linkspan for the purposes of the relevant
         management functions;

         "ASSET COVERAGE COMPLIANCE CERTIFICATE"
         means the Officer's Certificate to be delivered by Stena AB pursuant
         to Clause 10.2(F);

         "ASSET DISPOSITION"
         by any person means any transfer, conveyance, sale (including any
         instalment sale or similar arrangement but excluding any sale pursuant
         to a Sale and Leaseback Transaction), lease (other than pursuant to a
         charter or operating lease of a Vessel in the ordinary course of
         business) or other disposition by such person or any of its
         Subsidiaries (including a consolidation or merger or other sale of any
         such Subsidiary with, into or to another person in a transaction in
         which such Subsidiary ceases to be a Subsidiary, but excluding a
         disposition by a Subsidiary of such person to such person or a
         Subsidiary of such person or by such person to a Subsidiary of such
         person) (collectively, a "TRANSFER") of:-

         (A)      shares of Capital Stock (other than directors' qualifying
                  shares and other than pledges permitted under Clause 10.6) or
                  other ownership interests of a Subsidiary of such person;

         (B)      all or substantially all of the assets representing a
                  division or line of business of such person or any of its
                  Subsidiaries;
<PAGE>

                                      - 3 -

         (C)      a Vessel; or

         (D)      other assets or rights of such person or any of its
                  Subsidiaries outside of the ordinary course of business

         but solely for the purposes of Clause 10.7, the term "ASSET
         DISPOSITION" shall not include:-

         (i)      any transfers of properties or assets which in the aggregate
                  do not exceed $5,000,000 in any fiscal year of Stena AB;

         (ii)     any transfer of any properties or assets to an Unrestricted
                  Subsidiary permitted to be made under Clause 10.6 and Section
                  10.22 (LIMITATION ON UNRESTRICTED SUBSIDIARIES) of each of the
                  Indentures or any corresponding provision in documentation
                  evidencing the terms of any Successor Financing;

         (iii)    the exchange of Capital Stock of a person for Capital Stock of
                  a different class of such person ranking at least pari passu
                  with the Capital Stock being so exchanged as to the payment of
                  dividends or as to the distribution of assets upon any
                  voluntary or involuntary liquidation, dissolution or winding
                  up of such person, provided that the Fair Market Value of the
                  shares received in such exchange is not less than that of the
                  Capital Stock to be surrendered in such exchange; and

         (iv)     any sale or transfer pursuant to an arrangement with any
                  lessor, lender, obligee or investor or to which such lessor,
                  lender, obligee or investor is a party providing for the
                  leasing or renting by such person of any property or asset of
                  such person which has been or is being sold or transferred by
                  such person two hundred and seventy (270) days or less after
                  the acquisition thereof, to such lessor, lender, obligee or
                  investor or to any person to whom funds have been or are to be
                  advanced by such lessor, lender, obligee or investor on the
                  security of such property or asset;

         "AUDITED STENA AB FINANCIAL STATEMENTS"
         means the consolidated audited annual financial statements of the Stena
         AB Group and any other entities required to be consolidated in such
         statements in accordance with any applicable laws;

         "AUDITED STENA INTERNATIONAL FINANCIAL STATEMENTS"
         means the consolidated audited annual financial statements of the Stena
         International Group and any other entities required to be consolidated
         in such statements in accordance with any applicable laws;

         "AVAILABILITY DATE"
         means the first date upon which the conditions referred to in Clauses
         14.1 and 14. shall have been fulfilled;

         "AVAILABILITY PERIOD"
         means the period from the Availability Date and ending on the
         Termination Date or the period ending on such earlier date (if any) (i)
         on which the Borrower cancels all of

<PAGE>

                                      - 4 -


         the Commitments under Clause 5.8 or (ii) on which the Commitments of
         all the Banks are reduced to zero pursuant to Clauses 5.3, 5.6,
         5.7,15.2 or 17.1;

         "AVAILABLE COMMITMENT"
         means, in relation to a Bank, the amount of its Commitment less the
         amount of its Contribution;

         "AVERAGE LIFE"
         means as of the date of determination with respect to any Debt or other
         securities or like instruments, the quotient obtained by dividing (i)
         the sum of the products of the number of years from the date of
         determination to the dates of each successive scheduled principal
         payment of each such Debt, securities or instruments multiplied by the
         amount of such principal payment by (ii) the sum of all such principal
         payments;

         "BANKING DAY"
         means a day on which dealings in deposits in Dollars are carried on in
         the London Interbank Eurocurrency Market and (other than Saturday or
         Sunday) on which banks are open for business in London, Gothenburg and
         New York City (or any other relevant place of payment under Clause 7);

         "BANKS"
         means the banks and financial institutions listed in Schedule 1 and
         includes their successors in title and assignees and transferees;

         "BOARD OF DIRECTORS"
         means either the board of directors of Stena AB (or its relevant
         Subsidiary) or any duly authorised committee of that board;

         "BOARD RESOLUTION"
         means a copy of a resolution certified by Stena AB (or its relevant
         Subsidiary) to have been duly adopted by its Board of Directors and to
         be in full force and effect on the date of such certification, and
         delivered to the Agent;

         "BORROWER"
         means Stena International B.V. a company incorporated under the laws
         of The Netherlands acting through its branch office at Aegeristrasse
         52, CH-6300 Zug, Switzerland;

         "CAPITALISED LEASE OBLIGATION"
         of any person means:-

         (A)      the obligation to pay rent or other payment amounts under a
                  lease of (or other Debt arrangements conveying the right to
                  use) real or personal property of such person which is, or is
                  required to be, classified and accounted for as a capitalised
                  lease or a liability on the face of a balance sheet of such
                  person in accordance with Swedish GAAP; or

         (B)      the obligation to pay interest, principal, rent or other
                  payment amounts under a financing arrangement pursuant to a
                  Sale and Leaseback Transaction of real or


<PAGE>

                                      - 5 -

                  personal property of such person which is, or is required to
                  be, classified and accounted for as a "financing" or
                  "financing obligation - sale leaseback" or other liability
                  on the face of a balance sheet of such person in accordance
                  with Swedish GAAP

         and the Stated Maturity of any such obligation or arrangement shall be
         the date of the last scheduled payment of rent or any other amount due
         under such lease or financing arrangement prior to the first date upon
         which such lease or financing arrangement may be terminated by the
         lessee or obligor without payment of a penalty;

         "CAPITAL STOCK"
         of any person means any and all shares, interests, participations or
         other equivalents (however designated) or corporate stock of such
         person;

         "CASH ASSETS"
         means cash and/or Cash Equivalents, except to the extent that such cash
         or Cash Equivalents are used to cash collateralise or otherwise secure
         any Capitalised Lease Obligation;

         "CASH EQUIVALENTS"
         means:-

         (A)      any security issued directly or fully guaranteed or insured by
                  the United States, the Kingdom of Sweden or any OECD
                  government whose securities are readily marketable in London,
                  Frankfurt, Paris or New York City, or any agency or
                  instrumentality thereof;

         (B)      other readily marketable securities having a rating of at
                  least A from Standard & Poor's Ratings Group or Moody's
                  Investors Service, Inc.;

         (C)      any Eurodollar time deposit, overnight deposit, certificate of
                  deposit or bankers' acceptance, issued by, or time deposit of,
                  a commercial banking institution which has, on a combined
                  basis, capital, surplus and undivided profits of not less than
                  $250,000,000 and has a Moody's Bank Credit Service rating for
                  short-term bank deposits of at least P-2 (or such similar
                  equivalent rating by a nationally recognised statistical
                  rating organisation as defined in Rule 436 under the
                  Securities Act);

         (D)      repurchase obligations with a term of not more than ninety
                  (90) days for underlying securities of the types described in
                  paragraph (A) above entered into with any commercial banking
                  institution meeting the qualifications specified in paragraph
                  (C) above;

         (E)      short-term commercial paper issued by any person, having one
                  of the top two investment ratings from either Standard &
                  Poor's Ratings Group or Moody's Investors Service, Inc.;

         (F)      investments in money market funds substantially all of whose
                  assets are comprised of securities of the types described in
                  paragraph (A) through (E) above; and
<PAGE>

                                      - 6 -

         (G)      deposits which are unrestricted as to withdrawal with
                  commercial banking institutions meeting the criteria set forth
                  in paragraph (C) above;

         "CASUALTY AMOUNT"
         means $5,000,000 (or the equivalent in any other currency) unless the
         Agent on the direction of the Majority Banks shall have given notice to
         the Borrower that a Default shall have occurred and be continuing or
         that in its opinion there shall have been a material adverse change in
         the financial condition of the Stena AB Group which may impair the
         ability of the Borrower or any Security Party to comply with their
         obligations under any Security Document in which case the Casualty
         Amount shall be such amount, not however less than $2,000,000, as the
         Agent shall signify in its notice to the Borrower;

         "CHARTERER'S INSURANCE ASSIGNMENT"
         means, in relation to a Mortgaged Ship or Mortgaged Linkspan, any
         assignment by a Stena Charterer which charters the relevant Ship or
         Linkspan under a demise or bareboat charter executed or (as the context
         may require) to be executed by such Stena Charterer pursuant to Clause
         11.1 in substantially the form set out in Schedule 12 in favour of the
         Security Agent or, in relation to m.v. "STENA GERMANICA" (as long as
         she remains owned by Scandlines subject to the Stena Germanica
         Mortgage), in favour of the Borrower who, in accordance with the terms
         of the Stena Germanica Assignment, will forthwith on-assign it to the
         Security Agent as security for the Outstanding Indebtedness;

         "CHARTERER'S SUBORDINATION UNDERTAKING"
         means, in relation to each Mortgaged Ship or Mortgaged Linkspan, an
         undertaking by a Stena Charterer which charters the relevant Ship or
         Linkspan under a time charter or a demise or bareboat charter executed
         or (as the context may require) to be executed by such Stena Charterer
         pursuant to Clause 11.1 in substantially the form set out in Schedule
         13 in favour of the Security Agent or, in relation to m.v. "STENA
         GERMANICA" (as long as she remains owned by Scandlines subject to the
         Stena Germanica Mortgage), in favour of the Borrower who, in accordance
         with the terms of the Stena Germanica Assignment, will forthwith
         on-assign it to the Security Agent as security for the Outstanding
         Indebtedness;

         "CLASSIFICATION"
         means, in relation to each Ship, the classification set forth against
         the name of such Ship in Schedule 2 with its Classification Society or
         other highest classification available for Vessels of the same age and
         type as the Ship with its Classification Society or such other
         classification as the Agent shall, at the request of the Borrower, have
         agreed in writing shall be treated as the Classification of such Ship
         for the purposes of this Agreement (such agreement not to be
         unreasonably withheld or delayed);

         "CLASSIFICATION SOCIETY"
         means, in relation to any Ship, the classification society set forth
         against the name of such Ship in Schedule 2 or Lloyds Register of
         Shipping or Det norske Veritas or Germanischer Lloyd or Bureau Veritas
         or American Bureau of Shipping or such other classification society
         which the Agent shall, at the request of the Borrower, have

<PAGE>

                                      - 7 -

         agreed in writing shall be treated as its Classification Society for
         the purposes of this Agreement (such agreement not to be unreasonably
         withheld or delayed);

         "CO-ARRANGERS"
         means J. P. Morgan plc, Nordbanken AB (publ) and Svenska Handelsbanken
         AB (publ) and includes their respective successors in title and
         assignees (and all references to the Co-Arrangers shall include
         Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) in their
         capacities as Documentation Agents);

         "COMMERCIAL DOCUMENTS"
         means the documents listed in Schedule 3 and includes each bareboat
         charter and management agreement to which a member of the Stena AB
         Group is a party entered into hereafter in relation to a Mortgaged Ship
         and the documents regulating each sale hereafter of a Ship on Credit
         Terms;

         "COMMITMENT"
         means, in relation to a Bank, the amount set out opposite its name in
         Schedule 1 or, as the case may be, in any relevant Transfer
         Certificate, as reduced by any relevant term of this Agreement;

         "COMMON STOCK"
         of any person means Capital Stock of such person that does not rank
         prior, as to the payment of dividends or as to the distribution of
         assets upon any voluntary or involuntary liquidation, dissolution or
         winding up of such person, to shares of Capital Stock of any other
         class of such person;

         "COMPULSORY ACQUISITION"
         means requisition for title or other compulsory acquisition,
         requisition, appropriation, expropriation, deprivation, forfeiture or
         confiscation for any reason of a Ship or Linkspan by any Government
         Entity or other competent authority, whether de jure or de facto, but
         shall exclude requisition for use or hire not involving requisition of
         title;

         "CONSOLIDATED CASH FLOW"
         of any person means for any period:-

         (A)  (i) the Consolidated Operating Income for such period increased
                  by the sum of (without duplication):-

                  (x)  dividends or other distributions actually paid in cash
                       or Cash Equivalents to such person by any other person
                       who is not a Subsidiary of such person but only to the
                       extent that such dividends or other distributions are
                       paid in respect of securities classified under
                       "investments in affiliated companies" on the balance
                       sheet of such person; plus

                  (y)  consolidated interest income earned by such person
                       during such period; plus

                  (z)  to the extent deducted from consolidated revenues in
                       determining Consolidated Operating Income for such
                       period

<PAGE>

                                      - 8 -

                       and without duplication, consolidated depreciation and
                       amortisation expense included in the income statement of
                       such person for such period and other consolidated non-
                       cash charges included in the income statement of such
                       person for such period

         minus

             (ii) the aggregate gain on the disposition of a Vessel or Vessels
                  included in Consolidated  Operating Income for such period

         plus

         (B)      the aggregate gain on the disposition of a Vessel or Vessels
                  included in Consolidated Operating Income for such period, but
                  only to the extent such amount does not exceed twenty five per
                  cent (25%) of the amount calculated pursuant to paragraph (A)
                  of this definition;

         "CONSOLIDATED INTEREST COVERAGE RATIO"
         of any person means for any period the ratio of:-

         (A)      Consolidated Cash Flow of such person for such period

                  to

         (B)      the sum of:-

                  (i)      Consolidated Interest Expense of such person for such
                           period, plus

                  (ii)     the annual interest expense (including the
                           amortisation of debt discount) with respect to any
                           Debt proposed to be Incurred by such person or its
                           Subsidiaries, plus

                  (iii)    the annual interest expense (including the
                           amortisation of debt discount) with respect to any
                           other Debt Incurred by such person or its
                           Subsidiaries since the end of such period to the
                           extent not included in paragraph (B)(i) minus

                  (iv)     Consolidated Interest Expense of such person to the
                           extent included in paragraph (B)(i) with respect to
                           any Debt that will no longer be outstanding as a
                           result of the Incurrence of the Debt proposed to be
                           Incurred;

                  provided that:-

                  (X)      in making such computation, the Consolidated Interest
                           Expense of such person attributable to interest on
                           any Debt bearing a floating interest rate shall be
                           computed on a pro forma basis as if the rate in
                           effect on the date of computation had been the
                           applicable rate for the entire period; and
<PAGE>

                                      - 9 -

                  (Y)      in the event such person or its Subsidiaries has made
                           Asset Dispositions or acquisitions of assets not in
                           the ordinary course of business or of any Vessel
                           (including acquisitions of other persons or Vessels
                           by merger, consolidation or purchase of Capital
                           Stock) during or after such period, such computation
                           shall be made on a pro forma basis as if the Asset
                           Dispositions or acquisitions had taken place on the
                           first day of such period

                  and in the case of the Post-Delivery Financing of a Vessel or
                  Vessels (or the financing of the acquisition of a
                  Single-Purpose Vessel-Owning Subsidiary) by Stena AB or any of
                  its Subsidiaries, the computation of Consolidated Cash Flow
                  for purposes of calculating the Consolidated Interest Coverage
                  Ratio shall be increased by:-

                  (a)      the pro forma annual earnings (losses) for such
                           period pursuant to any binding charter, lease or like
                           arrangement which will be applicable to any such
                           Vessel (including a Vessel owned by any such
                           Single-Purpose Vessel-Owning Subsidiary) for at least
                           one year after the date of delivery of such Vessel to
                           Stena AB or any of its Subsidiaries; or

                  (b)      with respect to any such Vessel not subject to such
                           an arrangement, the earnings (losses) for such period
                           of the most comparable Vessel of Stena AB or any of
                           its Subsidiaries (as determined in the reasonable
                           judgment of the Board of Directors of Stena AB), or,
                           if Stena AB or any of its Subsidiaries do not have a
                           comparable Vessel, based on industry average earnings
                           for comparable Vessels (as determined in the
                           reasonable judgement of the Board of Directors of
                           Stena AB) during such period;

         "CONSOLIDATED INTEREST EXPENSE"
         for any person means for any period the consolidated interest expense
         included in the consolidated income statement (without deduction of
         interest income) of such person for such period calculated on a
         consolidated basis in accordance with Swedish GAAP, including, without
         limitation or duplication (or, to the extent not so included, with the
         addition of):-

         (A)      the amortisation of Debt discounts;

         (B)      any commissions, discounts and other fees and charges with
                  respect to letters of credit, bankers' acceptances, payment
                  guarantees or similar facilities;

         (C)      fees with respect to interest rate swap or similar agreements
                  or foreign currency hedge, exchange or similar agreements;

         (D)      Preferred Stock dividends declared and payable in cash;

         (E)      the interest portion of Capitalised Lease Obligations and
                  other deferred payment obligations;
<PAGE>

                                      - 10 -

         (F)      interest actually paid in respect of any guarantee of Debt or
                  other obligation of any person (other than a consolidated
                  Subsidiary of such person); and

         (G)      all non-cash interest payments;

         "CONSOLIDATED NET INCOME"
         of any person means for any period the consolidated net income (or
         loss) of such person for such period determined on a consolidated basis
         in accordance with Swedish GAAP, adjusted to the extent included in
         such consolidated net income by excluding (without duplication):-

         (A)      the net income (or loss) of any person acquired by such person
                  or a Subsidiary of such person in a pooling-of-interests
                  transaction for any period prior to the date of such
                  transaction;

         (B)      the portion of net income (or loss) of any Consolidated
                  Subsidiary allocable to minority interests;

         (C)      the net income (but not net loss) of any Subsidiary of such
                  person which is subject to restrictions which prevent the
                  payment of dividends or the making of distributions to such
                  person to the extent of such restrictions;

         (D)      the net income (or loss) of any person that is not a
                  Subsidiary of such person except to the extent of the amount
                  of dividends or other distributions actually paid to such
                  person by such other person during such period;

         (E)      gains or losses on Asset Dispositions by such person or its
                  Subsidiaries provided that gains or losses on the disposition
                  of a Vessel or Vessels shall be included:-

                  (i)      in the case of a sale for cash, Cash Equivalents
                           and/or the assumption of Debt in accordance with
                           paragraph (ii)(z) of Clause 10.7(A), to the full
                           extent of such gain or loss; and

                  (ii)     in the case of a sale pursuant to a deferred payment
                           obligation (whether by way of a promissory note or
                           instalment receivable or otherwise), only to the
                           extent of the portion of such gain or loss allocable
                           to such period (based on the life of such deferred
                           payment obligation) and (with respect to gains only)
                           only to the extent payments in respect of such
                           deferred payment obligation are actually received by
                           such person during such period;

         (F)      the amount by which the aggregate gain on the disposition of a
                  Vessel or Vessels exceeds the amounts calculated pursuant to
                  paragraph (B) of the definition of "Consolidated Cash Flow"
                  for such period; and

         (G)      all extraordinary gains and extraordinary losses;
<PAGE>

                                      - 11 -

         "CONSOLIDATED OPERATING INCOME"
         of any person means for any period the income from operations of such
         person for such period determined on a consolidated basis in accordance
         with Swedish GAAP, less gains on the disposition of a Vessel or Vessels
         pursuant to a deferred payment obligation (whether by way of a
         promissory note or instalment receivable or otherwise), plus the
         portion of such gain allocable to such period (based on the life of
         such deferred payment obligation) to the extent payments in respect of
         such deferred payment obligation are actually received by such person
         during such period;

         "CONSOLIDATED TANGIBLE ASSETS"
         of any person means the sum of the Tangible Assets of such person after
         eliminating intercompany items, determined on a consolidated basis in
         accordance with Swedish GAAP, including appropriate deductions for any
         minority interest in Tangible Assets of such person's Subsidiaries;

         "CONSOLIDATION" or "CONSOLIDATION"
         means, with respect to any person, the consolidation of the accounts of
         such person and each of its Subsidiaries if and to the extent the
         accounts of such person and each of its Subsidiaries would normally be
         consolidated with those of such person, all in accordance with Swedish
         GAAP (in the case of Stena AB) or Dutch GAAP (in the case of the
         Borrower) and the terms "CONSOLIDATED" and "CONSOLIDATED" shall be
         construed accordingly provided that, in the computation of the
         Consolidated Net Income, Consolidated Interest Coverage Ratio,
         Consolidated Cash Flow, Consolidated Interest Expense, Consolidated
         Operating Income, Consolidated Tangible Assets and Tangible Assets of
         Stena AB or any other person, the accounts of any Unrestricted
         Subsidiary of Stena AB or such other person shall not be included in
         any such consolidation even if the inclusion of such accounts would be
         required by Swedish GAAP as in effect at the date of the 2007 Indenture
         or at any later date and the accounts of no other person shall be
         included in such consolidation if not required to be so consolidated by
         Swedish GAAP as in effect on the date of the 2007 Indenture;

         "CONSTRUCTION FINANCING"
         means Debt Incurred by Stena AB or any Subsidiary of Stena AB to
         finance any progress or other similar payments required prior to the
         delivery of the subject Vessel or Vessels under any Vessel Construction
         Contract;

         "CONTRIBUTION"
         means, in relation to a Bank, the principal amount of the Advances
         owing to such Bank at any relevant time;

         "CONTROL"
         when used with respect to any person means the power to direct the
         management and policies of such person, directly or indirectly, whether
         through the ownership of voting securities, by contract or otherwise,
         and the terms "CONTROLLING" and "CONTROLLED" shall be construed
         accordingly;

         "CREDIT TERMS"
         means, in relation to an Asset Disposition, terms whereby the whole or
         part of the consideration for the Asset Disposition is to be paid or
         provided after the date on

<PAGE>

                                      - 12 -

         which the ownership or possession of the relevant asset is transferred
         to a person which is not a Subsidiary of Stena AB;

         "DEBT"
         means (without duplication), with respect to any person, whether
         recourse is to all or a portion of the assets of such person and
         whether or not contingent:-

         (A)      every obligation of such person for money borrowed;

         (B)      every obligation of such person evidenced by bonds,
                  debentures, notes or other similar instruments, including
                  obligations Incurred in connection with the acquisition of
                  property, assets or businesses;

         (C)      every reimbursement obligation of such person with respect to
                  letters of credit, bankers' acceptances, payment guarantees or
                  similar facilities issued for the account of such person,
                  other than bonds, letters of credit, payment guarantees or
                  other similar obligations required by governmental or
                  regulatory agencies in connection with Vessels owned by or
                  businesses conducted by Stena AB or any of its Subsidiaries;

         (D)      every obligation of such person issued or assumed as the
                  deferred purchase price of property or services (but excluding
                  trade accounts payable or accrued liabilities arising in the
                  ordinary course of business which are not overdue or which are
                  not being contested in good faith);

         (E)      the maximum fixed redemption or repurchase price of Redeemable
                  Stock of such persons at the time of determination;

         (F)      every Capitalised Lease Obligation of such person;

         (G)      every net obligation under interest rate swap, foreign
                  currency hedge, exchange or similar agreements of such person;
                  and

         (H)      every obligation of the type referred to in paragraphs (A) to
                  (G) above of another person and all dividends of another
                  person the payment of which, in either case, such person has
                  guaranteed or is responsible or liable, directly or
                  indirectly, as obligor, guarantor or otherwise,

         provided that:-

                  (i)      guarantees made by any person shall not be deemed
                           "Debt" to the extent that (a) the Debt so guaranteed
                           would be classified and accounted for as Debt on the
                           consolidated balance sheet of such person or (b) both
                           such person and the person whose obligation is being
                           guaranteed are Subsidiaries of Stena AB; and

                  (ii)     payment obligations of a person pursuant to a charter
                           or operating lease which does not constitute a
                           Capitalised Lease Obligation shall not be deemed
                           "Debt";
<PAGE>

                                      - 13 -

                  (iii)    reimbursement obligations of any person with respect
                           to facilities in respect of letters of credit,
                           bankers' acceptances or payment guarantees issued for
                           the account of such person, or obligations of such
                           person in respect of loan facilities the proceeds of
                           which are used as cash collateral, shall not be
                           deemed "Debt" to the extent that any such facility
                           (or the proceeds thereof) is used to fully and
                           irrevocably secure, guarantee or defease the payment
                           of Debt of such person or any of its Subsidiaries
                           (including, without limitation, Debt under a
                           Capitalised Lease Obligation) which is Incurred in
                           connection with the financing of a Vessel or group of
                           Vessels and which is otherwise permitted to be
                           Incurred under this Agreement;

         "DEED OF COVENANT"
         means, in relation to a Designated Ship, the deed of covenant
         collateral to the Ship Mortgage over that Ship (or, in the case of a
         Linkspan, the Linkspan Mortgage) and entered or (as the context may
         require) to be entered into between the relevant Shipowner and the
         Security Agent in the form set out in Schedule 11.1 or, in relation to
         m.v. "STENA CARISMA" and her related Linkspans, Schedule 11.2 or, in
         relation to m.v. "STENA GERMANICA", between Scandlines and the Borrower
         (being the Stena Germanica Deed of Covenant) who will on-assign it to
         the Security Agent under the Stena Germanica Assignment as security for
         the Outstanding Indebtedness and "DEEDS OF COVENANT" means all of such
         deeds of covenant;

         "DEFAULT"
         means any Event of Default or any event or circumstance which with the
         giving of notice or lapse of time or both would constitute an Event of
         Default;

         "DESIGNATED SHIP"
         means each Mortgaged Ship or Mortgaged Linkspan as may from time to
         time be registered under British or Swedish or Bahamas flag or any flag
         of any other jurisdiction which requires the registration of a ship
         mortgage by means of a statutory form and where the Agent determines
         that a separate Deed of Covenant is required to protect the interest in
         the Mortgaged Ship or Mortgaged Linkspan (as the case may be) of the
         Security Agent;

         "DISPOSAL REDUCTION AMOUNT"
         has the meaning ascribed thereto in Clause 5.3;

         "DISPOSAL REDUCTION DATE"
         means:-

         (A)      in the case of a Total Loss of a Mortgaged Ship, the date
                  which is the earlier of:-

                  (i)      the date one hundred and eighty (180) days after such
                           Ship became a Total Loss or such later date as may be
                           agreed by the Agent on the direction of the Majority
                           Banks from time to time if they are satisfied that
                           the relevant Ship was insured at the time of the loss
                           and that the proceeds of the Insurances will be
                           received and applied in accordance
<PAGE>

                                      - 14 -

                           with the Commercial Documents and the Security
                           Documents within such further period as may be
                           acceptable to the Majority Banks; and

                  (ii)     the date upon which insurance proceeds or Requisition
                           Compensation in respect of such Total Loss are
                           received by the Security Agent, the Shipowner or the
                           Stena Charterer in respect of such Ship or a
                           charterer of such Ship by demise which is not a Stena
                           Charterer pursuant to the relevant Security Documents
                           or Commercial Agreements in relation to the relevant
                           Ship;

         (B)      in the case of a Total Loss of a Transferred Ship sold on
                  Credit Terms, the date on which the Total Loss insurance
                  proceeds are received by the seller of the relevant Ship or
                  the Security Agent under the relevant Commercial Documents or,
                  if earlier, the date on which the owner of the relevant
                  Transferred Ship repays in full to the Shipowner the deferred
                  consideration for the relevant Ship;

         (C)      in the case of a sale of a Mortgaged Ship or any share
                  therein, and except where the sale is effected on Credit
                  Terms, the date on which the sale of such Ship or share is
                  completed;

         (D)      in the case of any Transferred Ship which is transferred on
                  terms whereby the relevant Shipowner transfers title to the
                  Ship whilst any part of the deferred consideration therefore
                  remains outstanding (other than in the case of a Total Loss),
                  each of the following:-

                  (i)      31 December 2001 and each date falling at six (6)
                           monthly intervals thereafter until the deferred
                           purchase price of the relevant Ship has been paid in
                           full;

                  (ii)     the date of the final payment of the deferred
                           purchase price;

                  (iii)    in the case of an enforcement of security given for
                           the purchaser's obligations by way of sale of the
                           Ship, the date or dates on which consideration for
                           the sale of the Ship is paid to the Shipowner or the
                           Security Agent; and

                  (iv)     if any such Ship is sold by the buyer thereof before
                           the deferred consideration payable to the Shipowner
                           has been paid in full, the date on which the
                           Shipowner receives payment of the balance of the
                           deferred consideration following such sale;

         (E)      in the case of a Transferred Ship which is disposed of on
                  terms whereby the relevant Shipowner retains title to the Ship
                  until the full amount of the deferred consideration has been
                  paid (other than in the case of a Total Loss), each of the
                  following:-

                  (i)      each date falling at six (6) monthly intervals from
                           the date of completion of the Asset Disposition until
                           the deferred consideration for the acquisition of the
                           Ship has been settled in full; and

<PAGE>

                                      - 15 -

                  (ii)     the date of such final settlement;

                  (iii)    in case of an enforcement of security for the
                           purchaser's obligations by way of sale of the Ship,
                           the date or dates on which the consideration for the
                           sale of the Ship is paid to the Shipowner or the
                           Security Agent;

                  (iv)     if the purchaser or lessee of the Ship defaults under
                           the sale or hire agreement relating to the Ship and
                           the owner thereof withdraws the Ship from such
                           purchaser or lessee and the agreement is validly
                           terminated by the owner or the agreement is
                           terminated by agreement between the parties thereto
                           and the Ship returned to the owner's possession, each
                           date, prior to that on which such Ship again falls to
                           be treated as a Mortgaged Ship for the purposes of
                           this Agreement following repossession by the relevant
                           owner, on which the owner receives any amount by way
                           of damages or payment for the compromise of any legal
                           action relating to the agreement or agreed
                           compensation for termination of the agreement;

         (F)      in the case of a sale of a Mortgaged Port or any part thereof
                  (other than the sale of any part of a Mortgaged Port for a
                  consideration of less than $25,000 or the equivalent thereof
                  in any other currency) the date on which the sale of such
                  Mortgaged Port or part thereof is completed;

         (G)      in the case of a sale of the shares in the capital of any Port
                  Owner, the date on which the sale of such shares is completed;

         "DISQUALIFIED STOCK"
         of any person means any Capital Stock of such person which, by its
         terms (or by the terms of any security into which it is convertible or
         for which it is exchangeable), or upon the happening of any event:-

         (A)      matures or is mandatorily redeemable, pursuant to a sinking
                  fund obligation or otherwise; or

         (B)      is convertible or exchangeable for Debt or Disqualified Stock;
                  or

         (C)      is redeemable at the option of Stena AB, any Subsidiary of
                  Stena AB or the holder thereof, in whole or in part, on or
                  prior to the Termination Date;

         "DOCUMENTATION AGENTS"
         means Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) in their
         capacities as Co-Arrangers responsible for the negotiation and
         production of this Agreement and the other Security Documents;

         "DOLLARS" and "$"
         mean the lawful currency of the United States of America and in respect
         of all payments to be made under any of the Security Documents mean
         funds which are for same day settlement in the New York Clearing House
         Interbank Payments System (or such other U.S. dollar funds as may at
         the relevant time be customary for the settlement of international
         banking transactions denominated in U.S. dollars);

<PAGE>

                                      - 16 -

         "DRAWDOWN NOTICE"
         means a notice substantially in the terms of Schedule 4;

         "DUTCH GAAP"
         means generally accepted accounting principles in the Kingdom of the
         Netherlands, consistently applied;

         "EARNINGS"
         of a person means, in relation to any Ship, all earnings whatsoever due
         or to become due to such person including, without limitation, all
         moneys receivable by such person and arising, in relation to such Ship,
         out of its hire, compensation for requisition for hire, remuneration
         for salvage and towage services, demurrage and detention moneys,
         damages for breach of any charterparty or other contract for employment
         or amounts payable in consideration of the termination or variation of
         any such charterparty or contract;

         "EVENT OF DEFAULT"
         means any of the events or circumstances described in Clause 15.1;

         "EXISTING DEBT"
         of any person means Debt incurred prior to the date of this Agreement
         which remains outstanding and shall include, without limitation, the
         aggregate amount of Debt available to be borrowed under committed
         credit or lease facilities existing on the date of this Agreement
         less:-

         (A)      principal payments actually made by or on behalf of such
                  person on any term Debt or lease facility under any agreement
                  governing such Existing Debt (other than principal payments
                  made in connection with or pursuant to a refinancing of such
                  Existing Debt agreement); and

         (B)      any amounts by which any revolving credit facility commitment
                  under any Existing Debt agreement is permanently reduced (so
                  long as and to the extent that any required payments in
                  connection therewith are actually made);

         "FAIR MARKET VALUE"
         means, with respect to any asset or property, the sale value that would
         be obtained in an arm's-length transaction between an informed and
         willing seller under no compulsion to sell and an informed and willing
         buyer under no compulsion to buy;

         "FLAG STATE"
         means, in relation to any Ship or Linkspan, such state or territory as
         the Banks may approve pursuant to Clause 19.5, at the request of the
         Borrower, as being the "Flag State" of such Ship or Linkspan for the
         purposes of the Security Documents;

         "GOVERNMENT ENTITY"
         means and includes (whether having a distinct legal personality or not)
         any national or local government authority, board, commission,
         department, division, organ, instrumentality, court or agency and any
         association, organisation or institution of which any of the foregoing
         is a member or to whose jurisdiction any of the foregoing is subject or
         in whose activities any of the foregoing is a participant;


<PAGE>

                                      - 17 -

         "GUARANTEE"
         by any person means any obligation, contingent or otherwise, of such
         person guaranteeing any Debt of any other person (the "PRIMARY
         OBLIGOR") in any manner, whether directly or indirectly, and including,
         without limitation, any obligation of such person:-

         (A)      to purchase or pay (or advance or supply funds for the
                  purchase or payment of) such Debt or to purchase (or to
                  advance or supply funds for the purchase of) any security for
                  the payment of such Debt;

         (B)      to purchase property, securities or services for the purpose
                  of assuring the holder of such Debt of the payment of such
                  Debt; or

         (C)      to maintain working capital, equity capital or other financial
                  statement condition or liquidity of the primary obligor so as
                  to enable the primary obligor to pay such Debt

         (and "GUARANTEED", "GUARANTEEING" and "GUARANTOR" shall be construed
         accordingly provided that the guarantee by any person shall not include
         endorsements by such person for collection or deposit, in either case,
         in the ordinary course of business);

         "HOLYHEAD CHARGE"
         means the English law first fixed legal charge in respect of Holyhead
         Port to be executed and delivered by Stena Line Ports in favour of the
         Security Agent in substantially the form set out in Schedule 14;

         "HOLYHEAD PORT"
         means all of the freehold and leasehold property belonging to Stena
         Line Ports at the port of Holyhead, Isle of Anglesey, Gwynedd as is
         more particularly described in the Holyhead Charge;

         "INCUR"
         means, with respect to any Debt or other obligation of any person, to
         create, issue, incur (by conversion, exchange or otherwise), assume,
         guarantee or otherwise become liable in respect of such Debt or other
         obligation or the recording, as required pursuant to Swedish GAAP or
         otherwise, of any such Debt or other obligation on the balance sheet of
         such person (and "INCURRENCE", "INCURRED", "INCURRABLE" and "INCURRING"
         shall be construed accordingly) provided that a change in Swedish GAAP
         that results in an obligation of such person that exists at such time
         becoming Debt shall not be deemed an Incurrence of such Debt and
         provided that:-

         (A)      Debt of Stena AB or any Subsidiary of Stena AB in respect of
                  the Post-Delivery Financing of Vessels shall be deemed to have
                  been "Incurred" in the full amount of such Post-Delivery
                  Financing only on the date Stena AB (or such Subsidiary)
                  enters into a binding credit or lease commitment in good faith
                  with a lender (or group of lenders) or lessor with respect to
                  such financing;

         (B)      no Debt shall be deemed to have been "Incurred" solely by
                  reason of Stena AB or any Subsidiary of Stena AB entering into
                  a Vessel Construction Contract;

<PAGE>

                                      - 18 -

         (C)      no Debt shall be deemed to have been "Incurred" solely by
                  reason of the transfer (including, without limitation, by way
                  of novation or assignment and assumption) of Debt secured by a
                  Vessel from a Subsidiary of Stena AB to another Subsidiary of
                  Stena AB in connection with the transfer of such Vessel from
                  the former to the latter (including, without limitation, a
                  transfer effected for the purpose of reflagging such Vessel)
                  provided that such transfer is permitted pursuant to the
                  provisions of clause (H) of the definition of "Permitted
                  Liens";

         "INDEBTEDNESS"
         means any obligation for the payment or repayment of money, whether as
         principal or as surety and whether  present or future, actual or
         contingent;

         "2005 INDENTURE"
         means the indenture dated as of 20 December 1995 made between Stena AB
         and The Chase Manhattan Bank (then called Chemical Bank) as trustee in
         relation to the issue of the 2005 Notes as referred to in the 2005
         Prospectus;

         "2007 INDENTURE"
         means the indenture dated as of 1 October 1997 made between Stena AB
         and The Chase Manhattan Bank as trustee in relation to the issue of the
         2007 Notes as referred to in the 2007 Prospectus;

         "INDENTURES"
         means the 2005 Indenture and the 2007 Indenture and, where the context
         so requires, means either of them;

         "INSURANCES"
         means, in relation to any Ship or Linkspan, all policies and contracts
         of insurance (which expression includes all entries of such Ship or
         Linkspan in a protection and indemnity or war risks association) which
         are from time to time during the Security Period in place or taken out
         or entered into by or for the benefit of the owner and/or any relevant
         charterer (or in the joint names of the owner and/or any relevant
         charterer or other person)(but not any insurances taken out for the
         sole benefit of a charterer which is not a member of the Stena AB
         Group) in respect of such Ship or Linkspan or otherwise howsoever in
         connection with such Ship or Linkspan and all benefits thereof
         (including claims of whatsoever nature and return of premiums);

         "INSURANCE ASSIGNMENT"
         means, in relation to each Owned Ship or Linkspan which is not a
         Designated Ship, the first priority assignment of all the right, title
         and interest of the relevant Shipowner in the Insurances and
         Requisition Compensation thereof executed or (as the context may
         require) to be executed in the form set out in Schedule 9 in favour of
         the Security Agent or, in relation to m.v. "STENA GERMANICA" (as long
         as she remains owned by Scandlines subject to the Stena Germanica
         Mortgage), in favour of the Borrower who, in accordance with the terms
         of the Stena Germanica Assignment, will forthwith on-assign it to the
         Security Agent as security for the Outstanding Indebtedness and
         "INSURANCE ASSIGNMENTS" means all of such assignments;

<PAGE>

                                      - 19 -

         "INVESTMENT"
         by any person means any direct or indirect loan, advance or other
         extension of credit (including by way of guarantee or similar
         arrangement) or capital contribution to (by means of transfers of cash
         or other property to others or payments for property or services for
         the account or use of others, or otherwise), or purchase or acquisition
         of Capital Stock, bonds, notes, debentures or other securities or
         evidence of Debt issued by any other person (other than through the
         exchange or conversion of other securities of such other person
         pursuant to the terms of such other securities or pursuant to a bona
         fide plan of liquidation or reorganisation of such other person in
         satisfaction of trade payable obligations owed from such other person)
         save that notwithstanding anything to the contrary set forth above:-

         (A)      the receipt by Stena AB or any of its Subsidiaries of a
                  promissory note or like evidence of indebtedness pursuant to
                  an Asset Disposition otherwise permitted under Clause 10.7
                  (insofar as the receipt of such evidence of indebtedness is
                  deemed to be a loan made by Stena AB or such Subsidiary) shall
                  be deemed not to be an "Investment"; and

         (B)      one or more investments by Stena AB or any of its Subsidiaries
                  in persons whose only assets are a Vessel and property
                  directly related thereto shall be deemed not to be an
                  "Investment";

         "ISM CODE"
         means the International Safety Management Code for the Safe Operation
         of Ships and for Pollution Prevention adopted by the International
         Maritime Organisation;

         "LEGAL OPINIONS"
         means the legal opinions delivered or, as the case may be, to be
         delivered to the Agent pursuant to Clause 14.1;

         "LIBOR"
         means, in relation to a particular period, the rate per annum for
         deposits of Dollars for a period equivalent to such period at or about
         11.00 a.m. (London time) on the second London Banking Day before the
         first day of such period as displayed on Reuter page LIBOR 01 (British
         Bankers' Association Interest Settlement Rates) (or such other page as
         may replace such page LIBOR 01 on such system or on any other system of
         the information vendor for the time being designated by the British
         Bankers' Association to calculate the BBA Interest Settlement Rate (as
         defined in the British Bankers' Association's Recommended Terms and
         Conditions ("BBAIRS" terms) dated August, 1985)), provided that if on
         such date no such rate is so displayed, LIBOR for such period shall be
         the arithmetic mean (rounded upward if necessary to four decimal
         places) of the rates respectively quoted to the Agent by each of the
         Reference Banks at the request of the Agent as such Reference Bank's
         offered rate for deposits of Dollars in an amount approximately equal
         to the amount in relation to which LIBOR is to be determined for a
         period equivalent to such period to prime banks in the London Interbank
         Market at or about 11.00 a.m. (London time) on the second London
         Banking Day before the first day of such period;

<PAGE>

                                      - 20 -

         "LIEN"
         means, with respect to any property or assets, any mortgage or deed of
         trust, pledge, hypothecation, assignment, security deposit arrangement,
         security interest, lien, charge, easement (other than any easement not
         materially impairing usefulness or marketability), encumbrance,
         preference, priority or other security agreement or preferential
         arrangement (other than the subordination of inter-Subsidiary Debt to
         the extent required by a lender or lessor of Stena AB or any of its
         Subsidiaries) of any kind or nature whatsoever on or with respect to
         such property or assets (including, without limitation, any conditional
         sale or other title retention agreement having substantially the same
         economic effect as any of the foregoing);

         "LINKSPAN MORTGAGE"
         means:-

         (A)      in the case of the two Linkspans named "LINKSPAN I" and
                  "LINKSPAN II" with call signs SFNH and SFNL respectively
                  registered in the Swedish Register of Shipping, the mortgage
                  and first priority pledge of mortgage of such Linkspan to be
                  executed and registered by Stena Line Scandinavia in the form
                  or substantially in the form set out in Schedule 8 together
                  also with the deed of covenant collateral thereto to be
                  executed by Stena Line Scandinavia in the form or
                  substantially in the form set out in Schedule 11.2;

         (B)      in the case of any other Linkspan over which a first priority
                  mortgage is to be executed and, if appropriate, registered by
                  the relevant Shipowner, a mortgage in form and substance
                  acceptable to the Agent but in any event substantially similar
                  to the mortgages and collateral deeds of covenant described in
                  paragraph (A) above;

         "LINKSPANS"
         means:-

         (A)      the linkspan named "LINKSPAN I" having call sign SFNH
                  registered in the Swedish Register of Shipping in the
                  ownership of Stena Line and which, prior to drawdown of the
                  first Advance hereunder, is to be transferred into the name
                  of Stena Line Scandinavia, which linkspan is at the date of
                  this Agreement located at Gothenburg and used in connection
                  with the operation of m.v. "STENA CARISMA";

         (B)      the linkspan named "LINKSPAN II" having call sign SFNL
                  registered in the Swedish Register of Shipping in the
                  ownership of Stena Line and which, prior to drawdown of the
                  first Advance hereunder, is to be transferred into the name of
                  Stena Line Scandinavia, which linkspan is at the date of this
                  Agreement located at Frederikshavn and used in connection with
                  the operation of m.v. "STENA CARISMA"; and

         (C)      any other linkspan owned by a member of the Stena AB Group in
                  relation to which a Linkspan Mortgage or other Lien may be
                  granted to the Security Agent during the Security Period
                  directly or indirectly as security for the obligations of the
                  Borrower under this Agreement

<PAGE>

                                      - 21 -

         and "LINKSPAN" means any of them;

         "LONDON BANKING DAY"
         means a day on which dealings and deposits in Dollars are carried on in
         the London Interbank Eurocurrency Market and (other than Saturday or
         Sunday) a day on which banks are open for business in London;

         "LOSS PAYABLE CLAUSES"
         means the provisions regulating the manner of payment of sums
         receivable under the Insurances of an Owned Ship or a Linkspan which
         are to be incorporated in the relevant insurance documents, such Loss
         Payable Clauses to be in the forms set out in the Schedules to the Deed
         of Covenant and/or Insurance Assignment and/or Charterer's Insurance
         Assignment and/or Stena Germanica Assignment in relation to the
         relevant Ship or Linkspan, in the form set out in Schedule 20 or in
         such other forms as may from time to time be agreed in writing by the
         Agent;

         "MAJOR CASUALTY"
         means an incident or occurrence whereby a Mortgaged Ship sustains
         damage or is the subject of a claim in excess of the Casualty Amount;

         "MAJORITY BANKS"
         means Banks the aggregate of whose Commitments exceed two-thirds
         (2/3rds) of the aggregate total of the Commitments of all the Banks;

         "MANAGER'S SUBORDINATION UNDERTAKINGS"
         means the undertakings in the form of Schedule 18 to be given by each
         Approved Manager which is a member of the Stena AB Group, on or before
         the date of drawdown of the first Advance or at the time such Approved
         Manager is appointed as manager of a Ship or Linkspan after such first
         drawdown date;

         "MARGIN"
         means one per cent (1.00%) (subject to adjustment under Clause 6.7);

         "MATURITY DATE"
         in relation to an Advance means, subject to Clause 7.4, the last day
         of its Term;

         "MINOR CASUALTY"
         means an incident or occurrence whereby a Mortgaged Ship sustains
         damage or is the subject of a claim of the Casualty Amount or less;

         "MONTH"
         means a period beginning in one calendar month and ending in the next
         calendar month on the day numerically corresponding to the day of the
         calendar month on which it started, provided that (i) if the period
         started on the last Banking Day in a calendar month or if there is no
         such numerically corresponding day, it shall end on the last Banking
         Day in such next calendar month and (ii) if such numerically
         corresponding day is not a Banking Day, the period shall end on the
         next following Banking Day in the same calendar month but if there is
         no such Banking Day it shall end on the preceding Banking Day and
         "MONTHS" and "MONTHLY" shall be construed accordingly;


<PAGE>

                                      - 22 -


         "MORTGAGED LINKSPAN"
         means, at any relevant time, any Linkspan which is at such time
         subject to a Linkspan Mortgage;

         "MORTGAGED PORT"
         means, at any relevant time, any Port which is at such time subject to
         a Port Mortgage;

         "MORTGAGED SHIP"
         means, at any relevant time, any Owned Ship which is at such time
         subject to a Ship Mortgage and/or the Insurances and Requisition
         Compensation of which or sale proceeds or right to receive a rebate of
         rentals in respect whereof are subject to an Lien pursuant to the
         relevant Ship Mortgage and Deed of Covenant or any relevant Insurance
         Assignment or other Security Documents but not including a Transferred
         Ship (except that, for the purposes of Clauses 11 and 12, the term
         "MORTGAGED Ship" shall include any Transferred Ship where the ownership
         of such Transferred Ship is retained by the relevant Shipowner) and an
         Owned Ship shall for the purposes of this Agreement be deemed to be a
         Mortgaged Ship as from the date that the Lien in respect of that Ship
         or rights relating thereto shall have been executed and registered in
         accordance with this Agreement until whichever shall be the earlier of
         (i) the release of the Ship Mortgage in respect of such Ship or Total
         Loss of such Ship and (ii) the end of the Security Period;

         "NET AVAILABLE PROCEEDS"
         from any Asset Disposition or Sale and Leaseback Transaction by any
         person means cash or Cash Equivalents (including, when received,
         payments (including any related interest payments) in respect of
         deferred payment obligations pursuant to a promissory note or
         instalment receivable or otherwise) received (including by way of sale
         or discounting of a note, instalment receivable or other receivable,
         but excluding any other consideration received in the form of
         assumption by the acquirer of Debt or other obligations relating to
         such properties or assets or received in any other non-cash form)
         therefrom by such person net of:-

         (A)      all legal, title and recording tax expenses, commissions and
                  other fees and expenses incurred and all federal, state,
                  foreign and local taxes required to be accrued as a liability
                  as a consequence of such Asset Disposition or Sale and
                  Leaseback Transaction;

         (B)      all payments made by such person or its Subsidiaries on any
                  Debt outstanding immediately prior to such Asset Disposition
                  or Sale and Leaseback Transaction which is secured by such
                  assets in accordance with the terms of any Lien upon or with
                  respect to such assets or which must by the terms of such
                  Lien, or in order to obtain a necessary consent to such Asset
                  Disposition or by applicable law, be repaid out of the
                  proceeds from such Asset Disposition or Sale and Leaseback
                  Transaction or by applicable laws, be repaid out of the
                  proceeds from such Asset Disposition or Sale and Leaseback
                  Transaction; and

         (C)      all distributions and other payments required to be made to
                  any person (other than Stena AB or any Subsidiary of Stena AB)
                  owning a beneficial interest in

<PAGE>

                                      - 23 -

                  the assets subject to such Asset Disposition or Sale and
                  Leaseback Transaction;

         "NET CASH SALE PROCEEDS"
         means:-

         (A)      in relation to a Mortgaged Ship and (if relevant) its related
                  Linkspans or share thereof which is sold (otherwise than on
                  Credit Terms), the sale price of such Ship and (if relevant)
                  Linkspans or share received by or on behalf of the relevant
                  Shipowner (after deducting the relevant Shipowner's reasonable
                  costs and out-of-pocket expenses incurred in connection with
                  such sale including reasonable and proper costs of drydocking
                  the relevant vessel and carrying out any repairs on the vessel
                  for the purposes of complying with its obligations under the
                  relevant sale agreement except insofar as the costs of such
                  repairs are covered by insurance for the benefit of the
                  relevant Shipowner); and

         (B)      in relation to a Mortgaged Port or any part thereof, the sale
                  price thereof received by or on behalf of the relevant Port
                  Owner (after deducting the relevant Port Owner's reasonable
                  costs and out-of-pocket expenses incurred in connection with
                  such sale);

         "NON-RECOURSE DEBT"
         means Debt or that portion of Debt of any person:-

         (A)      as to which neither Stena AB nor any of its Subsidiaries:-

                  (i)      provides credit support (including any undertaking,
                           agreement or instrument which would constitute Debt);
                           or

                  (ii)     is directly or indirectly liable (whether pursuant to
                           a guarantee or otherwise) for such Debt; and

         (B)      no default with respect to such Debt (including any rights
                  which the holders thereof may have to take enforcement action
                  against such an Unrestricted Subsidiary) would permit (upon
                  notice, lapse of time or both) any holder of any other Debt of
                  Stena AB or any Subsidiary of Stena AB to declare a default on
                  such other Debt or cause the payment thereof to be accelerated
                  or payable prior to its Stated Maturity;

         "2005 NOTEHOLDERS"
         means the holders from time to time of the 2005 Notes;

         "2007 NOTEHOLDERS"
         means the holders from time to time of the 2007 Notes;

         "2005 NOTES"
         means the Senior Notes due 2005 issued by Stena AB in an amount of
         $175,000,000 pursuant to the 2005 Indenture;

<PAGE>

                                      - 24 -

         "2007 NOTES"
         means the Senior Notes due 2007 issued by Stena AB in an amount of
         $175,000,000 pursuant to the 2007 Indenture;

         "NOTES"
         means the 2005 Notes and the 2007 Notes or, where the context so
         requires, means either of them;

         "NOTICE OF ASSIGNMENT OF INSURANCES"
         means, in respect of a Mortgaged Ship or Mortgaged Linkspan, a notice
         of assignment in the form set out in Schedule 1 to the relevant Deed of
         Covenant or Schedule 1 to the relevant Insurance Assignment or Schedule
         1 to the relevant Charterer's Insurance Assignment or Schedule 5 to the
         Stena Germanica Assignment (as the case may be), or in such other form
         as may from time to time be required or agreed in writing by the Agent;

         "OFFICER'S CERTIFICATE"
         means a certificate of Stena AB signed by the Chairman of the Board,
         the Chief Executive Officer, the President or the Chief Financial
         Officer (or any other officer identified by any of the foregoing
         officers in an Officer's Certificate to be an executive officer of
         Stena AB), the Secretary, any Assistant Secretary, the Treasurer, the
         Financial Manager, any Assistant Treasurer or the Controller of Stena
         AB;

         "OPINION OF COUNSEL"
         means an opinion in writing signed by legal counsel, who may be an
         employee of or counsel to Stena AB, and who shall be counsel reasonably
         satisfactory to the relevant trustee under each Indenture (or any
         applicable Successor Financing);

         "OUTSTANDING INDEBTEDNESS"
         means all sums of any kind arising at any time for any reason payable
         actually or contingently by the Borrower to the Banks, the
         Co-Arrangers, the Agent, the Security Agent or any of them under this
         Agreement or any other of the Security Documents (whether by way of
         repayment of principal, payment of interest or default interest,
         payment upon any indemnity or counter-indemnity, reimbursement for
         costs or otherwise howsoever);

         "OWNED SHIPS"
         means the Ships specified in Part 1 of Schedule 2 and such other Ships
         owned by a member of the Stena AB Group as may from time to time be
         mortgaged to the Security Agent as security for the Borrower's
         obligations under this Agreement;

         "PERCENTAGE"
         as at any date means, in relation to a Bank, the proportion, expressed
         as a percentage, which the amount of the Commitment of such Bank bears
         to the total amount of the Commitments of all of the Banks (including
         such Bank) as at such date and being in relation to each Bank, on the
         date of this Agreement, the percentage set out against its name in
         Schedule 1;

<PAGE>

                                      - 25 -

         "PERMITTED INVESTMENTS"
         means:-
         (A)      any Investment in any Cash Equivalent provided that the
                  Average Life of the aggregate of all Cash Equivalents held by
                  Stena AB and its Subsidiaries may not exceed one year at any
                  time;

         (B)      any Related Business Investment in an amount not in excess of
                  the amount of Restricted Payments that Stena AB and its
                  Subsidiaries will be permitted to make under Clause 10.14
                  immediately prior to the making of such Investment;

         (C)      Investments made after 1 October 1997 in Unrestricted
                  Subsidiaries, Stena Line and Coflexip S.A. and Related
                  Business Investments in an aggregate amount not to exceed:-

                  (i)      ten per cent (10%) of Consolidated Tangible Assets
                           plus

                  (ii)     the aggregate amount of all moneys from time to time
                           actually received by Stena AB or any of its
                           Subsidiaries in respect of Investments made from time
                           to time pursuant to this paragraph (C) or (in respect
                           of Investments made after 1 October 1997 but before
                           the date of this Agreement) paragraph (iii) of the
                           definition of "Permitted Investments" in the 2007
                           Indenture, whether such moneys are received as
                           interest or principal payments (in the case of
                           Investments made in the form of loans or other debt
                           instruments or other extensions of credit), as
                           dividends or redemption payments or return of capital
                           (in the case of Investments made in the form of the
                           purchase of Capital Stock or capital contributions)
                           or otherwise, provided that the aggregate amount
                           permitted to be invested pursuant to this sub-
                           paragraph (ii) shall not exceed the aggregate amount
                           of Investments from time to time actually made by
                           Stena AB and its Subsidiaries pursuant to this
                           paragraph (C) or (in respect of Investments made
                           after 1 October 1997 but before the date of this
                           Agreement) paragraph (iii) of the definition of
                           "Permitted Investments" in the 2007 Indenture; plus

                  (iii)    the aggregate amount of all Investments made in any
                           person pursuant to this paragraph (C) or (in respect
                           of Investments made after 1 October 1997 but before
                           the date of this Agreement) paragraph (iii) of the
                           definition of "Permitted Investments" in the 2007
                           Indenture if (and for so long as) any such person
                           becomes a Subsidiary of Stena AB and provided
                           further, that upon giving effect to such Investment,
                           Stena AB could incur at least $1 of additional Debt
                           pursuant to Clause 10.8(A); and

         (D)      other Investments not otherwise permitted to be made pursuant
                  to paragraphs (A) to (C) above, which, together with the then
                  outstanding amount of other Investments made pursuant to this
                  paragraph (D) or (in respect of Investments made after 1
                  October 1997 but before the date of this Agreement) paragraph
                  (iv) of the definition of "Permitted Investments" in the 2007
                  Indenture, shall not exceed five per cent (5%) of Consolidated
                  Tangible Assets in aggregate at the time the Investment is
                  made;

<PAGE>

                                      - 26 -

         "PERMITTED LIENS"
         means:-

         (A)      Liens securing only the Notes granted pursuant to Section
                  10.14 of either Indenture where equivalent Liens are granted
                  to the Security Agent on a pari passu basis as security for
                  the Outstanding Indebtedness;

         (B)      Liens in favour of Stena AB or, with respect to Liens granted
                  by any Subsidiary of Stena AB, in favour of Stena AB or any
                  Wholly Owned Subsidiary of Stena AB;

         (C)      Liens on property existing immediately prior to the time of
                  acquisition  thereof (and not created in anticipation of
                  such acquisition);

         (D)      (x) Liens to secure Debt Incurred for the purpose of
                  financing all or any part of the purchase price or the cost
                  of construction or lease (pursuant to a Capitalised Lease
                  Obligation) of a Vessel or other property, or the cost of
                  improvements of a Vessel or other property used in the
                  business of Stena AB and its Subsidiaries and (y) Liens on
                  any Vessel or other property (including, without limitation,
                  the Related Collateral) owned or leased (pursuant to a
                  Capitalised Lease Obligation) by a Subsidiary of Stena AB
                  prior to the time it becomes a Subsidiary of Stena AB to
                  secure Debt Incurred by Stena AB (or any Subsidiary of Stena
                  AB), in an amount not to exceed the Fair Market Value of
                  such Vessel or other property or such Subsidiary, for the
                  purpose of financing (or refinancing) all or part of the
                  acquisition cost of such Subsidiary, but only if such Debt
                  is Incurred within 180 days after the acquisition of such
                  Subsidiary; provided that, with respect to clauses (x) and
                  (y) above:-

                  (i)      in the case of a Vessel or Vessels, the principal
                           amount of any Debt secured by such a Lien does not
                           exceed 80% of the Ready for Sea Cost of a Vessel (or,
                           with respect to Debt Incurred under a single
                           financing facility to finance all or part of the
                           purchase price or construction cost of two or more
                           Vessels, the aggregate Ready for Sea Cost of such
                           group of Vessels) or such Fair Market Value (as the
                           case may be) of such Vessel or other property; and
                           provided further that the principal amount of Debt
                           secured by such a Lien may be up to 100% of the Ready
                           for Sea Cost of such Vessel or Vessels if such Debt
                           financing consists of Capitalised Lease Obligations;
                           and provided further that, with respect to any Debt
                           Incurred to finance the replacement of a Vessel as
                           described in Clause 10.8(B)(iv) or 10.9(A), the
                           principal amount of such Debt secured by such Lien
                           may be up to 100% of the Ready for Sea Cost of such
                           replacement Vessel less all compensation, damages or
                           other such payments (including insurance proceeds
                           other than in respect of business interruption
                           insurance, protection and indemnity insurance or
                           other third-party liability insurance) received in
                           connection with a Total Loss in excess of amounts
                           actually used to repay Debt secured by the Vessel
                           subject to the Total Loss;

<PAGE>

                                      - 27 -

                  (ii)     such Liens do not extend to or cover any property
                           other than such Vessel or other property and Related
                           Collateral and any such improvements;

                  (iii)    the Incurrence of such Debt is permitted by the
                           provisions of Clause 10.8 and, if applicable, Clause
                           10.9; and

                  (iv)     any such Liens (other than Liens of the type
                           described in paragraph (D) of the definition of
                           "Related Collateral") attach within 180 days after
                           the date of the acquisition or delivery (or
                           completion of such improvements) of such Vessel or
                           group of Vessels or person or other property;

         (E)      Liens on property of a person existing at the time such person
                  is merged into or consolidated with or acquired by Stena AB or
                  any Subsidiary of Stena AB that were not created in
                  anticipation of the acquisition of such person;

         (F)      Permitted Ship Liens and any other Liens in respect of Vessels
                  and Related Collateral arising in the ordinary course of
                  business which, individually or in the aggregate do not
                  materially and adversely affect such Vessel or materially
                  impair the use and operation thereof or the business of Stena
                  AB and its Subsidiaries;

         (G)      Liens to secure obligations under workmen's compensation laws
                  or similar legislation, including Liens with respect to
                  judgments which are not currently dischargeable;

         (H)      Liens to secure Debt Incurred to refinance, in whole or in
                  part, (i) any secured Debt existing on the date of this
                  Agreement or (ii) any Debt secured by Liens referred to in
                  paragraphs (A) to (G) above and paragraphs (J) and (M)
                  below, so long as in each such case the Liens do not extend
                  to any other property (except for the Related Collateral, or
                  other property and Related Collateral secured by Debt which
                  is being concurrently refinanced on a cross-collateralised
                  basis) and the aggregate principal amount of Debt so secured
                  (which amount shall be deemed to include the amount of any
                  undrawn or available amounts under any credit or lease
                  facility to be so refinanced) is not increased (other than
                  as permitted pursuant to Clause 10.8(B)(vi)(a)(y) or Clause
                  10.9(F)(i)(b) by an amount greater than the amount of any
                  premium required to be paid in connection with such
                  refinancing pursuant to the terms of the Debt refinanced or
                  the amount of any premium reasonably determined by Stena AB
                  as necessary to accomplish such refinancing by means of a
                  tender offer or privately negotiated repurchase, plus the
                  expenses of Stena AB or any of its Subsidiaries incurred in
                  connection with such refinancing;

         (I)      any Liens securing Debt owing by Stena AB to one or more
                  Wholly Owned Subsidiaries of Stena AB;

         (J)      subject to compliance with sections (i), (iii) and (iv) of
                  paragraph (D) above, a pledge of, or other Lien in respect of,
                  the Capital Stock of a Single-Purpose Vessel-Owning Subsidiary
                  made to secure (i) Debt Incurred by such Single-

<PAGE>

                                      - 28 -

                  Purpose Vessel-Owning Subsidiary to finance or refinance the
                  acquisition, construction or improvement of a Vessel by such
                  Subsidiary or (ii) Debt Incurred by Stena AB or any
                  Subsidiary of Stena AB to finance or refinance the
                  acquisition of any or all of the Capital Stock of such
                  Single-Purpose Vessel-Owning Subsidiary;

         (K)      Liens in respect of Vessels and Related Collateral otherwise
                  permitted hereunder and incurred solely by reason of the
                  substitution of a new mortgage or other security agreements
                  for an existing agreement (or the novation or assignment of
                  such existing agreement), the effect of which new agreement,
                  novation or assignment is to effect the reflagging of the
                  Vessel or Vessels to which such existing agreement relates;

         (L)      Liens created by this Agreement and the Security Documents;

         (M)      Liens created by the Stena Discovery Facility Agreement and
                  the "Security Documents" referred to therein;

         (N)      a pledge or assignment of a promissory note (or other evidence
                  of indebtedness), or the assignment of a mortgage or other
                  security interest, or guarantee received by or granted to
                  Stena AB or any of its Subsidiaries pursuant to an Asset
                  Disposition to secure the unpaid portion of any Debt of Stena
                  AB or any of its Subsidiaries attributable to the property
                  sold in such Asset Disposition;

         (O)      subject to the limit imposed by Clause 10.6, Liens in respect
                  of Related Collateral and/or other property required to be
                  granted under the terms of an agreement governing Debt of
                  Stena AB or any Subsidiary of Stena AB to provide additional
                  security to the lenders under such agreement in the event the
                  value of the Vessel or Vessels and other property securing
                  such Debt falls below the level specified in such agreement;

         (P)      Liens on a Vessel, Related Collateral (and/or the contract for
                  the acquisition of such Vessel and/or Related Collateral)
                  existing only during the construction of such Vessel and
                  granted to secure the builder's obligations in respect of
                  construction financing for such Vessel obtained by such
                  builder; and

         (Q)      Liens incurred to secure the Revolving Credit Facilities as
                  required by the terms thereof;

         "PERMITTED SHIP LIENS"
         means:-

         (A)      any ship repairer's or outfitter's possessory lien for a sum
                  not (except with the prior written consent of the Agent or
                  where the cost of the relevant work is covered by the vessel's
                  insurances or is required for the purpose of maintaining the
                  vessel's classification) exceeding the Casualty Amount;

         (B)      any lien on a vessel for master's, officer's or crew's wages
                  outstanding in the ordinary course of trading;

<PAGE>

                                      - 29 -

         (C)      any lien for salvage;

         (D)      liens arising in the ordinary course of trading by statute or
                  by operation of law in respect of obligations which are not
                  overdue or which are being contested in good faith by
                  appropriate proceedings (and for the payment of which adequate
                  reserves have been provided) so long as any such proceedings
                  or the continued existence of such lien do not involve any
                  likelihood of the sale, forfeiture or loss of, or of any
                  interest in, any vessel owned by or chartered to a Security
                  Party or any other member of Stena AB Group;

         (E)      liens securing liabilities for Taxes against which adequate
                  reserves have been provided;

         (F)      liens arising in respect of a Ship or Linkspan by reason of an
                  act or omission of a charterer (other than a Stena Charterer)
                  of the Ship or Linkspan, in relation to which the relevant
                  Shipowner or Stena Charterer demonstrates to the reasonable
                  satisfaction of the Agent that it is taking all reasonable
                  steps available to it with due dispatch to procure the lifting
                  of the lien;

         "PLANNING ACTS"
         means, in the case of Holyhead Port or any other Port situated in
         England and Wales, the Town and Country Planning Acts 1990 and, in the
         case of Stranraer Port or any other Port situated in Scotland, the Town
         and Country Planning (Scotland) Act 1972 (including in each case any
         Act or Acts for the time being amending or replacing such Acts and any
         orders, regulations and direction issued under or by virtue of such
         Acts or such amending or replacing Acts for the time being in force);

         "P&O STENA"
         means P&O Stena Line (Holdings) Limited, a company incorporated with
         limited liability under the laws of England and Wales with company
         number 3291852 and having its registered office at Channel House,
         Channel View Road, Dover, CT17 9TJ;

         "P&O STENA LOAN STOCK"
         means all of SLUK's 30,000,000 units of the (pound)150,000,000 nominal
         amount of zero per cent second unsecured loan stock 2017 issued by P&O
         Stena constituted by a loan stock instrument dated 9 March 1998 issued
         by P&O Stena (and any other loan stock from time to time issued by P&O
         Stena and held by SLUK or any other member of the Stena AB Group);

         "P&O STENA SHARES"
         means all of SLUK's 5,625,000 ordinary shares designated "B" shares in
         the capital of P&O Stena (and any other shares from time to time issued
         by P&O Stena and held by SLUK or any other member of the Stena AB
         Group);

         "PORT"
         means each of Holyhead Port and Stranraer Port and includes any other
         port which is or may become owned by a member of the Stena AB Group;

<PAGE>

                                      - 30 -

         "PORT MORTGAGE"
         means:-

         (A)      in the case of Holyhead Port, the Holyhead Charge; and

         (B)      in the case of Stranraer Port, the Stranraer Charge;

         "PORT OWNER"
         means, in relation to a Mortgaged Port, the owner thereof being, at the
         date of this Agreement, Stena Line Ports in respect of both Holyhead
         Port and Stranraer Port;

         "PORT OWNER'S GUARANTEE"
         means, in respect of each Port Owner, the deed of guarantee and
         indemnity to be executed and delivered by that Port Owner in favour of
         the Security Agent in substantially the form set out in Schedule 7.2;

         "PORT OF REGISTRY"
         means in relation to a Mortgaged Ship the port of registry approved in
         writing by the Banks at which such Ship is, or is to be registered on,
         or at any relevant time after, the date hereof;

         "POST COMPLETION REGISTRATIONS"
         means registration of the Liens created by any of the Security
         Documents and the restriction contained in Clause 10.6 which require to
         be completed within a period after execution thereof and/or hereof
         under the laws of any relevant jurisdiction;

         "POST-DELIVERY FINANCING"
         means Debt Incurred by Stena AB or any Subsidiary of Stena AB to
         finance the total Ready for Sea Cost of a Vessel or group of Vessels
         and "Post-Delivery Financing" shall include the amount of any
         Construction Financing with respect to any Vessel or group of Vessels,
         but only to the extent that fully committed Post-Delivery Financing for
         such Vessel or group of Vessels has been arranged at such time;

         "PREFERRED STOCK"
         as applied to the Capital Stock of any person, means Capital Stock of
         such person of any class or classes (however designated) that ranks
         prior, as to the payment of dividends or as to the distribution of
         assets upon any voluntary or involuntary liquidation, dissolution or
         winding up of such person, to shares of Capital Stock of any other
         class of such person;

         "2005 PROSPECTUS"
         means the final prospectus of Stena AB relating to the initial public
         offering of the 2005 Notes, such prospectus having been filed with the
         Securities and Exchange Commission in Washington, D.C. with
         registration number 33-99284;

         "2007 PROSPECTUS"
         means the final prospectus of Stena AB relating to the initial public
         offering of the 2007 Notes, such prospectus having been filed with the
         Securities and Exchange Commission in Washington, D.C. with
         registration number 333-7486;

<PAGE>

                                      - 31 -

         "READY FOR SEA COST"
         means, with respect to a Vessel or Vessels to be acquired or leased
         (pursuant to a Capitalised Lease Obligation) by Stena AB or any
         Subsidiary of Stena AB, the aggregate amount of all expenditures
         incurred to acquire or construct and bring such Vessel or Vessels to
         the condition and location necessary for its intended use which would
         be classified and accounted for as "property, plant and equipment" in
         accordance with Swedish GAAP;

         "RECEIVABLES ASSIGNMENT"
         means the first priority assignment to be granted in favour of the
         Security Agent in respect of the deferred purchase consideration and
         Insurances and other security granted in relation to a Transferred Ship
         in accordance with Clause 5.3(L) substantially in the form set out in
         Schedule 16 in relation to a Ship sold on terms set out in paragraph
         (A) of the definition of Transferred Ship and substantially in the form
         set out in Schedule 17 in relation to a Ship sold on terms set out in
         paragraph (B) of the definition of Transferred Ship;

         "REDEEMABLE STOCK"
         of any person means any equity security of such person that by its
         terms or otherwise is required to be redeemed prior to the Termination
         Date or is redeemable at the option of the holder thereof at any time
         prior to the Termination Date;

         "REFERENCE BANKS"
         means the principal London offices of Svenska Handelsbanken AB (publ),
         J. P. Morgan plc and Nordbanken AB (publ) and/or any other Bank
         appointed as such pursuant to this Agreement;

         "REFINANCE"
         has the meaning ascribed to it in Clause 10.8(B)(vi) and shall be
         deemed to include successive refinancings;

         "RELATED BUSINESS INVESTMENT"
         means an Investment made in a person engaged in the same or a similar
         line of business as Stena AB and its Subsidiaries or made for the
         purpose of maintaining, enhancing the productivity of or expanding the
         capabilities of Stena AB and its Subsidiaries in any business activity
         permitted under Clause 10.12 (as determined, with respect to any such
         Investment or series of related Investments in an aggregate amount of
         $5,000,000 or more, in good faith by the Board of Directors of the
         person making such Investment);

         "RELATED COLLATERAL"
         means, with respect to a Vessel:-

         (A)      any insurance policies on such Vessel;

         (B)      any requisition compensation payable in respect of any
                  compulsory acquisition thereof;

         (C)      any earnings derived from the use or operation thereof and/or
                  any earnings account with respect to such earnings, provided
                  that any assignment with

<PAGE>

                                      - 32 -

                  respect thereto may only permit the assignee thereof to
                  apply such earnings to the repayment of Debt held by such
                  assignee:-

                  (i)      upon the occurrence and during the continuation of a
                           payment default with respect to such Debt or upon the
                           acceleration of such Debt (unless such acceleration
                           has been rescinded); or

                  (ii)     in the case of any other default with respect to such
                           Debt which would allow for the acceleration of such
                           Debt at such time, but only until the earliest of:-

                           (a)      180 days after the initial occurrence of
                                    such default;

                           (b)      the date such default is cured or waived;
                                    and

                           (c)      the date such Debt is repaid in full;

         (D)      any charters, operating leases, licences and related
                  agreements entered into in respect of the Vessel and any
                  security or guarantee in respect of the relevant charterer's
                  or lessee's obligations under any relevant charter, operating
                  lease, licence or related agreement;

         (E)      any cash collateral account established with respect to such
                  Vessel pursuant to the financing arrangements with respect
                  thereto;

         (F)      any inter-company loan or facility agreements relating to the
                  financing of the acquisition of, and/or the leasing
                  arrangements ,pursuant to Capitalised Lease Obligations) with
                  respect to, such Vessel;

         (G)      any building or conversion contracts relating to such Vessel
                  and any security or guarantee in respect of the builder's
                  obligations under such contracts;

         (H)      any interest rate swap, foreign currency hedge, exchange or
                  similar agreement incurred in connection with the financing of
                  such Vessel and required to be assigned by the lender; and

         (I)      any security interest in, or agreement or assignment relating
                  to, any of the foregoing or any mortgage in respect of such
                  Vessel;

         "RELATED PERSON"
         of any person means any other person directly or indirectly owning:-

         (A)      five per cent (5%) or more of the outstanding Common Stock of
                  such person (or, in the case of a person that is not a
                  corporation, five per cent (5%) or more of the equity interest
                  in such person); or

         (B)      five per cent (5%) or more of the combined voting power of
                  Voting Stock of such person;
<PAGE>

                                      - 33 -

         "REQUISITION COMPENSATION"
         means, in relation to a Ship or Linkspan, all sums of money or other
         compensation from time to time payable during the Security Period by
         reason of the Compulsory Acquisition of such Ship or Linkspan;

         "REVOLVING CREDIT FACILITIES"
         means one or more revolving or other credit facilities to which Stena
         AB and/or one or more Subsidiaries of Stena AB may be parties (as
         obligor or guarantor) in an aggregate principal amount not to exceed
         $600,000,000 at any time outstanding;

         "SALE AND LEASEBACK TRANSACTION"
         of any person means an arrangement with any lessor, lender, obligee or
         investor or to which such lessor, lender, obligee or investor is a
         party providing for the leasing or renting by such person of any
         property or asset of such person which has been or is being sold or
         transferred by such person more than two hundred and seventy (270) days
         after the acquisition thereof or, if later, the delivery or
         commencement of operation thereof, to such lessor, lender, obligee or
         investor or to any person to whom funds have been or are to be advanced
         by such lessor, lender, obligee or investor on the security of such
         property or asset and the Stated Maturity of such arrangement shall be
         the date of the last scheduled payment of rent or any other amount due
         under such arrangement prior to the first date on which such
         arrangement may be terminated by the lessee without payment of a
         penalty;

         "SCANDLINES"
         means Scandlines AB, a company incorporated under the laws of the
         Kingdom of Sweden with registration number 556206-4575 in the Swedish
         Companies Register and having its registered office at Knutpunkten 43,
         SE-252 78 Helsingborg, Sweden;

         "SECURITIES ACT"
         refers to the Securities Act of 1933 of the United States of America as
         it may be amended and any successor act thereto;

         "SECURITY AGENT"
         means Svenska Handelsbanken AB (publ) or such other person as may be
         appointed security agent for the Banks, the Co-Arrangers and the Agent
         pursuant to this Agreement;

         "SECURITY DOCUMENTS"
         means this Agreement, the Ship Mortgages, the Deeds of Covenant, the
         Insurance Assignments, the Shipowner's Guarantees, the Linkspan
         Mortgages, the Charterer's Insurance Assignments, the Charterer's
         Subordination Undertakings, the Manager's Subordination Undertakings,
         the Stena Germanica Assignment, each Receivables Assignment, the Port
         Owner's Guarantees, the Port Mortgages and any other documents as may
         have been or shall from time to time after the date of this Agreement
         be executed to guarantee and/or secure all or any part of any moneys
         from time to time owing by the Borrower pursuant to this Agreement
         (whether or not any such document also secures moneys from time to time
         owing pursuant to any other document or agreement);

<PAGE>

                                      - 34 -

         "SECURITY PARTY"
         means any person who may at any time be a party to any of the Security
         Documents (other than the Banks, the Co-Arrangers, the Agent and the
         Security Agent) but does not include either any such party as and when
         it has ceased to be under any continuing obligation under the Security
         Documents and its property has ceased to be (or was never) subject to
         any Lien pursuant to any of the Security Documents or any party which
         is not a member of the Stena AB Group;

         "SECURITY PERIOD"
         means the period commencing on the date hereof and terminating upon the
         later of (i) the end of the Availability Period and (ii) the discharge
         of the security created by the Security Documents by payment of moneys
         payable thereunder;

         "SHIP MORTGAGE"
         means, in relation to an Owned Ship:-

         (A)      in the case of a Designated Ship (other than a Ship registered
                  in Sweden), the first priority statutory mortgage of the Ship
                  executed (or as the context may require) to be executed and
                  registered by the relevant Shipowner in favour of the Security
                  Agent including the narrative text set out in Schedule 10;

         (B)      in the case of a Ship which is registered in Sweden the first
                  priority mortgage and pledge of mortgage of the Ship to be
                  executed and registered by the relevant Shipowner in the form
                  or substantially in the form set out in Schedule 8, which
                  mortgage and pledge of mortgage in the case of m.v. "STENA
                  GERMANICA" (the Stena Germanica Mortgage) has been executed
                  and assigned to the Borrower (as assignee from Stena Line
                  Scandinavia (as assignee from Stena Line)) and on-assigned by
                  it to the Security Agent under the Stena Germanica Assignment
                  as security for the Outstanding Indebtedness;

         (C)      in the case of any other Owned Ship over which, after drawdown
                  of the first Advance, a first priority mortgage is to be
                  executed and registered by the relevant Shipowner, a mortgage
                  in a form and substance acceptable to the Agent but in any
                  event substantially similar to the mortgages described in
                  paragraphs (A) and (B) above and including, where appropriate,
                  mortgage covenants substantially similar to those contained in
                  the pro forma Deed of Covenants set out in Schedule 11.1;

         and "SHIP MORTGAGES" means all of such mortgages;

         "SHIPOWNER"
         means, in relation to a Ship or Linkspan, the registered owner or
         owners thereof and being at the date of this Agreement, in relation to
         a Ship identified in Schedule 2, the company whose name is set forth
         opposite the name of such Ship in Schedule 2;

         "SHIPOWNER'S GUARANTEE"
         means, in respect of each Shipowner and each member of the Stena
         International Group which at any time during the Security Period owns a
         Ship or Linkspan or sells a Mortgaged Ship on Credit Terms, the deed of
         guarantee and indemnity to be

<PAGE>

                                      - 35 -

         executed and delivered by that Shipowner or other member of the Stena
         International Group in favour of the Security Agent in substantially
         the form set out in Schedule 7.1 (provided that no Shipowner's
         Guarantee shall be required from Scandlines by reason of its
         registered ownership of m.v. "STENA GERMANICA" as long as the Stena
         Germanica Loan Documents remain in place in favour of the Borrower and
         are assigned to the Security Agent under the Stena Germanica
         Assignment);

         "SHIPS"
         means each of the ships listed in Schedule 2 and includes any other
         Vessel in relation to which a Ship Mortgage, or in relation to rights
         to the sale proceeds, Insurances or rebate of rentals of which a Lien,
         may be granted to the Security Agent during the Security Period
         directly or indirectly as security for the obligations of the Borrower
         under this Agreement and "SHIP" means any of them;

         "SINGLE-PURPOSE VESSEL-OWNING SUBSIDIARY"
         means a Subsidiary of Stena AB the sole purpose of which is to own or
         lease (pursuant to a Capitalised Lease Obligation) one (but not more
         than one) Vessel;

         "SLUK"
         means Stena Line (UK) Limited, a company incorporated with limited
         liability under the laws of England and Wales with company number
         2454575 and having its registered office at Charter House, Park Street,
         Ashford, Kent, TN24 8EX;

         "STATED MATURITY"
         means:-

         (A)      with respect to any debt security, the date specified in such
                  debt security as the fixed date on which the final instalment
                  of principal of such debt security is due and payable; or

         (B)      with respect to any specified scheduled instalment of
                  principal or interest on any debt security, the date specified
                  in such debt security as the fixed date on which such
                  instalment is due and payable;

         "STENA AB"
         means Stena AB a company incorporated under the laws of the Kingdom of
         Sweden with registration number 556001-0802 in the Swedish Companies
         Register and having its registered office at Masthuggskajen, SE-405 19
         Gothenburg, Sweden;

         "STENA AB GROUP"
         means Stena AB and its Subsidiaries and "MEMBER OF THE STENA AB GROUP"
         means Stena AB or any of its Subsidiaries;

         "STENA CHARTERER"
         means any  member of the Stena AB Group to whom a Mortgaged Ship or a
         Transferred  Ship or a  Mortgaged  Linkspan  may be chartered;

         "STENA DISCOVERY FACILITY AGREEMENT"
         means the facility agreement dated of even date herewith made between
         the Borrower as borrower and Deutsche Bank AG as lender pursuant to
         which Deutsche Bank AG

<PAGE>

                                      - 36 -

         has agreed to make available to the Borrower a secured term loan
         facility in the amount of $75,000,000 to be secured on, inter alia,
         m.v. "STENA DISCOVERY" and her linkspans and to be applied towards
         partly refinancing the existing indebtedness of Stena Line under the
         Stena Line Revolving Credit Facility;

         "STENA GERMANICA ASSIGNMENT"
         means the first priority assignment of all the right, title and
         interest of the Borrower in the Stena Germanica Loan Documents to be
         executed and delivered by the Borrower in favour of the Security Agent
         in substantially the form set out in Schedule 19;

         "STENA GERMANICA CHARTERER'S INSURANCE ASSIGNMENT"
         means the Charterer's Insurance Assignment executed or (as the case may
         be) to be executed by Stena Line Scandinavia in favour of the Borrower
         on or before the Availability Date;

         "STENA GERMANICA CHARTERER'S SUBORDINATION UNDERTAKING"
         means the Charterer's Subordination Undertaking executed or (as the
         case may be) to be executed by Stena Line Scandinavia in favour of the
         Borrower on or before the Availability Date;

         "STENA GERMANICA DEED OF COVENANT"
         means the deed of covenant dated 21 December 2000 made between
         Scandlines as owner and Stena Line as mortgagee as assigned by Stena
         Line to Stena Line Scandinavia pursuant to the Stena Line Asset
         Purchase Agreement and as amended by an amendment no. 1 thereto to be
         made on or before the Availability Date between Scandlines, Stena Line
         Scandinavia and the Borrower amending certain provisions thereof and
         assigning all of Stena Line Scandinavia's rights, title and interest
         thereunder to the Borrower;

         "STENA GERMANICA LOAN AGREEMENT"
         means the inter-company loan agreement dated 21 December 2000 made
         between Scandlines as borrower and Stena Line as lender under which
         Stena Line made available to Scandlines a loan in the amount of
         $52,000,000 as assigned by Stena Line to Stena Line Scandinavia
         pursuant to the Stena Line Asset Purchase Agreement and as amended by
         an amendment no. 1 thereto to be made on or before the Availability
         Date between Scandlines, Stena Line Scandinavia and the Borrower
         amending certain provisions thereof and assigning all of Stena Line
         Scandinavia's right, title and interest thereunder to the Borrower;

         "STENA GERMANICA LOAN DOCUMENTS"
         means the Stena Germanica Loan Agreement, the Stena Germanica
         Mortgage, the Stena Germanica Deed of Covenant, the Stena Germanica
         Charterer's Insurance Assignment and the Stena Germanica Charterer's
         Subordination Undertaking;

         "STENA GERMANICA MORTGAGE"
         means the first priority mortgage and pledge of mortgage of m.v. "STENA
         GERMANICA" dated 21 December 2000 executed and registered by Scandlines
         in favour of Stena Line as assigned by Stena Line to Stena Line
         Scandinavia pursuant to the Stena Line Asset Purchase Agreement and as
         assigned by Stena Line Scandinavia to the Borrower on or before the
         Availability Date;

<PAGE>

                                      - 37 -

         "STENA INTERNATIONAL GROUP"
         means Stena International B.V. and its Subsidiaries;

         "STENA LINE"
         means Forvaltningsaktiebolaget Lastluckan (formerly Stena Line AB), a
         company incorporated under the laws of the Kingdom of Sweden with
         registration number 556207 - 8005 in the Swedish Companies Register and
         having its registered office at Masthuggsterminalen, SE-405 19
         Gothenburg, Sweden;

         "STENA LINE ASSET PURCHASE AGREEMENT"
         means the agreement made or (as the context may require) to be made
         between Stena Line and Stena Line Scandinavia pursuant to which (inter
         alia) Stena Line shall assign all its rights in respect of the Stena
         Germanica Loan Agreement, the Stena Germanica Mortgage and the Stena
         Germanica Deed of Covenant to Stena Line Scandinavia;

         "STENA LINE PORTS"
         means Stena Line Ports Limited, a company incorporated with limited
         liability under the laws of England and Wales with company number
         1824328 and having its registered office at Charter House, Park Street,
         Ashford, Kent, TN24 8EX;

         "STENA LINE REVOLVING CREDIT FACILITY"
         means the $425,000,000 secured revolving credit and guarantee facility
         provided to Stena Line pursuant to a facility agreement dated 28 May
         1998 (as amended) made between, amongst others, (1) Stena Line as
         borrower, (2) the various banks and financial institutions named
         therein as lenders, (3) The Bank of Nova Scotia as issuing bank and (4)
         Svenska Handelsbanken AB (publ) as agent and security agent;

         "STENA LINE SCANDINAVIA"
         means Stena Line Scandinavia AB, a company incorporated under the laws
         of the Kingdom of Sweden with registration number 556231-7825 in the
         Swedish Companies Register and having its registered office at SE-405
         19 Gothenburg, Sweden;

         "STEN A. OLSSON FAMILY"
         means:-

         (A)      Sten Allan Olsson;

         (B)      all the lineal descendants in direct line of the said Sten
                  Allan Olsson;

         (C)      a husband and wife or former husband or wife or widower or
                  widow of any of the above persons; and

         (D)      the estates or legal representatives of any of the above
                  persons

         and so that for the purposes of this definition a step-child or adopted
         child or illegitimate child of any person shall be deemed to be a
         lineal descendant of such person and of the lineal ascendants of such
         person;

<PAGE>

                                      - 38 -

         "STEN A. OLSSON FAMILY TRUSTS"
         means trusts (whether arising under settlement, declaration of trust
         or other instrument by whomsoever or wheresoever made or under a
         testamentary disposition or on an intestacy) under which no immediate
         beneficial interest in the property which is the subject of such trust
         is for the time being vested in any person other than members of the
         Sten A. Olsson Family;

         "STRANRAER CHARGE"
         means the Scots law first priority standard security in respect of
         Stranraer Port to be executed and delivered by Stena Line Ports in
         favour of the Security Agent in substantially the form set out in
         Schedule 15;

         "STRANRAER PORT"
         means all of the property belonging to Stena Line Ports at Stranraer
         Harbour, Stranraer, County of Wigtown, Scotland as is more particularly
         described in the Stranraer Charge;

         "SUBORDINATED DEBT"
         means Debt of Stena AB or any Subsidiary of Stena AB which is
         subordinate or junior in right of payment to the Notes (or any
         applicable Successor Financing) pursuant to a written agreement;

         "SUBSIDIARY"
         of any person means:-

         (A)      a corporation more than fifty per cent (50%) of the
                  outstanding Voting Stock of which is owned, directly or
                  indirectly, by such person or by one or more other
                  Subsidiaries of such person or by such person and one or more
                  Subsidiaries thereof; or

         (B)      any other person (other than a corporation) in which such
                  person, or one or more other Subsidiaries of such person or
                  such person and one or more other Subsidiaries thereof,
                  directly or indirectly, has at least a majority ownership and
                  power to direct the policies, management and affairs thereof

         but for the purposes of the definitions of "Affiliate", "Asset
         Disposition", "Consolidated Cash Flow", "Consolidated Interest Coverage
         Ratio", "Consolidated Interest Expense", "Consolidated Net Income",
         "Consolidated Tangible Assets", "Construction Financing", "Disqualified
         Stock", "Investment", "Lien", "Net Available Proceeds", "Non-Recourse
         Debt", "Permitted Investments", "Permitted Liens", "Post-Delivery
         Financing", "Ready for Sea Cost", "Related Business Investment",
         "Revolving Credit Facilities", "Single-Purpose Vessel-Owning
         Subsidiary", "Subordinated Debt", "Unrestricted Subsidiary", "Vessels",
         "Vessel Construction Contract", "Wholly Owned Subsidiary" and the
         proviso to the definition of "Incur" and Clauses 10.6, 10.7, 10.8,
         10.9, 10.10, 10.11, 10.12 and 10.14 Unrestricted Subsidiaries shall be
         deemed not to be Subsidiaries of Stena AB;

         "SUCCESSOR FINANCING"
         has the meaning ascribed thereto in Clause 10.18;

<PAGE>

                                      - 39 -

         "SWEDISH GAAP"
         means generally accepted accounting principles in the Kingdom of
         Sweden, consistently applied and (but only in relation to the
         definitions of "Capitalised Lease Obligation", "Consolidated Cash
         Flow", "Consolidated Interest Coverage Ratio", "Consolidated Interest
         Expense", "Consolidated Net Income", "Consolidated Operating Income",
         "Consolidated Tangible Assets" and "Tangible Assets" and not for any
         other purpose of this Agreement) as in effect on the date of the 2007
         Indenture;

         "TANGIBLE ASSETS"
         of any person means, at any date, the gross book value as shown by the
         accounting books and records of such person of all its property both
         real and personal, less (without duplication):-

         (A)      the net book value of all its licences, patents, patent
                  applications, copyrights, trademarks, trade names, goodwill,
                  non-compete agreements or organisational expenses and other
                  like intangibles;

         (B)      unamortised Debt discount and expenses;

         (C)      all reserves for depreciation, obsolescence, depletion and
                  amortisation of its properties; and

         (D)      all other proper reserves which in accordance with Swedish
                  GAAP should be provided in connection with the business
                  conducted by such person;

         "TAXES"
         includes all present and future taxes, levies, imposts, duties, fees or
         charges of whatever nature together with interest thereon and penalties
         in respect thereof and "TAXATION" shall be construed accordingly;

         "TERM"
         means, in relation to an Advance, the period for which such Advance
         is, or is to be, borrowed, as specified in the Drawdown Notice for
         such Advance;

         "TERMINATION DATE"
         means, subject to Clause 7.4, the date falling sixty (60) months after
         the date hereof;

         "TOTAL LOSS"
         in relation to a Ship or Linkspan means:-

         (A)      actual, constructive, compromised or arranged total loss of
                  such Ship or Linkspan; or

         (B)      the Compulsory Acquisition of such Ship or Linkspan; or

         (C)      the condemnation, capture, seizure, arrest, detention or
                  confiscation of such Ship or Linkspan (other than where the
                  same amounts to the Compulsory Acquisition of such Ship or
                  Linkspan) by any Government Entity, or by persons acting or
                  purporting to act on behalf of any Government Entity, unless

<PAGE>

                                      - 40 -

                  the Ship or Linkspan be released and restored to the relevant
                  Shipowner, Stena Charterer or other charterer from such
                  hijacking, theft, condemnation, capture, seizure, arrest,
                  detention or confiscation within one hundred and eighty (180)
                  days after the occurrence thereof;

         "TRANSFER CERTIFICATE"
         means a transfer certificate for the purposes of Clause 20.3
         substantially in the form set out in Schedule 6 (or in such other form
         as the Banks may approve or require);

         "TRANSFEREE BANK" and "TRANSFEROR BANK"
         shall have the meaning ascribed to those expressions in Clause 20.3;

         "TRANSFERRED SHIP"
         means a ship which was a Mortgaged Ship but the ownership or possession
         of which has been transferred to a person which is not a Subsidiary of
         Stena AB on Credit Terms so that either:-

         (A)      such person has obtained title thereto on terms that all or
                  part of the purchase price of the Ship is payable after the
                  date such person acquired title thereto; or

         (B)      such person will or may obtain title thereto under a hire
                  purchase or conditional sale agreement by payment of hire
                  payable in respect of the Ship and either by virtue of the
                  exercise of an option, or an obligation, to purchase such Ship
                  at the end of the hire period upon payment of a nominal sum or
                  final obligatory rental payment or a sum referrable to the
                  written down value or unamortised capital cost of the Ship

         provided that a Ship shall cease to be a Transferred Ship for the
         purposes of this Agreement if the Ship, having been sold by the
         relevant Shipowner on hire purchase or conditional sale terms is
         repossessed by the Shipowner following a default by the purchaser under
         the relevant Commercial Documents or by agreement between the Shipowner
         and the purchaser and is not required to be sold by the Shipowner
         pursuant to its agreement with the relevant purchaser and the Ship
         shall thereupon be treated as a Mortgaged Ship for all purposes of this
         Agreement;

         "UNENCUMBERED ASSETS"
         means:-

         (A)      the P&O Stena Shares;

         (B)      the P&O Stena Loan Stock; and

         (C)      all the issued shares in the Borrower from time to time;

         "UNRESTRICTED SUBSIDIARY"
         means:-

         (A)      Stena Fastigheter;

         (B)      Stena Realty BV;


<PAGE>

                                      - 41 -

         (C)      any Subsidiary of Stena AB which Stena AB by resolution of its
                  Board of Directors shall classify as an Unrestricted
                  Subsidiary and, for this purpose, a Subsidiary of Stena AB may
                  only be classified as an Unrestricted Subsidiary if,
                  immediately after giving effect to such classification:-

                  (i)      there would be no Default or Event of Default under
                           and as defined in the Indentures (or any applicable
                           Successor Financing);

                  (ii)     such Subsidiary would have no Debt other than
                           Non-Recourse Debt, as certified in an Opinion of
                           Counsel delivered to the relevant trustee under each
                           Indenture or any Successor Financing;

                  (iii)    Stena AB would be able to Incur at least $1.00 of
                           Debt pursuant to Clause 10.8;

                  (iv)     such Subsidiary has no assets which are essential to
                           the operations of Stena AB and its Subsidiaries,
                           taken as a whole; and

                  (v)      neither Stena AB nor any of its Subsidiaries has any
                           obligation:-

                           (a)      to subscribe for additional shares of
                                    Capital Stock or other equity interests of
                                    such Subsidiary; or

                           (b)      to maintain or preserve such Subsidiary's
                                    financial condition or to cause such
                                    Subsidiary to achieve certain levels of
                                    operating results;

                  Provided however that:-

                           (x)      any Subsidiary of Stena AB may not be
                                    reclassified  more than once in any thirteen
                                    (13) month period;

                           (y)      an Unrestricted Subsidiary may only be
                                    reclassified as a Subsidiary of Stena AB if
                                    immediately after giving effect to such
                                    reclassification, there would be no Default
                                    or Event of Default as defined in the
                                    Indentures (or any applicable Successor
                                    Financing); and

                           (z)      any such classification or reclassification
                                    shall be evidenced by, and shall become
                                    effective upon, the filing with each
                                    relevant trustee under the Indentures (or
                                    any Successor Financing) of the resolution
                                    of the Board of Directors of Stena AB giving
                                    effect to such designation, an Officer's
                                    Certificate certifying that such designation
                                    complies with the applicable conditions set
                                    forth above and, if applicable, the Opinion
                                    of Counsel required under paragraph (C)(ii)
                                    above, in each case in form and substance as
                                    satisfactory to such trustee;

         (D)      any Subsidiary of an Unrestricted Subsidiary;

<PAGE>

                                      - 42 -

         "UNSECURED REVOLVING CREDIT FACILITY AGREEMENT"
         means the facility agreement dated of even date herewith made between
         (1) Stena AB as borrower, (2) the banks and financial institutions
         defined therein as "Banks" as lenders, (3) the Co-Arrangers as
         arrangers and (4) Svenska Handelsbanken AB (publ) as agent pursuant to
         which such lenders have agreed to make available to Stena AB a 364 day
         unsecured revolving credit facility in the amount of two hundred
         million Euro ((eurodollar) 200,000,000);

         "VESSEL CONSTRUCTION CONTRACT"
         means any contract for the construction (or construction and
         acquisition) or conversion of a Vessel or Vessels entered into by Stena
         AB or any Subsidiary of Stena AB;

         "VESSELS"
         means the shipping vessels whose primary purpose is the maritime
         transportation of cargo and/or passengers or which are otherwise
         engaged or used in any business activities of Stena AB and its
         Subsidiaries permitted under Clause 10.12 (including, without
         limitation, semi-submersible and other drilling rigs and drillships)
         and which are owned by and registered (or to be owned by and
         registered) in the name of Stena AB or any of its Subsidiaries or
         operated by Stena AB or any of its Subsidiaries pursuant to a lease or
         other operating agreement constituting a Capitalised Lease Obligation,
         in each case together with all related equipment and any additions or
         improvements;

         "VOTING STOCK"
         of any person means Capital Stock of such person which ordinarily has
         voting power for the election of directors (or persons performing
         similar functions) of such person, whether at all times or only so long
         as no senior class of securities has such voting power by reason of any
         contingency; and

         "WHOLLY OWNED SUBSIDIARY"
         of any person means a Subsidiary of such person all of the outstanding
         Capital Stock or other ownership interests of which (other than
         directors' qualifying shares) shall at the time be owned by such person
         or by one or more Wholly Owned Subsidiaries of such person or by such
         person and one or more Wholly Owned Subsidiaries of such person.

1.3      Insurance terms

         In Clause 11:-

         (A)      "EXCESS RISKS" means the proportion (if any) of claims for
                  general average, salvage and salvage charges and under the
                  ordinary collision clause not recoverable in consequence of
                  the value at which a Ship is assessed for the purpose of such
                  claims exceeding her insured value;

(B)      "PROTECTION AND INDEMNITY RISKS" means:-

                  (i)      the usual risks (including oil pollution) covered by
                           a United Kingdom protection and indemnity association
                           or a protection and indemnity association which is
                           managed in London, Norway or Sweden or is a

<PAGE>

                                      - 43 -

                           member of the "International Group" of protection and
                           indemnity associations (including, without
                           limitation, the maximum proportion (if any) of any
                           sums payable to any other person or persons in case
                           of collision which are not recoverable under the hull
                           and machinery policies by reason of the incorporation
                           therein of Clause 1 of the Institute Time Clauses
                           (Hulls) (1/11/95) or the Institute Amended Running
                           Down Clause (1/10/71) or any equivalent provision; or

                  (ii)     (if placed on Norwegian terms) means protection and
                           indemnity risks as defined in the Norwegian Marine
                           Insurance Plan of 1996 as amended; and

         (C)      "WAR RISKS" includes those risks covered by the standard form
                  of English marine policy with Institute War and Strikes
                  Clauses (Time) (1/10/83) attached or similar cover which may
                  be insured by entry with such association or (if placed on
                  Norwegian terms) means the war risks described in the
                  Norwegian Marine Insurance Plan of 1996 as amended or (if
                  placed on Swedish terms) means the Swedish War Insurance
                  Conditions for Ships 1992/01/01;

1.4      Accounting terms

         All accounting terms not otherwise defined in this Agreement shall have
         the meanings assigned to them in accordance with Swedish GAAP where
         used in relation to the Stena AB Group and Dutch GAAP where used in
         relation to the Stena International Group (whether or not such is
         indicated in this Agreement).

1.5      Headings

         Clause headings and the table of contents are inserted for convenience
         of reference only and shall be ignored in the interpretation of this
         Agreement.

1.6      Construction of certain terms

         In any Security Document unless the context otherwise requires:-

         (A)      references to Clauses and Schedules are to be construed as
                  references to Clauses of, and Schedules to, such Security
                  Document and references to such Security Document include its
                  Schedules;

         (B)      references to (or to any specified provision of) any Security
                  Document or any other document shall be construed as
                  references to such Security Document, that provision or that
                  document as in force for the time being and as novated and/or
                  as amended in accordance with terms thereof, or, as the case
                  may be, with the agreement of the relevant parties and (where
                  such consent is, by the terms of any Security Document or the
                  relevant document, required to be obtained as a condition to
                  such amendment) with the consent of the Agent;

         (C)      references to a "regulation" include any present or future
                  regulation, rule, directive, requirement, request or guideline
                  (whether or not having the force of law) of any agency,
                  authority, central bank or government department or any
                  self-regulatory or other national or supra-national authority;

<PAGE>

                                      - 44 -

         (D)      words importing the plural shall include the singular and vice
                  versa;

         (E)      references to a time of day are to London time;

         (F)      references to a person shall be construed as references to an
                  individual, firm, company, corporation, unincorporated body of
                  persons or any Government Entity;

         (G)      references to any person includes such person's assignees and
                  successors in title; and

         (H)      references to any enactment shall be deemed to include
                  references to such enactment as re-enacted, amended or
                  extended.

1.7      Consents and approvals

         (A)      Where any matter requires the approval or consent of the Agent
                  and/or the Security Agent and/or the Banks, such approval or
                  consent shall not be deemed to have been given unless given in
                  writing.

         (B)      Unless the context otherwise expressly states to the contrary,
                  where in any Security Document any party is required or
                  requested to consent or agree to, authorise or approve,
                  either with or without conditions, or give an opinion or
                  express satisfaction or certify, make payments, determinations
                  or determine requirements in any such case at its discretion,
                  then it is hereby agreed that such consent, agreement,
                  authorisation, approval, conditions, opinion, expression of
                  satisfaction, certification, determination, payment or
                  requirement shall not (when taking into account all the
                  circumstances) be unreasonably withheld, imposed, given or
                  determined. Where in any Security Document the Agent, the
                  Co-Arrangers, the Security Agent or any of the Banks is
                  required to give any notice, document or other information
                  or to do any act or thing (unless the context otherwise
                  expressly states to the contrary) such notice, document or
                  other information shall be given and such act or thing shall
                  be done as soon as is reasonably practicable.

1.8      Conflict with Facility Agreement

         In the event of any conflict between the provisions of this Agreement
         and any other of the Security Documents, the provisions of this
         Agreement shall prevail.

1.9      Majority Banks

         Where this Agreement provides for any matter to be determined by
         reference to the opinion of the Majority Banks or to be subject to the
         consent or request of the Majority Banks or for any action to be taken
         on the instructions of the Majority Banks, such opinion, consent,
         request or instructions shall (as between the Banks) only be regarded
         as having been validly given or issued by the Majority Banks if all the
         Banks shall have received prior notice of the matter on which such
         opinion, consent, request or instructions are required to be obtained
         and the relevant majority of Banks shall have given or issued such
         opinion, consent, request or instructions but so that the Borrower
         shall be entitled (and bound) to assume that such notice shall

<PAGE>

                                      - 45 -

         have been duly received by each Bank and that the relevant majority
         shall have been obtained to constitute Majority Banks whether or not
         this is in fact the case.

1.10     Transfer and Succession

         In this Agreement all references to the Agent, the Security Agent, the
         Banks and/or the Co-Arrangers shall in each case include:-

         (A)      any successor in title to or assignee or transferee of all or
                  any portion of that respective party's rights, title and
                  interest in, to and under this Agreement including any
                  Transferee to whom all or part of such person's rights and
                  obligations hereunder are transferred; and

         (B)      any other person whomsoever in whose favour all or any portion
                  of such rights, title and interest are transferred including
                  any person who becomes a party to this Agreement by way of a
                  novation hereof

         and the expression "Bank" shall include any such person aforesaid
         notwithstanding that such person may have made no advance to the
         Borrower hereunder and notwithstanding also that the indebtedness of
         the Borrower to such person may be operation of law or otherwise
         constitute, or be deemed to constitute, an indebtedness separate and
         distinct from the indebtedness arising on the date of drawing of the
         Commitment in respect of which the assignment or other transfer of
         rights, title and interest is made.

2.       THE COMMITMENTS

2.1      Agreement to lend

         Upon and subject to the terms and conditions of this Agreement and in
         reliance on the representations and warranties in Clause 9 the Banks
         agree to lend Advances to the Borrower and the obligation of each Bank
         under this Agreement shall be to contribute its Percentage of each
         Advance.

2.2      Obligations of Banks several

         The obligations of each Bank under this Agreement are several; the
         failure of any Bank to perform such obligations shall not relieve any
         other Bank, the Co-Arrangers, the Agent, the Security Agent or the
         Borrower of any of their respective obligations or liabilities under
         this Agreement nor shall the Co-Arrangers, the Agent or the Security
         Agent be responsible for the obligations of any Bank (except for its
         own obligations, if any, as a Bank) nor shall any Bank be responsible
         for the obligations of any other Bank under this Agreement. Provided
         that, in the event of the failure of any Bank (the "defaulting Bank")
         to perform its obligations under this Agreement:-

         (A)      the Agent shall consult with the Borrower and the other Banks
                  with a view to taking steps to mitigate the effects of such
                  default including the procuring of another bank to assume the
                  obligations of the defaulting Bank; and

         (B)      the defaulting Bank shall indemnify the Borrower against any
                  losses, costs and expenses which the Borrower may sustain or
                  incur as a result of such failure.

<PAGE>

                                      - 46 -


2.3      Interests several

         Notwithstanding any other term of this Agreement (but without prejudice
         to Clause 21.4 (I) or the provisions of this Agreement relating to or
         requiring action by the Majority Banks) the interests of the
         Co-Arrangers, the Agent, the Security Agent and the Banks are several
         and the amount due to the Co-Arrangers, the Agent, the Security Agent
         and each Bank (each for its own account) is a separate and independent
         debt. The Co-Arrangers, the Agent, the Security Agent and each Bank
         shall have the right to protect and enforce its rights arising out of
         this Agreement and it shall not be necessary for the Co-Arrangers, the
         Agent, the Security Agent or any Bank (as the case may be) to be joined
         as an additional party in any proceedings for this purpose.

3.       ADVANCES

3.1      Drawdown

         Subject to the terms and conditions of this Agreement, an Advance may
         be made to the Borrower following receipt by the Agent from the
         Borrower of a Drawdown Notice not later than 10.00 a.m. on the third
         Banking Day before the date on which the Advance is intended to be made
         which shall be a Banking Day falling within the Availability Period. A
         Drawdown Notice shall be effective on actual receipt by the Agent and,
         once given, shall, subject as provided in Clause 4.5(A), be
         irrevocable. No Drawdown Notice may be given in respect of an amount
         which is the subject of a notice of cancellation under Clause 5.

3.2      Amount

         Each Advance shall be a minimum of $10,000,000 and an integral multiple
         of $5,000,000 or the balance of the Available Commitments or such other
         amount (not exceeding the Available Commitments) as the Banks may agree
         but no Advance may be drawn down on any day of an amount exceeding the
         Available Commitments on such day, taking into account for this purpose
         any Advance to be repaid on such day and any other Advance which is to
         be made which is the subject of a current Drawdown Notice.

3.3      Term

         Subject to Clause 3.6, Advances may be borrowed only for a Term of one
         (1), three (3), six (6), nine (9) or twelve (12) months or such other
         period as the Banks may agree, in each case ending on or before the
         Termination Date.

3.4      Availability

         Upon receipt of a Drawdown Notice complying with the terms of this
         Agreement the Agent shall notify each Bank thereof and of the date on
         which the Advance is to be made and, subject to the provisions of
         Clause 14, on such date each of the Banks shall make available to the
         Agent its portion of such Advance for payment by the Agent in
         accordance with Clause 7.2. Except with the Banks' consent, no Advances
         shall be made to the Borrower under this Agreement after the date
         falling one (1) month before the Termination Date.


<PAGE>

                                      - 47 -

3.5      The Termination Date

         Without prejudice to any other provisions of this Agreement, the
         Commitments shall in any event be reduced to zero on the Termination
         Date and no Advances shall be made to the Borrower under this Agreement
         thereafter.

3.6      Number of Advances

         Notwithstanding the provisions of Clauses 3.2 and 3.3, Advances may be
         drawn only so that the number of separate Advances outstanding at any
         time does not exceed fifteen (15) or such other number as may be agreed
         by all the Banks or so that on the Maturity Date in respect of the next
         Advance to be repaid the number of Advances outstanding (excluding
         those repayable on such Maturity Date) will not exceed fifteen (15) or
         such other number as may be agreed by all the Banks. No more than
         twelve (12) Terms of one month (or, if agreed by the Banks, any shorter
         period) may be selected by the Borrower in respect of Advances during
         any calendar year.

3.7      Application of proceeds

         Without prejudice to the Borrower's obligations under Clause 10.19,
         none of the Banks, the Co-Arrangers or the Agent shall have any
         responsibility for the application of proceeds of any Advance by the
         Borrower.

4.       INTEREST ON ADVANCES

4.1      Normal interest rate

         The Borrower shall pay interest on each Advance on its Maturity Date
         (or, in the case of an Advance having a Term of more than six (6)
         months, by instalments, the first six (6) months from the drawdown of
         such Advance and the subsequent instalments at intervals of six (6)
         months or, if shorter, the period from the date of the preceding
         instalment until the relevant Maturity Date) at the rate per annum
         determined by the Agent to be the aggregate of (i) the Margin and (ii)
         LIBOR

         PROVIDED HOWEVER THAT, in the case of any Advance which is borrowed for
         a Term of one month or less, the amount of interest payable in respect
         thereof shall be that amount which is the higher of:-

         (A)      the amount of interest which would be payable thereon if
                  calculated at the interest rate specified in the foregoing
                  provisions of this Clause 4.1; and

         (B)      the amount which is equal to the aggregate of (i) that amount
                  of interest which would be payable thereon pursuant to the
                  foregoing provisions of this Clause 4.1 if the Margin were
                  zero and (ii) eight thousand three hundred and thirty three
                  Dollars ($8,333).

<PAGE>

                                      - 48 -


4.2      Default interest

         If the Borrower fails to pay any sum (including, without limitation,
         any sum payable pursuant to this Clause 4.2) on its due date for
         payment under any of the Security Documents, the Borrower shall pay
         interest on such sum on demand from the due date up to the date of
         actual payment (as well after as before judgment) at a rate determined
         by the Agent pursuant to this Clause 4.2. The period beginning on such
         due date and ending on such date of payment shall be divided into
         successive periods of not more than three (3) months as selected by the
         Agent (after consultation with the Banks) each of which (other than the
         first, which shall commence on such due date) shall commence on the
         last day of the preceding such period. The rate of interest applicable
         to each such period shall be the aggregate (as determined by the Agent)
         of (i) two point seven five per cent (2.75%) per annum and (ii) LIBOR
         for such period provided that if such unpaid sum is an amount of
         principal which became due and payable, by reason of a declaration by
         the Agent under Clause 15.2 or a prepayment pursuant to Clauses 5.3,
         5.6, 5.7, 5.9 or 17.1 on a date other than a Maturity Date relating
         thereto, the first such period selected by the Agent shall be of a
         duration equal to the period between the due date of such principal sum
         and such Maturity Date and interest shall be payable on such principal
         sum during such period at a rate of two point seven five per cent
         (2.75%) above the rate of LIBOR applicable thereto immediately before
         it shall have become so due and payable. Default interest shall be due
         and payable on the last day of each such period as determined by the
         Agent pursuant to this Clause 4.2 or, if earlier, on the date on which
         the sum in respect of which such default interest is accruing shall
         actually be paid. If, for the reasons specified in Clause 4.5(A), the
         Agent is unable to determine a rate in accordance with the foregoing
         provisions of this Clause 4.2, each Bank shall promptly notify the
         Agent of the cost of funds to such Bank and interest on any sum not
         paid on its due date for payment shall be calculated for each Bank at a
         rate determined by the Agent to be two point seven five per cent
         (2.75%) per annum above the cost of funds to such Bank. Each Bank shall
         (without prejudice to the obligation of the Borrower to pay such
         interest) provide reasonable detail as to the basis on which it has
         determined such cost of funds.

4.3      Notification of interest rate

         The Agent shall notify the Borrower promptly of each rate of interest
         determined by it under this Clause 4.

4.4      Reference Bank quotations

         If any Reference Bank is unable or otherwise fails to furnish a
         quotation for the purpose of calculating LIBOR pursuant to the proviso
         contained in the definition of LIBOR the interest rate shall be
         determined, subject to Clause 4.5, on the basis of the quotations
         furnished by the remaining Reference Banks.

4.5      Market disruption; non-availability

         (A)    If and whenever, at any time prior to the making of an Advance:-

<PAGE>

                                      - 49 -

                  (i)      the Agent shall have determined (which determination
                           shall, in the absence of manifest error, be
                           conclusive) that adequate and fair means do not exist
                           for ascertaining LIBOR during the Term of that
                           Advance;

                  (ii)     where applicable, none of the Reference Banks
                           supplies the Agent with a quotation for the purpose
                           of calculating LIBOR; or

                  (iii)    the Agent shall have received notification from Banks
                           with Commitments aggregating not less than one-half
                           of the total of the Commitments (or, if no Advance
                           has been made, Commitments aggregating not less than
                           one-half of the Commitments of all the Banks) that
                           deposits in Dollars are not available to such Banks
                           in the London Interbank Market in the ordinary course
                           of business in sufficient amounts to fund their
                           Contributions to such Advance or, where applicable,
                           that the arithmetic mean of the quotations for LIBOR
                           supplied by the Reference Banks does not accurately
                           reflect the cost to such Banks of obtaining such
                           deposits,

                  the Agent shall forthwith give notice (a "DETERMINATION
                  NOTICE") thereof to the Borrower and to each of the Banks and
                  such Advance shall not be made. A Determination Notice shall
                  contain particulars of the relevant circumstances giving rise
                  to its issue.

         (B)      After the giving of any Determination Notice no further
                  Advances may be borrowed until notice to the contrary is given
                  to the Borrower by the Agent.

         (C)      During the period of twenty (20) days following the giving of
                  any Determination Notice, the Borrower and the Agent in
                  consultation with the Banks shall negotiate in good faith in
                  order to arrive at a mutually acceptable substitute basis for
                  each Bank to continue its Contribution to any further Advances
                  and, if within such twenty (20) day period the Borrower and
                  the Agent (in consultation as aforesaid) shall agree in
                  writing upon such an alternative basis (the "SUBSTITUTE
                  BASIS") the Substitute Basis shall be retroactive to and
                  effective from the first day of the relevant Term.

         (D)      If the Borrower and the Agent (in consultation with the Banks)
                  fail to agree on a Substitute Basis within such twenty (20)
                  day period, the Borrower shall pay interest on the Advances to
                  each Bank at the rate certified by each such Bank and notified
                  through the Agent to the Borrower as being a reasonable
                  interest rate reflecting the cost to such Bank of funding its
                  Contribution to such Advances during the period from the date
                  of the relevant Determination Notice, plus the Margin and such
                  rate plus the Margin shall be the Substitute Basis.

         (E)      So long as any Substitute Basis is in force, the Agent shall
                  from time to time (but at least monthly) and in consultation
                  with the Banks review whether or not the circumstances are
                  such that such Substitute Basis is no longer necessary and, if
                  the Agent so determines it shall notify the Borrower and the
                  Banks that the Substitute Basis shall cease to be effective
                  from such date as the Agent shall reasonably specify.

<PAGE>

                                      - 50 -


5.       REPAYMENT, REDUCTION AND CANCELLATION

5.1      Repayment of Advances

         The Borrower shall repay each Advance on its Maturity Date. If an
         Advance (the "NEW ADVANCE") is to be made on a day on which another
         Advance (the "MATURING ADVANCE") is due to be repaid then, subject to
         the terms of this Agreement, (i) the maturing Advance shall be deemed
         to have been repaid on its Maturity Date either in whole (if the new
         Advance is equal to or greater than the maturing Advance) or in part
         (if the new Advance is less than the maturing Advance) and (ii) to the
         extent that the maturing Advance is so deemed to have been repaid, the
         principal amount of the new Advance to be made on such date shall be
         deemed to have been credited to the account of the Borrower by the
         Agent on behalf of the Banks in accordance with the terms of this
         Agreement and the Banks shall only be obliged to make available to the
         Borrower pursuant to Clause 3 a principal amount equal to the amount by
         which the new Advance exceeds the maturing Advance. On the Termination
         Date, all outstanding Advances and other sums (if any) then owing under
         this Agreement shall in any event be repaid or paid in full.

5.2      Scheduled reductions of Commitments

         Without prejudice to any other provision of this Agreement, the
         Commitments shall be reduced in aggregate by the following amounts on
         the following dates:-

         (A)      on the date falling twelve (12) months after the date of this
                  Agreement, by $30,000,000 or, if lower, by an amount in
                  Dollars equal to 30/275ths of the then aggregate amount of the
                  Commitments;

         (B)      on the date falling twenty four (24) months after the date of
                  this Agreement, by $30,000,000 or, if lower, by an amount in
                  Dollars equal to 30/245ths of the then aggregate amount of the
                  Commitments;

         (C)      on the date falling thirty six (36) months after the date of
                  this Agreement, by $30,000,000 or, if lower, by an amount in
                  Dollars equal to 30/215ths of the then aggregate amount of the
                  Commitments;

         (D)      on the date falling forty eight (48) months after the date of
                  this Agreement, by $30,000,000 or, if lower, by an amount in
                  Dollars equal to 30/185ths of the then aggregate amount of the
                  Commitments;

         (E)      on the Termination Date by the whole of the aggregate amount
                  of the Commitments so that all of the Commitments shall be
                  reduced to zero on such date.

5.3      Reduction of Commitments on Total Loss or sale or by receipt of
         instalments

         (A)      Total Loss or sale of Mortgaged Ships

                  If a Mortgaged Ship is sold or becomes a Total Loss, the
                  Commitments shall, subject to Clause 5.3(E), be reduced on the
                  Disposal Reduction Date for such Ship by the relevant Disposal
                  Reduction Amount.

<PAGE>

                                      - 51 -

         (B)      Transferred Ships

                  On each Disposal Reduction Date applicable to a Transferred
                  Ship, the Commitments shall, subject to Clause 5.3(E), be
                  reduced by the relevant Disposal Reduction Amount.

         (C)      Sale of Mortgaged Ports and/or Port Owner

                  If a Mortgaged Port or any part thereof is sold (other than
                  any part of a Mortgaged Port which is sold for a consideration
                  of less than $25,000 or the equivalent thereof in any other
                  currency), or any of the shares in the capital of any Port
                  Owner are sold, the aggregate amount of the Commitments shall,
                  subject to Clause 5.3(E), be reduced on the Disposal Reduction
                  Date relating thereto by the relevant Disposal Reduction
                  Amount.

         (D)      Prepayment upon reduction of Commitments

                  If, upon reduction or suspension of the Commitments by any
                  such Disposal Reduction Amount, the aggregate of the Advances
                  at such time exceeds the Commitments as thereby reduced or
                  after deduction of the amount to be suspended as the case may
                  be, the Borrower shall on such Disposal Reduction Date prepay
                  such amount of the outstanding Advances as will ensure that
                  immediately thereafter the aggregate amount of the Advances
                  will not exceed the Commitments as so reduced or after
                  deduction of the amount to be suspended as the case may be.

         (E)      Substitute security

                  (i)      Without prejudice to the Borrower's obligation to
                           make any payment due under Clause 5.3(D) the
                           Commitments shall be suspended for a period of up to
                           twelve (12) months from the relevant Disposal
                           Reduction Date in an amount equal to the relevant
                           Disposal Reduction Amount. The Borrower shall
                           within such twelve (12) month period provide the
                           Security Agent with substitute security with a value
                           equal to the Disposal Reduction Amount (adjusted if
                           appropriate in accordance with the following
                           provisions of this paragraph). On the Agent giving
                           notice to the Borrower and the Banks that such
                           security has been duly granted, the relevant amount
                           of the Commitments shall cease to be suspended by the
                           Disposal Reduction Amount previously suspended
                           (adjusted if appropriate in accordance with the
                           following provisions of this paragraph) or such
                           lesser amount as the Borrower requests, but so that
                           the Commitments may not at any time exceed the amount
                           of the Commitments as they would have stood but for
                           the suspension of part thereof and taking into
                           account reductions and cancellations by virtue of the
                           other provisions of this Agreement. For the purpose
                           of this paragraph (i) the Disposal Reduction Amount
                           shall be reduced during the period of the suspension
                           in proportion to the reduction of the Commitments
                           (including the suspended portions) which takes effect
                           by virtue of any reduction or partial cancellation in
                           respect of the Commitments which takes effect during
                           the period of the suspension by virtue of the other
                           provisions of this Agreement.

<PAGE>

                                      - 52 -

                  (ii)     The Borrower's obligation to provide substitute
                           security in relation to an amount of the Commitments
                           suspended by virtue of this Clause 5.3(E) shall be
                           deemed discharged if the relevant member of the Stena
                           AB Group provides security over a Vessel (a
                           "SUBSTITUTE VESSEL") owned by such member of the
                           Stena AB Group if the following conditions are
                           satisfied:-

                           (a)  the relevant member of the Stena AB Group has
                                executed a Shipowner's Guarantee in favour of
                                the Security Agent and a Ship Mortgage (the
                                "SUBSTITUTE MORTGAGE") and either a Deed of
                                Covenant or an Insurance Assignment in respect
                                of the Substitute Vessel in substantially the
                                forms of Schedule 11.1 and Schedule 9;

                           (b)  the market value of the Substitute Vessel
                                (determined in accordance with Clause 5.3(G)) is
                                not less than one hundred and fifty per cent
                                (150%) of the relevant amount suspended by
                                virtue of paragraph (i) of this Clause as
                                reduced or cancelled by virtue of the other
                                provisions of this Agreement;

                           (c)  the Substitute Vessel is registered under the
                                laws and flag of an Approved Flag State;

                           (d)  the Agent shall have received the documents and
                                evidence referred to in Clause 19.5(F) in
                                relation to the Substitute Vessel.

                           If the Borrower provides substitute security in any
                           other form such security shall be in such form and
                           constituted in such manner as shall be in all
                           respects satisfactory to the Majority Banks.

                  (iii)    To the extent that the Borrower does not grant or
                           procure the grant of additional security as provided
                           in this Clause 5.3(E) or cancel the whole or part of
                           the suspended amount under paragraph (iv) of this
                           Clause 5.3(E) within the period of twelve (12) months
                           after the relevant Disposal Reduction Date, then the
                           Commitments shall be treated as permanently reduced
                           by the suspended amount or lesser amount in respect
                           of which the Borrower has not granted or procured the
                           grant of substitute security in accordance with the
                           preceding provisions of this Clause 5.3(E).

                  (iv)     The Borrower may, during any period for which a part
                           of the Commitments is suspended under this Clause
                           5.3(E), by notice to the Agent cancel with effect
                           from a date not less than thirty (30) days after the
                           receipt by the Agent of such notice in whole or part
                           (being $1,000,000 or any larger sum which is an
                           integral multiple of $1,000,000) of the suspended
                           amount. Any such notice of cancellation, once given,
                           shall be irrevocable and upon such cancellation
                           taking effect the Commitment of each of the Banks
                           shall be reduced proportionately.

<PAGE>

                                      - 53 -

                  (v)      Nothing in this Clause 5.3(E) shall affect the
                           Borrower's obligation to procure that all amounts
                           realised from the property pledged to the Security
                           Agent as security under the Security Documents shall,
                           after an Event of Default has occurred and is
                           continuing, be applied in payment of the relevant
                           Disposal Reduction Amounts and, following a
                           declaration by the Agent under Clause 15.2, be
                           applied in accordance with Clause 7.10.

         (F)      Defined terms

                  For the purposes of this Clause 5.3:-

                  "DISPOSAL REDUCTION AMOUNT"  means:-

                  (x)      in relation to a Mortgaged Ship which has become a
                           Total Loss or is sold, an amount in Dollars which is
                           the lesser of:-

                           (i)     (aa)     where the Ship has become a
                                            Total Loss, the minimum amount for
                                            which such Ship was required to have
                                            been insured under the Security
                                            Documents less any applicable
                                            deductible, collection commissions
                                            and any other expenses incurred by
                                            the relevant Shipowner or Stena
                                            Charterer or third party demise
                                            charterer in recovering under the
                                            Insurances of the Ship in respect of
                                            such Total Loss and/or recovering
                                            any Requisition Compensation in
                                            respect thereof; or

                                    (bb)    where the Ship has been sold
                                            (otherwise than on Credit Terms) the
                                            Net Cash Sale Proceeds of such Ship
                                            and (if relevant) its related
                                            Linkspans; and

                           (ii)     such amount (if any) as will, after
                                    reduction of the Commitments and, if
                                    required by Clause 5.3(B), after any
                                    prepayment of Advances on the Disposal
                                    Reduction Date for such Ship, result in the
                                    Security Value being not less than one
                                    hundred and fifty per cent (150%) of the
                                    aggregate total of the Commitments (as so
                                    reduced);

                  (y)      in relation to a Transferred Ship, an amount in
                           Dollars which is the lesser of:-

                           (i)     (aa)     if the Ship has become a Total
                                            Loss, the amount which the seller or
                                            lessor of the Ship is contractually
                                            entitled as against the relevant
                                            purchaser or lessee (as the case may
                                            be) to receive, and has received,
                                            from the Insurances of the Ship less
                                            any part thereof due to, or
                                            belonging to, or by reference to
                                            which a payment is to be made to,
                                            the purchaser or lessee (as the case
                                            may be); or

<PAGE>

                                      - 54 -

                                    (bb)    if the Ship is sold pursuant to a
                                            power conferred on the mortgagee or
                                            lessor thereof, or an obligation on
                                            the lessor thereof, following a
                                            default by the purchaser or lessee,
                                            the net sale proceeds of the Ship
                                            received by the mortgagee or lessor
                                            (after deducting the costs and
                                            out-of-pocket expenses incurred in
                                            connection with the sale) less any
                                            part thereof due to, or belonging
                                            to, or by reference to which a
                                            payment is to be made to, the
                                            purchaser or lessee (as the case may
                                            be);

                                    (cc)    in any other case the amount of
                                            deferred payment instalments, rent
                                            or other deferred consideration
                                            received since the drawdown date of
                                            the first Advance or, as the case
                                            may be, the preceding Disposal
                                            Reduction Date by the member of the
                                            Stena AB Group which has disposed of
                                            the relevant Ship;

                                    (dd)    if, following a default by the
                                            purchaser or lessee of the Ship
                                            under an agreement for the sale of
                                            the Ship on Credit Terms or the
                                            agreed early termination thereof the
                                            agreement is validly terminated, and
                                            the Ship is sold by the Shipowner
                                            following the default or agreed
                                            early termination the amount
                                            received by the Shipowner by way of
                                            damages for breach of the agreement
                                            (or any payment received by the
                                            Shipowner or Stena Charterers on the
                                            compromise of legal proceedings in
                                            respect of such breach) or
                                            compensation for early termination;
                                            and

                           (ii)     the amount referred to in paragraph (x)(ii)
                                    of this Clause 5.3(F); and

                  (z)      in relation to any Mortgaged Port or part of a
                           Mortgaged Port (other than any such part sold for a
                           consideration of less than $25,000 or the equivalent
                           thereof in any other currency) and/or any shares in
                           the capital of a Port Owner which is or are sold, an
                           amount in Dollars which is the lesser of:-

                           (i)      the Net Cash Sale Proceeds thereof; and

                           (ii)     the amount referred to in paragraph (x)(ii)
                                    of this Clause 5.3(F).

                  However, if the Security Value has not been determined by the
                  relevant Disposal Reduction Date, the Disposal Reduction
                  Amount shall be the amount referred to in sub-paragraph
                  (x)(i), (y)(i) or (z)(i) (as the case may be) of this
                  definition, provided that if, no later than thirty (30) days
                  after such Disposal Reduction Date, the Borrower demonstrates
                  to the Agent's satisfaction that, on the basis of the Security
                  Value as at the relevant Disposal Reduction Date, a lower
                  Disposal Reduction Amount would have applied at such date,
                  such lower Disposal Reduction Amount shall, for the purposes
                  of determining the respective Commitments of the Banks and for
                  all other relevant purposes of

<PAGE>

                                      - 55 -

                   this Agreement, be deemed to have applied on and from such
                   Disposal Reduction Date;

                  "SECURITY VALUE" means the amount in Dollars (as certified by
                  the Agent whose certificate shall, in the absence of manifest
                  error, be conclusive and binding on the parties hereto) which,
                  at any relevant time, is the aggregate of:

                  (w)      the market value of all the Owned Ships which are
                           then Mortgaged Ships (together with their related
                           Linkspans, if any, but only if they are Mortgaged
                           Linkspans) determined in accordance with Clause
                           5.3(G) provided that if the Ship Mortgage on any such
                           Owned Ship or the Linkspan Mortgage on such Linkspan
                           (as the case may be) is restricted to a registered
                           maximum amount recoverable thereunder then such
                           maximum mortgage amount shall be used towards
                           calculating the Security Value if it is lower than
                           the market value determined as aforesaid in respect
                           of such Owned Ship or Linkspan provided further that,
                           in the case of m.v. "STENA GERMANICA", if the
                           principal amount due under the Stena Germanica Loan
                           Agreement is less than the market value of the Ship
                           and the registered maximum amount recoverable under
                           the Stena Germanica Mortgage then such principal
                           amount shall be used towards calculating the Security
                           Value in respect of such Ship;

                  (x)      in the case of a Transferred Ship which is sold on
                           terms which provide for capital payments to be paid
                           over a period of time together with interest at an
                           agreed rate or let on hire purchase terms where the
                           rentals are calculated by reference to an inherent
                           rate of interest, the aggregate amount of the capital
                           payments or the capital element of such payments
                           payable in respect of the Ship during the period for
                           which such payments are to be made under the relevant
                           Commercial Documents;

                  (y)      in the case of a Transferred Ship which is sold or
                           let on hire purchase terms and the relevant
                           Commercial Documents do not distinguish between
                           capital and interest payments inherent in the
                           instalment or rental payments made the aggregate of
                           the payments payable in respect of the Ship during
                           the period for which such payments are to be made
                           under the relevant Commercial Documents, discounted
                           to their net present value at a discount rate
                           certified by an Officer's Certificate as the average
                           cost of funds of the Stena AB Group as at the date on
                           which the Asset Disposition affecting the relevant
                           ship is completed and in the case that any of the
                           above are initially expressed in a currency other
                           than Dollars the relevant value shall be taken to be
                           the amount in Dollars obtained by converting the
                           amount in foreign currency at the Agent's spot rate
                           for the purchase of the relevant foreign currency
                           with Dollars as at the date of determination of the
                           Security Value;

                  (z)      the market value of the Ports which are then subject
                           to a Port Mortgage determined in accordance with
                           Clause 5.3(H) unless the Port Mortgage on any such
                           Port is restricted to a registered maximum amount


<PAGE>

                                      - 56 -

                           recoverable thereunder in which case such maximum
                           mortgage amount shall be used towards calculating the
                           Security Value if it is lower than the market value
                           determined as aforesaid in respect of such Port.

         (G)      Valuation of Ships and Linkspans

                  The value of each Mortgaged Ship shall be determined as being
                  the mortgage free value thereof after deduction of the
                  aggregate amount of any mortgage debt secured thereon in
                  favour of any creditor other than the Security Agent and, in
                  the case of m.v. "STENA CARISMA" and any other Ship which may
                  become a Mortgaged Ship and which requires the use of
                  Linkspans for its operation, such value shall be taken as the
                  mortgage free value thereof together with the book value of
                  its related Linkspans (but only if they are Mortgaged
                  Linkspans) as shown in the then latest Asset Coverage
                  Compliance Certificate delivered to the Agent. For these
                  purposes, the mortgage free value of each such Ship (together,
                  if relevant, with its Linkspans) shall be the mean of the
                  valuations of the charter-free market value thereof on a
                  willing buyer/willing seller basis as assessed as at the
                  relevant date by three leading European shipbrokers active in
                  the ro-ro/ferry market appointed by the Borrower from the
                  following list of brokers:-

                  Barry Rogliano Salles
                  Brax Shipping HB
                  Simsonship AB
                  Maersk Sales
                  Parimar Francharte S.A.
                  English White Shipping Ltd.
                  Nor Ocean

                  or any other broker nominated by the Borrower and approved by
                  the Agent.

                  Valuations of each Mortgaged Ship and each Mortgaged Linkspan
                  shall be obtained once annually as at 30 December 2001 and as
                  at the dates falling at twelve (12) monthly intervals
                  thereafter and as at any other Disposal Reduction Date (which
                  valuations are to be received by the Agent within twenty one
                  (21) days after the relevant dates) provided however that
                  where a Disposal Reduction Date occurs within six (6) months
                  of a previous valuation pursuant to this Clause 5.3(G), the
                  value of each such Ship or Linkspan shall be the value
                  previously determined pursuant to this Clause 5.3(G) and no
                  further valuations shall be obtained for the relevant Disposal
                  Reduction Date unless required by the Borrower.

         (H)      Valuation of Holyhead Port and Stranraer Port

                  The value of each Port shall be the amount (expressed in
                  Dollars by reference to exchange rates prevailing on the day
                  of computation of the Security Value) determined as the
                  earnings before interest, taxes, depreciation and amortisation
                  in respect of such Port for the previous period of twelve (12)
                  months as shown in the documents relating to such Port most
                  recently delivered to and accepted by the Agent pursuant to
                  Clause 10.2(E) multiplied by six and one half (6.5) provided
                  that if the Agent on the instructions of the


<PAGE>

                                      - 57 -

                  Majority Banks gives notice to the Borrower that the
                  foregoing does not represent a fair market value of Holyhead
                  Port and/or Stranraer Port the value shall be determined by
                  the auditors of the Borrower or such other firm of auditors
                  as the Agent shall on the instructions of the Majority Banks
                  appoint on a basis which in the opinion of such auditors
                  provides a Fair Market Valuation in accordance with the
                  practice adopted by auditors in valuing similar port
                  facilities in the United Kingdom.

                  The foregoing procedure shall also be used to value any other
                  Port which may from time to time be subject to a Port Mortgage
                  in favour of the Security Agent.

                  The initial values in Sterling of Holyhead Port and Stranraer
                  Port (computed in accordance with the foregoing procedure for
                  each Port for the twelve (12) month period ended 31 December
                  2000) shall be (pound)66,300,000 and (pound)17,600,000
                  respectively.

         (I)      Valuation costs

                  The reasonable costs of valuations carried out pursuant to
                  this Clause 5.3 shall be reimbursed by the Borrower to the
                  Agent on the Agent's request.

         (J)      Date of Total Loss

                  For the purpose of this Agreement, a Total Loss shall be
                  deemed to have occurred:-

                  (i)      in the case of an actual total loss of a Ship or
                           Linkspan on the actual date and at the time such Ship
                           or Linkspan was lost or, if such date is not known,
                           on the date on which the Ship or Linkspan was last
                           reported;

                  (ii)     in the case of a constructive total loss of a Ship or
                           Linkspan, upon the date and at the time notice of
                           abandonment of such Ship or Linkspan is given to the
                           insurers of such Ship or Linkspan for the time being
                           (provided a claim for total loss is admitted by such
                           insurers) or, if such insurers do not forthwith admit
                           such a claim, at the date and at the time at which
                           either a total loss is subsequently admitted by the
                           insurers or a total loss is subsequently adjudged by
                           a competent court of law or arbitration panel to have
                           occurred or, if earlier, the date falling six (6)
                           months after notice of abandonment of such Ship or
                           Linkspan was given to the insurers;

                  (iii)    in the case of a compromised or arranged total loss,
                           on the date upon which a binding agreement as to such
                           compromised or arranged total loss has been entered
                           into by the insurers of the relevant Ship or
                           Linkspan;

                  (iv)     in the case of Compulsory Acquisition of a Ship or
                           Linkspan, on the date upon which the relevant
                           requisition of title or other compulsory acquisition
                           of such Ship or Linkspan occurs; and

<PAGE>

                                      - 58 -


                  (v)      in the case of hijacking, theft, condemnation,
                           capture, seizure, arrest, detention or confiscation
                           of a Ship or Linkspan (other than where the same
                           amounts to Compulsory Acquisition of such Ship or
                           Linkspan) by any Government Entity, or by persons
                           purporting to act on behalf of any Government Entity,
                           which deprives the relevant Shipowner of the use or
                           the relevant Stena Charterer or third party demise
                           charterer of such Ship or Linkspan for more than one
                           hundred and eighty (180) days, upon the expiry of the
                           period of one hundred and eighty (180) days after the
                           date upon which the relevant hijacking, theft,
                           condemnation, capture, seizure, arrest, detention or
                           confiscation occurred.

         (K)      Application of Total Loss and sale proceeds

                  Provided no Event of Default has occurred and is continuing,
                  and provided the Borrower shall have complied with Clauses 5.3
                  and 5.4, any insurance moneys or Requisition Compensation or
                  proceeds of sale received by the Agent or the Security Agent
                  in respect of a Total Loss of a Ship or sale of a Mortgaged
                  Ship or Mortgaged Port or Mortgaged Linkspan under the
                  relevant Security Documents or in consideration of the
                  agreement of the Security Agent to release its security in
                  relation to any Ship or Port shall be paid to the relevant
                  mortgagor or assignor or (if and to the extent necessary to
                  ensure compliance with Clause 5.3) retained by the Agent for
                  application in or towards making any prepayment and paying any
                  other moneys required under Clauses 5.3 and 5.4. For this
                  purpose, any such insurance moneys or Requisition Compensation
                  or proceeds of sale so received (or the relevant part thereof)
                  may be applied, if the relevant mortgagor or assignor so
                  requests the Agent in writing before the date of receipt
                  thereof, in effecting any prepayment required in accordance
                  with Clause 5.3 and paying related amounts due under Clause
                  5.4 provided that in relation to any Transferred Ships the
                  references in this Clause 5.3(K) to sale proceeds, insurance
                  moneys and Requisition Compensation shall be deemed to refer
                  to the moneys received by the Security Agent under the
                  relevant Receivables Assignment. Pending each Disposal
                  Reduction Date in relation thereto such moneys shall be
                  accumulated in an account of the relevant assignor with the
                  Agent and the balance thereof after making applications
                  required by Clauses 5.3 and 5.4 shall, provided no Event of
                  Default has occurred and is continuing or would be occasioned
                  thereby, be released to the relevant assignor on the relevant
                  Disposal Reduction Date or as soon thereafter as is reasonably
                  practicable.

(L)      Sale of Ships on Credit Terms

                  Where a Shipowner sells its Mortgaged Ship on Credit Terms,
                  the relevant Shipowner shall before completion of the sale (in
                  the case of a credit sale) or delivery of the Ship to the
                  relevant charterer (in the case of a hire purchase or
                  conditional sale) execute and deliver to the Security Agent an
                  assignment in substantially the form of the Receivables
                  Assignment of the amounts receivable in respect of the sale or
                  letting of the Ship and all security granted to such Shipowner
                  in respect of the obligation of the buyer to pay the
                  outstanding balance of the purchase price or rentals and the
                  option price under any relevant hire purchase agreement in
                  respect of such Ship. Where the Ship

<PAGE>

                                      - 59 -

                  is sold pursuant to a credit sale or other arrangement under
                  which the purchaser acquires title to the Ship, such
                  security shall in any event include either:-

                  (i)      a first priority mortgage in favour of the seller of
                           the Ship constituted under the laws of an Approved
                           Flag State and a first priority assignment in favour
                           of the seller of the Insurances of the Ship which
                           shall be placed on terms which are not materially
                           less favourable to the seller than the terms set out
                           in the form of Deed of Covenant in Schedule 11.1 in
                           the case of mortgage covenants and the terms set out
                           in Schedule 9 in the case of an Insurance Assignment;
                           or

                  (ii)     a bank guarantee from a first class international
                           bank guaranteeing to the seller of the Ship repayment
                           of the full amount of the deferred consideration for
                           the sale of the Ship.

                  The Borrower and Stena AB shall procure that without the
                  consent of the Banks no Ship is sold on Credit Terms for a
                  consideration the principal or capital amount of which is less
                  than the Fair Market Value of the Ship at the time the Ship is
                  sold.

5.4      Amounts payable on prepayment

         Any prepayment under this Agreement  shall be made together with:-

         (A)      accrued interest on the amount to be prepaid to the date of
                  such prepayment (calculated in respect of the period during
                  which the relevant Substitute Basis has applied by virtue of
                  Clause 4.5, at a rate per annum equal to the aggregate of (i)
                  the Margin and (ii) for such period the cost to such Bank of
                  funding its Contribution);

         (B)      any additional amounts payable under Clauses 7.7 and 17.2;

         (C)      costs certified by the Agent as necessary to compensate the
                  Banks for the cost of repaying fixed deposits borrowed to fund
                  any part of any Advance which is prepaid before the Maturity
                  Date of any Advance or the fixed term by reference to which
                  the relevant rate of interest has been ascertained;

         (D)      all other sums payable by the Borrower to the relevant Bank
                  under this Agreement or any of the other Security Documents
                  including, without limitation, any accrued commitment
                  commission payable under Clause 6.2 and any amounts payable
                  under Clause 17.

5.5      Notice of prepayment

         No voluntary prepayment of an Advance may be effected under this Clause
         5 unless the Borrower shall have given the Agent at least three (3)
         Banking Days' notice of its intention to make such prepayment, except
         on the sale of a Ship or a Total Loss. Every notice of prepayment shall
         be effective only on actual receipt by the Agent, shall be irrevocable,
         shall specify the amount to be prepaid and shall oblige the Borrower to
         make such prepayment on the date specified. Unless and to the extent
         that the Commitments are cancelled or reduced on or with effect from
         the date of any

<PAGE>

                                      - 60 -

         such prepayment, amounts prepaid may be re-drawn under this Agreement.
         The Borrower may not prepay any Advance or any part thereof save as
         expressly provided in this Agreement.

5.6      Change of control of Stena AB: mandatory cancellation

         If at any time during the Security Period less than seventy five per
         cent (75%) of the issued voting share capital of Stena AB (including
         any votes attached to any shares of Stena AB into which outstanding
         warrants or other securities may be converted) is held by members of
         the Sten A. Olsson Family the Borrower or the Agent shall immediately
         upon becoming aware thereof give notice to the other. The Agent shall
         consult with the Banks as to the appropriate action to be taken in the
         light of representations by the Borrower as to the consequences of the
         change of shareholding. Without prejudice to Clause 15, not earlier
         than one hundred and twenty (120) days after receiving from or giving
         notice to the Borrower as provided above the Agent shall unless all of
         the Banks agree otherwise if the shareholding of the Sten A. Olsson
         Family in Stena AB does not then exceed seventy five per cent (75%),
         give notice to the Borrower requiring the Borrower to prepay all the
         Advances within thirty (30) days of the Agent's notice and upon such
         notice the Borrower shall within such period make payment to the Agent
         accordingly and the Commitments shall be cancelled at the end of such
         thirty (30) day period.

5.7      Change of control of the Borrower: mandatory cancellation

         If at any time during the Security Period Stena AB ceases directly or
         via a Wholly Owned Subsidiary of Stena AB to hold the entire issued
         share capital of the Borrower without the prior consent of the Majority
         Banks the Advances shall forthwith become repayable on the Agent's
         demand and the Agent may, and if so directed by the Majority Banks
         shall, make such a demand on the Borrower whereupon the Advances shall
         be repayable on the date specified in such notice together with all
         interest and any commitment commission accrued and all other sums
         payable under this Agreement and the Commitments shall be cancelled in
         full.

5.8      Voluntary cancellation of Commitments

         The Borrower may at any time during the Availability Period by notice
         to the Agent (effective only on actual receipt) cancel with effect from
         a date not less than thirty (30) days after the receipt by the Agent of
         such notice the whole or any part (being $10,000,000 or any larger sum
         which is an integral multiple of $10,000,000 but not more than the
         Available Commitments of all of the Banks as at such date) of the total
         of the Available Commitments as at such date of all the Banks. Any such
         notice of cancellation, once given, shall be irrevocable and upon such
         cancellation taking effect the Commitment of each of the Banks shall be
         reduced proportionately and the Borrower shall on the date designated
         in its notice prepay such amount of the outstanding Advances as will
         ensure that immediately thereafter the aggregate amount of the Advances
         will not exceed the Commitments as so reduced by virtue of the
         Borrower's cancellation.

<PAGE>

                                      - 61 -


5.9      Additional partial cancellation

         The Borrower may also at any time during the Availability Period by
         notice to the Agent (effective only on actual receipt) cancel with
         effect from a date not less than thirty (30) Banking Days after receipt
         by the Agent of such notice the whole but not part only, but without
         prejudice to its obligations under Clauses 7.7 and 17.2, of the
         Commitment of any Bank to which the Borrower shall have become obliged
         to pay additional amounts under Clause 7.7 or 17.2. Upon any notice of
         such prepayment being given, the Commitment of the relevant Bank shall
         be reduced to zero and the Borrower shall be obliged to prepay the
         Contribution of such Bank on such date.

5.10     Prepayment during Term

         The Borrower may at any time by notice to the Agent (effective only on
         actual receipt) prepay the whole or any part (being $5,000,000 or any
         larger sum which is an integral multiple of $1,000,000) of any Advance
         prior to its Maturity Date on not less than three (3) Banking Days
         notice (whether or not any part of the Commitment is also being
         cancelled on such date pursuant to any provision of this Agreement) and
         the Borrower shall when making such prepayment, make such prepayment
         together with any amounts as referred to in Clause 5.4.

5.11     Transferred Ships : Application of moneys received

         The Borrower shall procure that moneys payable by the purchasers of
         Transferred Ships on account of the deferred consideration for the
         purchase of the relevant Ships shall be paid to accounts in the name of
         the Security Agent established with itself. The amounts accumulated in
         such accounts shall be applied on each Disposal Reduction Date in
         payment to the Agent of the Disposal Reduction Amount in respect of the
         relevant Ship and, provided that no Event of Default has occurred and
         is continuing, the balance standing to the credit of the relevant
         accounts shall be released to the relevant seller immediately following
         such application. Moneys credited to the relevant accounts will bear
         interest at the normal rates paid by the Agent for accounts of the
         relevant type to first class customers.

6.       FEES, COMMISSION, MARGIN AND EXPENSES

6.1      Agency fee

         The Borrower shall pay to the Agent and Security Agent on the date
         hereof and on each anniversary thereof during the Security Period an
         agency fee of the amount set out in a separate letter agreement dated
         21 September 2001 made between Svenska Handelsbanken AB (publ), the
         Borrower and Stena AB.

6.2      Commitment commission

         The Borrower shall pay to the Agent for the account of the Banks
         quarterly in arrears during the Availability Period commitment
         commission computed from the date of this Agreement at an annual rate
         equal to zero point five per cent (0.5%) on the daily average undrawn
         and uncancelled amount of each Bank's Available Commitment in relation
         to the relevant period. Commitment commission shall also be payable in

<PAGE>

                                      - 62 -

         respect of any portion of the Commitments which has been suspended
         pursuant to Clause 5.3 (E) but not cancelled.

         The first period in respect of which such commitment commission shall
         be calculated will be the period from the date of this Agreement up to
         and including 30 September 2001; thereafter the commitment commission
         shall be calculated for each of the following consecutive periods of
         three (3) months ending on 31 March, 30 June, 30 September and 31
         December respectively in each year with a final instalment being
         calculated in respect of the period ending on the last day of the
         Availability Period.

         The amount of commitment commission payable in respect of each such
         period shall be calculated by the Agent within five (5) Banking Days of
         the end of such period and shall be notified by the Agent to the
         Borrower who shall pay such amount to the Agent not later than five (5)
         Banking Days after receiving the Agent's notification thereof.

6.3      Arrangement fee

         The Borrower shall pay to the Agent for the account of the Co-Arrangers
         on the date of this Agreement an arrangement fee of the amount set out
         in a separate letter agreement dated of even date herewith made between
         the Agent and the Borrower.

6.4      Expenses

         The Borrower shall pay to the Agent on a full indemnity basis on demand
         all expenses (including external and internal legal, printing and
         out-of-pocket expenses) incurred:-

         (A)      by the Agent and/or the Security Agent and/or the Co-Arrangers
                  in connection with the negotiation, preparation, primary
                  syndication, execution and, where relevant, registration of
                  the Security Documents and of any amendment or extension of or
                  the granting of any waiver or consent under, any of the
                  Security Documents (but excluding, for the avoidance of doubt,
                  any such expense incurred in connection with the transfer,
                  assignment or sub-participation of any of the rights and/or
                  obligations of any Bank under the Security Documents other
                  than by the Co-Arrangers in connection with the primary
                  syndication of the facility granted hereunder); and

         (B)      by the Agent, the Security Agent and any of the Banks in
                  contemplation of, or otherwise in connection with, the
                  enforcement of, or preservation of any rights under, any of
                  the Security Documents, or otherwise in respect of the moneys
                  owing under any of the Security Documents together with
                  interest at the rate referred to in Clause 4.2 from the date
                  on which such expenses were incurred, to the date of payment
                  (as well after as before judgment)

         provided that the Borrower shall not be liable to reimburse the costs
         of any external legal advisers under paragraph (A) except the legal
         fees and disbursements of Messrs Sinclair Roche & Temperley as counsel
         to the Co-Arrangers and the fees and disbursements of the legal counsel
         who are to render opinions in respect of any of the Security Documents
         or to deal with registration of any of the Ship Mortgages or other
         Security Documents on behalf of the Security Agent.

<PAGE>

                                      - 36 -


6.5      Value added tax

         All fees, commissions and expenses payable pursuant to this Clause 6
         shall be paid together with an amount equal to any value added tax
         payable by the Agent, the Security Agent, the Co-Arranger or any Bank
         in respect of such fees and expenses and any value added tax chargeable
         in respect of any services supplied by the Agent, the Security Agent,
         the Co-Arrangers or any Bank under this Agreement shall, on delivery of
         a value added tax invoice, be paid in addition to any sum agreed to be
         paid hereunder to the extent that, in either case, the Agent, the
         Security Agent, the Co-Arrangers or the relevant Bank (as the case may
         be) shall have certified (such certificate to be binding and
         conclusive, in the absence of manifest error, on the Borrower) to the
         Borrower that it is not entitled to credit for such value added tax as
         input tax.

6.6      Stamp and other duties

         The Borrower shall pay all stamp, documentary, registration or other
         like duties or taxes (including any duties or taxes payable by the
         Agent, the Security Agent, the Co-Arrangers and the Banks but excluding
         any such duties or taxes incurred in connection with any transfer,
         assignment or sub-participation of any of the rights and/or obligations
         of a Bank under any of the Security Documents) imposed on or in
         connection with any of the Commercial Documents or the Security
         Documents and shall indemnify the Agent, the Co-Arrangers, the Security
         Agent and the Banks against any liability arising by reason of any
         delay or omission by the Borrower to pay such duties or taxes.

6.7      Supplemental Margin

         (A)      The Margin is calculated on the basis that the daily average
                  of the Advances of each Bank during each Calculation Period
                  will not exceed thirty three and one-third of one per cent (33
                  1/3%) of the daily average of the Commitment of that Bank
                  during such Calculation Period. If such daily average for a
                  Calculation Period exceeds thirty three and one-third of one
                  per cent (33 1/3%) and sixty six and two-thirds of one per
                  cent (66 2/3%) (as the case may be) an additional amount shall
                  be payable by the Borrower to each Bank in the manner provided
                  by this Clause 6.7.

         (B)      For the purposes of this Clause 6.7:-

                  (i)      "CALCULATION PERIOD" means the period commencing on
                           the Availability Date and ending on the first Review
                           Date and each of the successive three (3) monthly
                           periods thereafter each expiring on a Review Date
                           with the final Calculation Period (whether of three
                           (3) months or shorter) ending on the final Review
                           Date; and

                  (ii)     "REVIEW DATE" means 30 September 2001 and 31 March,
                           30 June and 30 September and 31 December in each year
                           thereafter up to the date upon which all of the
                           Commitments are reduced to zero, and such date
                           itself.

         (C)      Within five (5) Banking Days after each Review Date the Agent
                  shall

<PAGE>

                                      - 64 -

                   calculate the actual daily average of the Advances of each
                   Bank during the Calculation Period expiring on such Review
                   Date according to the following formula -

                           A        =       O        x        100
                                            -
                                            C

                  where -

                  A is the actual daily average of the Advances of the relevant
                  Bank during the relevant Calculation Period, expressed as a
                  percentage.

                  O is the aggregate of the amounts of such Bank's Advances on
                  each day during such Calculation Period; and

                  C is the aggregate of the amounts of the Commitment of such
                  Bank on each day during such Calculation Period.

         (D)      For the purposes of this Clause 6.7, the rate of supplemental
                  margin in relation to a Calculation Period will be as
                  follows:-

                  (i)      where A as so calculated exceeds thirty three and
                           one-third of one per cent (33 1/3%) but does not
                           exceed sixty six and two-thirds of one per cent (66
                           2/3%), the supplemental margin for such part of such
                           Calculation Period will be zero point twenty five per
                           cent (0.25%); and

                  (ii)     where A as so calculated exceeds sixty six and
                           two-thirds of one per cent (66 2/3%), the
                           supplemental margin for such part of such Calculation
                           Period will be zero point three hundred and seventy
                           five per cent (0.375%).

         (E)      Upon calculating the rate of supplemental margin (if any), the
                  Agent shall promptly calculate an amount (the "Supplemental
                  Margin Amount") equal to interest accruing at an annual
                  percentage rate equal to the supplemental margin for such
                  Calculation Period on the daily Advances of each Bank from the
                  beginning of such Calculation Period to the Review Date on
                  which it ends. The Agent shall then notify the Borrower and
                  each Bank of the rate of supplemental margin (if any) for such
                  Calculation Period and the Supplemental Margin Amount (if any)
                  due to such Bank for such Calculation Period.

         (F)      The Borrower shall pay to the Agent, for the account of the
                  Banks, the aggregate of the Supplemental Margin Amounts due to
                  each of the Banks for a Calculation Period within five (5)
                  Banking Days of being notified by the Agent of the rate of
                  supplemental margin and the amount of the Supplemental Margin
                  Amounts for that Calculation Period.

7.       PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS

7.1      No set-off or counterclaim; distribution to the Banks


<PAGE>

                                      - 65 -

         The Borrower acknowledges that in performing their obligations under
         this Agreement, the Banks will be incurring liabilities to third
         parties in relation to the funding of amounts to the Borrower, such
         liabilities matching the liabilities of the Borrower to the Banks and
         that it is reasonable for the Banks to be entitled to receive payments
         from the Borrower gross on the due date in order that the Banks are put
         in a position to perform their matching obligations to the relevant
         third parties. Accordingly all payments to be made by the Borrower
         under any of the Security Documents shall be made in full, without any
         set-off or counterclaim whatsoever and, subject as provided in Clause
         7.7, free and clear of any deductions or withholdings, in Dollars
         (except for costs, charges or expenses which shall, at the request of
         the Agent, be payable in the currency in which they are incurred) on
         the due date to the account required under Clause 7.12. Save where this
         Agreement specifically provides for a payment to be made for the
         account of a particular Bank (including, without limitation, Clauses 6,
         7.7, 16.2, 17.1, 17.2 and 18.2) in which case the Agent shall
         distribute the relevant payment to the Bank concerned, payments to be
         made by the Borrower under this Agreement shall be for the account of
         all the Banks and the Agent shall forthwith distribute such payments in
         like funds as are received by the Agent to the Banks rateably in
         accordance with their Commitments.

7.2      Payments by the Banks

         (A)      To the Agent

                  All payments to be made by a Bank to or for the account of the
                  Agent under this Agreement shall be made in full, without any
                  set-off or counterclaim whatsoever and, subject as provided in
                  Clause 7.8, free and clear of any deductions or withholdings,
                  in Dollars on the due date to the account of the Agent at such
                  bank as the Agent may from time to time specify for this
                  purpose.

         (B)      To the Borrower

                  All sums to be advanced by the Banks to the Borrower under
                  this Agreement shall be remitted in Dollars on the date of the
                  Advance to the account of the Agent at such bank as the Agent
                  may have notified to the Banks and shall be paid by the Agent
                  on such date in like funds as are received by the Agent to the
                  account specified in the relevant Drawdown Notice.

7.3      Agent may assume receipt

         Where any sum is to be paid under any of the Security Documents to the
         Agent for the account of another person, the Agent may assume that the
         payment will be made when due and the Agent may (but shall not be
         obliged to) make such sum available to the person so entitled. If it
         proves to be the case that such payment was not made to the Agent, then
         the person to whom such sum was so made available shall on request
         refund such sum to the Agent together with interest thereon sufficient
         to compensate the Agent for the cost of making available such sum up to
         the date of such repayment and the person by whom such sum was payable
         shall indemnify the Agent and/or person to whom such sum was made
         available by the Agent for any and all loss or expense which the Agent
         or such person may sustain or incur as a consequence of such sum not
         having been paid on its due date.


<PAGE>

                                      - 66 -

7.4      Non-Banking Days

         When any payment under any of the Security Documents would otherwise be
         due, or the Termination Date would otherwise fall, on a day which is
         not a Banking Day, the due date for payment or (as the case may be) the
         Termination Date shall be extended to the next following Banking Day
         unless such Banking Day falls in the next calendar month in which case
         payment shall be made, or (as the case may be) the Termination Date
         shall fall, on the immediately preceding Banking Day.

7.5      Calculations

         All interest, commissions, fees and other payments of an annual nature
         under any of the Security Documents shall accrue from day to day and be
         calculated on the basis of actual days elapsed and a 360 day year.

7.6      Certificates conclusive

         Any certificate or determination of the Agent or any Bank as to any
         rate of interest or any other amount pursuant to and for the purposes
         of any of the Security Documents shall substantiate in reasonably
         sufficient detail the interest or other amount concerned and, subject
         thereto, shall, in the absence of manifest error, be conclusive and
         binding on the Borrower and (in the case of a certificate or
         determination by the Agent) on the Banks. The Agent shall, promptly
         upon the request of the Borrower, send to the Borrower such details as
         may reasonably be required by the Borrower setting out the manner in
         which any such rate or amount has been determined, together with such
         documents and calculations as may reasonably be required by the
         Borrower in order to verify the same.

7.7      Grossing-up for Taxes - Borrower

         (A)      Grossing up

                  If at any time the Borrower or Stena AB is required to make
                  any deduction or withholding in respect of Taxes from any
                  payment due under any of the Security Documents for the
                  account of any Bank, the Co-Arrangers, the Security Agent or
                  the Agent (or if the Agent is required to make any deduction
                  or withholding from a payment to the Co-Arrangers, the
                  Security Agent or a Bank), the sum due from the Borrower or,
                  as the case may be, Stena AB in respect of such payment shall
                  be increased to the extent necessary to ensure that, after the
                  making of such deduction or withholding, each Bank, each
                  Co-Arranger, the Security Agent, and the Agent receives on the
                  due date for such payment (and retains, free from any
                  liability in respect of such deduction or withholding), a net
                  sum equal to the sum which it would have received had no such
                  deduction or withholding been required to be made and the
                  Borrower and Stena AB shall indemnify each Bank, the
                  Co-Arrangers, the Security Agent and the Agent against any
                  losses or costs incurred by any of them by reason of any
                  failure of the Borrower or Stena AB to make any such deduction
                  or withholding or by reason of any increased payment not being
                  made on the due date for such payment. The Borrower or, as the
                  case may be, Stena AB shall promptly deliver to the Agent any
                  receipts, certificates or other proof


<PAGE>

                                      - 67 -

                  evidencing the amounts (if any) paid or payable in respect
                  of any deduction or withholding as aforesaid.

         (B)      Tax credits

                  If, following any such deduction or withholding as is referred
                  to in Clause 7.7(A) from any payment by the Borrower or Stena
                  AB, the recipient of that payment shall receive or be granted
                  a credit against or remission for any Taxes payable by it,
                  such recipient shall, subject to the Borrower or, as the case
                  may be, Stena AB having made any increased payment in
                  accordance with Clause 7.7(A) and to the extent that the
                  recipient can do so without prejudicing the retention of the
                  amount of such credit or remission and without prejudice to
                  the right of the recipient to obtain any other relief or
                  allowance which may be available to it, reimburse the Borrower
                  or, as the case may be, Stena AB with such amount as the
                  recipient shall in its absolute discretion certify to be the
                  proportion of such credit or remission as will leave the
                  recipient (after such reimbursement) in no worse position than
                  it would have been in had there been no such deduction or
                  withholding from the payment by the recipient as aforesaid.
                  Such reimbursement shall be made forthwith upon the Bank
                  certifying that the amount of such credit or remission has
                  been received by it. Nothing contained in this Agreement shall
                  oblige the recipient to rearrange its tax affairs or to
                  disclose any information regarding its tax affairs and
                  computations. Without prejudice to the generality of the
                  foregoing, neither the Borrower nor Stena AB shall by virtue
                  of this Clause 7.7(B) be entitled to enquire about the
                  recipient's tax affairs.

7.8      Grossing-up for Taxes - Banks

         If at any time any Bank is required to make any deduction or
         withholding in respect of Taxes from any payment due under any of the
         Security Documents for the account of the Agent or the Security Agent
         the sum due from such Bank in respect of such payment shall be
         increased to the extent necessary to ensure that, after the making of
         such deduction or withholding, the Agent and the Security Agent receive
         on the due date for such payment (and retains free from any liability
         in respect of such deduction or withholding) a net sum equal to the sum
         which they would have received had no such deduction or withholding
         been required to be made and each Bank shall indemnify the Agent and
         the Security Agent against any losses or costs incurred by any of them
         by reason of any failure of such Bank to make any such deduction or
         withholding or by reason of any increased payment not being made on the
         due date for such payment.

7.9      Bank accounts

         Each Bank shall maintain, in accordance with its usual practice, an
         account or accounts evidencing the amounts from time to time lent by,
         owing to and paid to it under the Security Documents. The Agent shall
         maintain a control account showing the Advances and other sums owing to
         the Agent, the Security Agent and the Banks under the Security
         Documents and all payments in respect thereof made from time to time.
         The control account shall, in the absence of manifest error, be
         conclusive as to the amount from time to time owing to the Agent, the
         Security Agent and the Banks under the Security Documents.

<PAGE>

                                      - 68 -


7.10     Application of moneys

         All moneys received by the Agent, the Security Agent or any Bank under
         or pursuant to this Agreement or any other of the Security Documents
         and expressed to be applicable in accordance with this Clause 7.10 or
         whose application is not otherwise specifically provided for in the
         Security Documents shall (if not already done so) be paid to the Agent
         and shall be applied by the Agent:-

         FIRST:     in or towards satisfaction pari passu of any amounts in
                    respect of the balance of the Outstanding Indebtedness as
                    are then accrued due and payable or are then due and payable
                    by virtue of payment demanded;

         SECONDLY:  the surplus (if any) shall be paid to the Borrower or
                    whomsoever else shall be entitled thereto.

7.11     Suspense account

         Notwithstanding the provisions of Clause 7.10, insofar as any moneys
         are received or recovered by the Security Agent under or in connection
         with the guarantee and indemnity contained in Clause 8, such moneys may
         at the Security Agent's discretion be transferred to a suspense or
         impersonal account and may be held in such account for so long as the
         Security Agent thinks fit pending payment to the Agent for application
         in or towards discharging the obligations of the Borrower under this
         Agreement and the other Security Documents.

7.12     Place of payment

         All payments to be made by the Borrower or Stena AB under any of the
         Security Documents shall be made not later than 10.00 a.m. New York
         time on the due date and in same day funds to the account of the Agent
         at The Chase Manhattan Bank New York City, USA by way of payment order
         MT100 SWIFT Address HANDSESG or tested telex no. 27500 answerback
         HANDGBS quoting reference RVIC STBNL 647 or at such other office or
         bank in New York City as the Agent may from time to time designate.

8.       GUARANTEE AND INDEMNITY

8.1      Guarantee

         In consideration of the Banks agreeing at the request of Stena AB to
         make available to the Borrower the loan facility provided for in this
         Agreement in accordance with the terms of this Agreement and in order
         to secure the payment of the Outstanding Indebtedness in accordance
         with the provisions of the Security Documents and the performance and
         observance of all of the obligations contained in the Security
         Documents:-

         (A)      Stena AB as primary obligor as and for its own debt and not
                  merely as surety hereby undertakes to the Security Agent as
                  trustee for and on behalf of itself, the Banks, the
                  Co-Arrangers and the Agent to be responsible for and hereby
                  guarantees to the Security Agent the due and punctual payment
                  by the Borrower to the Agent on behalf of the Banks, the
                  Co-Arrangers, the Security


<PAGE>

                                      - 69 -

                  Agent and the Agent (as and when due by acceleration, demand
                  or otherwise howsoever) of the Outstanding Indebtedness and
                  every part thereof;

         (B)      Stena AB unconditionally undertakes immediately on demand by
                  the Security Agent from time to time to pay and/or perform its
                  obligations under Clause 8.1(A); and

         (C)      Stena AB unconditionally undertakes immediately on demand by
                  the Agent from time to time to indemnify and hold harmless the
                  Security Agent, the Banks, the Co-Arrangers and the Agent in
                  respect of:-

                  (i)      any loss incurred by the Security Agent, the Banks,
                           the Co-Arrangers and/or the Agent as a result of any
                           of the Security Documents or any provision thereof
                           being or becoming invalid, void, voidable or
                           unenforceable for any reason whatsoever; and

                  (ii)     all loss or damage of any kind arising directly or
                           indirectly from any failure on the part of the
                           Borrower to perform any obligation to be performed by
                           the Borrower under and pursuant to the Security
                           Documents or any of them.

         The obligations of Stena AB under this Clause 8 shall not be diminished
         by any of the other obligations undertaken by Stena AB in this
         Agreement and the obligations of Stena AB set out in Clause 8.1(A)
         shall be construed as a guarantee of payment and not of collection.

8.2      Survival of Stena AB's liability

         Stena AB's liability to the Security Agent and the Banks, the
         Co-Arrangers and the Agent under Clause 8.1 shall not be discharged,
         impaired or otherwise affected by reason of any of the following events
         or circumstances (regardless of whether any such events or
         circumstances occur with or without the knowledge or consent of Stena
         AB):-

         (A)      any time, forbearance or other indulgence given or agreed by
                  the Security Agent, the Banks, the Co-Arrangers and/or the
                  Agent to or with any Security Party in respect of any of its
                  respective obligations to the Security Agent, the Banks, the
                  Co-Arrangers and/or the Agent hereunder or under any other of
                  the Security Documents; or

         (B)      any legal limitation, disability or incapacity relating to any
                  Security Party; or

         (C)      any invalidity, irregularity, unenforceability, imperfection
                  or avoidance of or any defect in any security granted by, or
                  the obligations of any Security Party under, this Agreement or
                  any other of the Security Documents or any amendment to or
                  variation thereof or to or of any other document or security
                  comprised therein; or

         (D)      any change in the name, constitution or otherwise of any
                  Security Party or the merger of any Security Party with any
                  other corporate entity; or

<PAGE>

                                      - 70 -

         (E)      the liquidation, bankruptcy or dissolution (or proceedings
                  analogous thereto) of any Security Party or the appointment of
                  a receiver or administrative receiver or administrator or
                  trustee or similar officer of any of the assets of any
                  Security Party or the occurrence of any circumstances
                  whatsoever affecting any Security Party's liability to
                  discharge its respective obligations under any of the Security
                  Documents; or

         (F)      any challenge, dispute or avoidance by any liquidator of any
                  Security Party in respect of any claim by Stena AB or the
                  Borrower or any of them by right of subrogation in any such
                  liquidation; or

         (G)      any release of any other Security Party or any renewal,
                  exchange or realisation of any security or obligation provided
                  under or by virtue of any of the Security Documents or the
                  provision to the Security Agent, the Banks, the Co-Arrangers
                  and/or the Agent at any time of any further security for the
                  obligations of the Borrower under any of the Security
                  Documents; or

         (H)      the release of any co-guarantor and/or indemnor who is now or
                  may hereafter become under a joint and several liability with
                  Stena AB under this guarantee or the release of any other
                  guarantor, indemnor or other third party obligor in respect of
                  the obligations of any Security Party under any of the
                  Security Documents; or

         (I)      any failure on the part of the Security Agent, the Banks, the
                  Co-Arrangers and/or the Agent (whether intentional or not) to
                  take or perfect any security agreed to be taken under or in
                  relation to any of the Security Documents or to enforce any of
                  the Security Documents; or

         (J)      any other act, matter or thing (save for repayment in full of
                  the Outstanding Indebtedness) which might otherwise constitute
                  a legal or equitable discharge of any of Stena AB's
                  obligations under this Clause 8.

8.3      Continuing guarantee

         The guarantee contained in Clause 8.1 shall be:

         (A)      a continuing guarantee remaining in full force and effect
                  until payment in full has been received by the Security Agent,
                  the Banks, the Co-Arrangers and the Agent of each and every
                  part and the ultimate balance of the Outstanding Indebtedness
                  in whatever currency or currencies the same may from time to
                  time be denominated in accordance with this Agreement; and

         (B)      in addition to and not in substitution for or in derogation of
                  any other security held by the Security Agent, the Banks, the
                  Co-Arrangers and/or the Agent from time to time in respect of
                  the Outstanding Indebtedness or any part thereof.

8.4      Circumstances where discharge to be void ab initio
         --------------------------------------------------

         Any satisfaction of obligations by Stena AB to the Security Agent, the
         Banks, the Co-Arrangers and/or the Agent or any discharge given by the
         Security Agent, the Banks, the Co-Arrangers and/or the Agent to Stena
         AB or any other agreement reached by

<PAGE>

                                      - 71 -

         Stena AB with the Security Agent, the Banks, the Co-Arrangers and/or
         the Agent in relation to this Clause 8 shall be, and be deemed always
         to have been, void ab initio if any act satisfying any of the said
         obligations or on the faith of which any such discharge was given or
         any such agreement was entered into is subsequently avoided in whole
         or in part by or pursuant to any provision of any applicable law
         whatsoever.

8.5      Exclusion of the rights of Stena AB as guarantor

         Until the actual and contingent obligations of each Security Party
         under the Security Documents have been performed in full Stena AB shall
         not:-

         (A)      be entitled to share in or succeed to or benefit from (by
                  subrogation or otherwise) any rights which the Security Agent,
                  the Banks, the Co-Arrangers and/or the Agent may have in
                  respect of the Outstanding Indebtedness or any security
                  therefor or all or any of the proceeds of such rights or
                  security; or

         (B)      without the prior consent of the Security Agent (as directed
                  by the Banks):-

                  (i)    exercise in respect of any amount paid by it hereunder
                         any right of subrogation, contribution or any other
                         right or remedy which it may have in respect thereof;
                         or

                  (ii)   prove in a liquidation of any Security Party in
                         competition with the Security Agent or the Agent, the
                         Co-Arrangers or any of the Banks for any moneys owing
                         to Stena AB by any other Security Party on any account
                         whatsoever.

9.       REPRESENTATIONS AND WARRANTIES

9.1      Continuing

         The Borrower and Stena AB each represent and warrant (subject to the
         reservations or qualifications as to matters of law as set forth in the
         Legal Opinions delivered to the Agent) to the Agent, the Security
         Agent, the Co-Arrangers and the Banks that as at the date hereof (and
         each other date referred to in Clause 9.3):-

         (A)      Status

                  each of the Security Parties is a limited liability company,
                  duly constituted and validly existing under the laws of its
                  place of incorporation, possessing perpetual corporate
                  existence, the capacity to sue and be sued in its own name and
                  the power to own its assets and carry on its business as it is
                  now being conducted;

(B)      Powers and authority

                  each of the Security Parties has the power and capacity to
                  enter into, and to perform its obligations under, those of the
                  Security Documents to which it is or will be a party and has
                  taken all necessary action to authorise the entry into such
                  Security Documents and the performance by it of its
                  obligations thereunder;

<PAGE>

                                      - 72 -

         (C)      Legal validity

                  this Agreement constitutes and each other of the Security
                  Documents, upon execution and delivery thereof, will
                  constitute (subject to any Post-Completion Registrations) the
                  legal, valid and binding obligations of each Security Party
                  which is a party thereto enforceable in accordance with its
                  terms except as such enforcement may be limited by any
                  relevant bankruptcy, insolvency, administration or similar
                  laws affecting creditors' rights generally and by general
                  principles of equity and subject to any relevant
                  qualifications contained in any of the Legal Opinions
                  delivered to the Agent;

         (D)      Non-conflict with laws

                  the entry into and performance of the Security Documents to
                  which each Security Party is or will be a party and the
                  transactions contemplated hereby and thereby do not and will
                  not contravene or conflict with:-

                  (i)   any law or regulation or any official or judicial
                        order; or

                  (ii)  the constitutional documents of such Security Party; or

                  (iii) any material agreement or document to which such
                        Security Party is a party or which is binding upon it
                        or any of its assets;

                  nor, save as contemplated by this Agreement and the other
                  Security Documents, result in the creation or imposition of
                  any Lien on the assets of any Security Parties pursuant to the
                  provisions of any such agreement or document;

         (E)      Pari passu status

                  the claims of the Banks, the Co-Arrangers, the Agent and the
                  Security Agent against each Security Party under the Security
                  Documents will (subject to the terms of the relevant Security
                  Documents) rank at least pari passu with the claims of all
                  other unsecured creditors of such Security Party other than
                  claims of such creditors to the extent that they are
                  statutorily preferred;

         (F)      No immunity

                  no Security Party nor any of its respective assets enjoys any
                  right of immunity from set-off, suit or execution in respect
                  of its obligations under this Agreement or any other of the
                  Security Documents to which it is a party;

         (G)      Executive office

                  none of the Security Parties has an executive office in any
                  part of the U.S.A. which would entitle it to apply for a
                  reorganisation under Chapter XI of the United States
                  Bankruptcy Act;

<PAGE>

                                      - 73 -

         (H)      No money laundering

                  in relation to the utilisation by the Borrower of the
                  facilities granted to it hereunder, the performance and
                  discharge of its obligations and liabilities under the
                  Security Documents to which it is a party, and the
                  transactions and other arrangements effected or contemplated
                  by the Security Documents to which the Borrower is a party,
                  the Borrower confirms that it is acting for its own account
                  and that the foregoing will not involve or lead to
                  contravention of any law, official requirement or other
                  regulatory measure or procedure implemented to combat "money
                  laundering" (as defined in Article 1 of the Directive
                  (91/308/EEC) of the Council of the European Communities).

9.2      Initial

         The Borrower and Stena AB each represent and warrant (subject to the
         reservations or qualifications as to matters of law as set forth in the
         Legal Opinions delivered to the Agent) to the Agent, the Security
         Agent, the Co-Arrangers and the Banks that as at the date hereof:-

         (A)      No default

                  no event has occurred which constitutes a material default
                  under or in respect of:-

                  (i)    any agreement or document relating to Debt to which any
                         Security Party is a party or by which any Security
                         Party may be bound; or

                  (ii)   any other agreement or document to which any Security
                         Party is a party or by which any Security Party may be
                         bound and which default will have, or may reasonably be
                         expected to have, a material adverse effect on the
                         ability of such Security Party to perform its
                         respective obligations under this Agreement and the
                         other Security Documents;

         (B)      Consents

                  save as disclosed in writing to the Agent or as disclosed in
                  any of the documents or evidence referred to in Schedule 5
                  delivered to, and accepted by, the Agent under this Agreement,
                  all authorisations, approvals, consents, licences, exemptions,
                  filings, registrations, notarisations and other matters,
                  official or otherwise, required by any Security Party:-

                  (i)    in connection with the entry into, performance,
                         validity and enforceability of this Agreement and the
                         other Security Documents and the transactions
                         contemplated hereby and thereby;

                  (ii)   in order to maintain its corporate existence in good
                         standing; and

                  (iii)   in order to ensure that it has the right, and is duly
                         qualified and able, to conduct its business as it is
                         conducted in all applicable jurisdictions including,
                         without limitation to the generality of the foregoing,
                         all such consents and approvals as are required to
                         conduct its business and/or own and operate its assets


<PAGE>

                                      - 74 -

                         have been obtained or effected and are in full force
                         and effect other than

                             (a)  Post-Completion Registrations in respect of
                                  paragraph (i) above; and

                             (b)  any consent or approval required by a Security
                                  Party to conduct its business and/or own and
                                  operate its assets to the extent that such
                                  Security Party is unaware or cannot reasonably
                                  be expected to be aware of the requirement to
                                  obtain such consent or approval or to the
                                  extent that the absence of such consent or
                                  approval would not have a material adverse
                                  effect on the ability of such Security Party
                                  to perform its obligations under the Security
                                  Documents;

         (C)      Accuracy of information

                  all factual information furnished in writing to the
                  Co-Arrangers by the Borrower and Stena AB relating to the
                  businesses and affairs of the Stena AB Group in connection
                  with this Agreement, the other Security Documents and the
                  Commercial Documents was (when given) true and correct in all
                  material respects and there are no other material facts or
                  considerations the omission of which would render any such
                  information misleading;

         (D)      Accounts

                  the Audited Stena AB Financial Statements for the financial
                  year ended 31 December 2000 (which accounts were prepared in
                  accordance with Swedish GAAP) fairly represent the
                  consolidated financial condition of the Stena AB Group as at
                  31 December 2000 and since that date there has been no
                  material adverse change in the consolidated financial
                  condition of the Stena AB Group as shown in such audited
                  accounts save as disclosed in writing to the Agent;

         (E)      No Liens

                  none of the Unencumbered Assets is subject to any Liens other
                  than in favour of Svenska Handelsbanken AB (publ) (in the case
                  of the P&O Stena Shares and the P&O Stena Loan Stock) as
                  security for the Stena Line Revolving Credit Facility;

         (F)      Existing Debt

                  neither Stena AB nor any of its Subsidiaries (other than
                  Unrestricted Subsidiaries) has incurred any Debt other than:

                  (i)   in respect of Existing Debt; or

                  (ii)  the Notes (to the extent not included in the definition
                        Existing Debt);

                  (iii) pursuant to this Agreement;

                  (iv)  pursuant to the Stena Discovery Facility Agreement;

<PAGE>

                                      - 75 -

                  (v)   pursuant to the Unsecured Revolving Credit Facility
                        Agreement;

                  (vi)  pursuant to the ABN Standby Facility Agreement;


         (G)      Winding-up, etc.

                  no Security Party has taken any corporate action nor have any
                  other steps been taken or legal proceedings been started or
                  (to the best of the knowledge and belief of the Borrower and
                  Stena AB) threatened against any of Stena AB or any other
                  Security Party for its winding-up or dissolution or for the
                  appointment of a liquidator, administrator, receiver,
                  administrative receiver, trustee or similar officer of any
                  Security Party of any or all of its assets or revenues nor has
                  any Security Party sought any other relief under any
                  applicable insolvency or bankruptcy law;

         (H)      Litigation

                  save as disclosed in writing to the Agent, no litigation,
                  arbitration or administrative proceedings are current or
                  pending or, to the knowledge of the Borrower and/or Stena AB,
                  threatened, which involve a claim against any Security Party
                  in an amount exceeding $2,000,000;

         (I)      Taxes on payments

                  all amounts payable by each Security Party under the Security
                  Documents may be made free and clear of and without deduction
                  for or on account of any Taxes;

         (J)      Completeness of documents

                  the copies of the Commercial Documents delivered to the Agent
                  are true and complete copies of each such document and no
                  amendments thereto or variations thereof have been made or
                  agreed which are substantial in relation to the business as
                  presently conducted of the Stena AB Group as a whole.

9.3      Repetition of continuing representations and warranties

         On and as of the Availability Date, each date of drawing an Advance and
         each Maturity Date the Borrower and Stena AB shall be deemed to repeat
         the representations and warranties in Clause 9.1 as if made with
         reference to the facts and circumstances existing on such day.

9.4      Future financial statements

         In relation to the financial statements provided or to be provided
         under Clause 10, the Borrower and Stena AB each represent and warrant,
         as at the date to which such statements were prepared, that the
         statements were prepared in accordance with Swedish GAAP (in the case
         of Stena AB) or Dutch GAAP (in the case of the Borrower) and fairly
         represent the consolidated financial position of (as the case may be)
         the Stena AB Group or the Stena International Group as at such date.


<PAGE>

                                      - 76 -

10.      UNDERTAKINGS

10.1     Duration

         The undertakings contained in this Clause 10 shall remain in force from
         the date of this Agreement until the end of the Security Period.

10.2     Provision of financial and other information

         The Borrower will provide to the Agent in sufficient copies for
         distribution to each of the Banks:-

         (A)      within one hundred and eighty (180) days after the close of
                  the relevant financial years, copies of the Audited Stena AB
                  Financial Statements and of the Audited Stena International
                  Financial Statements for that financial year;

         (B)      as soon as practicable, but in any event within ninety (90)
                  days after 30 September 2001 and each of the dates falling
                  quarterly thereafter (other than the final quarter of each
                  financial year), certified copies of the unaudited
                  consolidated management accounts of the Stena AB Group and of
                  the Stena International Group for the preceding quarter;

         (C)      promptly, such further information in the possession or
                  control of the Borrower or Stena AB regarding the financial
                  condition and operations of the Stena AB Group and/or the
                  Stena International Group as the Agent may reasonably request;

         (D)      within ninety (90) days after the end of each financial year
                  of Stena AB, an Officer's Certificate (one of the signors of
                  which is the principal executive, financial or accounting
                  officer of Stena AB), stating whether or not to the best
                  knowledge of the signors thereof, Stena AB is in default in
                  the performance and observance of any of the terms, provisions
                  and conditions of Clauses 10.6, 10.7, 10.8, 10.9, 10.10,
                  10.11, 10.14, 10.17, 10.20 and 10.21 and, if Stena AB shall be
                  in default, specifying all such defaults and the nature and
                  status thereof of which they may have knowledge;

         (E)      as soon as practicable, but in any event within one hundred
                  and twenty (120) days after the close of each financial year:-

                  (i)   a certificate from the chief financial officer of each
                         Port Owner certifying the amount of earnings before
                         interest, taxes, depreciation and amortisation during
                         the previous twelve (12) month period of each Mortgaged
                         Port owned by the Port Owner; and

                  (ii)   copies of the unaudited management accounts of each
                         Port Owner for such financial year showing the earnings
                         before interest, taxes, depreciation and amortisation
                         of each such Port

                  such documents to be in a form reasonably acceptable to the
                  Agent so that, if they are not so acceptable, the Borrower
                  shall, if requested by the Agent, procure that an auditor's
                  certificate and/or audited accounts are delivered to the

<PAGE>

                                      - 77 -

                  Agent showing the earnings before interest, taxes,
                  depreciation and amortisation of each Mortgaged Port as
                  referred to in paragraph (i) above, and

         (F)      not later than 28 September 2001 in respect of the position as
                  at 30 June 2001 and thereafter within ninety (90) days after
                  31 December 2001 and each of the dates falling at six (6)
                  monthly intervals thereafter or, if the Agent so requests in
                  writing pursuant to Clause 10.21(B), within ninety (90) days
                  after the end of any other relevant financial quarter (or (if
                  later) within ten (10) business days in Gothenburg (excluding
                  public holidays, Saturdays and Sundays) of receipt of the
                  Agent's written request), an Officer's Certificate together
                  with the method of the calculation of the asset coverage ratio
                  and all supporting documents, in substantially the form set
                  out in Schedule 21 in respect of the asset coverage ratio set
                  out in Clause 10.21(A) confirming:-

                  (i)    the respective amounts of the Appraised Value of
                         Restricted Group Assets, Secured Debt, Strategic
                         Investments, Cash and Marketable Securities, Net Market
                         Value of the Unrestricted Group, Other Assets and
                         Working Capital, Available Asset Value and Unsecured
                         Debt (as each of those terms is defined in Clause
                         10.21(C)) as at the relevant date and that such amounts
                         were calculated in accordance with this Agreement and
                         Swedish GAAP; and

                  (ii)   the amounts of the valuations of the assets comprised
                         in the calculation of the Available Asset Value
                         (including a list of each of the vessels and ports and
                         their respective valuations).

10.3     Notification of default

         The Borrower or Stena AB will notify the Agent of any Default promptly
         upon their becoming aware of the occurrence thereof.

10.4     Preparation of financial statements

         Each set of financial statements and management accounts to be provided
         to the Agent pursuant to Clause 10.2 shall be prepared in accordance
         with Swedish GAAP (in the case of the Stena AB Group) or Dutch GAAP (in
         the case of the Stena International Group) consistently applied (or, if
         not consistently applied, accompanied by details of the
         inconsistencies) and shall fairly represent the financial condition of
         Stena AB Group and the Stena International Group respectively.

10.5     Consents and registrations and maintenance of status

         Each of the Borrower and Stena AB will do, and will procure that each
         other Security Party will do, all such things as are necessary to
         enable it to comply with any of its financial obligations under those
         of the Security Documents to which it is a party including, without
         limitation, obtaining, maintaining, promptly renewing (when necessary)
         and complying at all times with (and promptly furnishing certified
         copies to the Agent of) all such authorisations, approvals, consents,
         licences and exemptions as are from time to time required under any
         applicable law or regulation in connection with any of the matters
         aforesaid.

<PAGE>

                                      - 78 -

         Insofar as any such filings or registrations aforesaid have not been
         completed on or before the first Advance is drawn the Borrower and
         Stena AB will procure the filing or registration within applicable time
         limits of each Security Document which requires filing or registration
         together with all ancillary documents required to preserve the priority
         and enforceability of the Security Documents.

         Where the operation of any Mortgaged Ship or Mortgaged Linkspan in
         accordance with its owner's or operator's requirements requires the
         obtaining or maintenance of a route licence or port licence, the
         Borrower and Stena AB further undertake to procure that such licence is
         obtained, maintained, promptly renewed (when necessary) and complied
         with in all material respects at all relevant times during the Security
         Period.

10.6     Limitation on Liens

         Except with the prior written consent of the Majority Banks, the
         Borrower and Stena AB will not, and shall procure that no other member
         of the Stena AB Group will:-

         (A)      create or incur or permit to subsist any Lien (other than a
                  Permitted Ship Lien) on the whole or any part of any property
                  or rights which is or are presently or may in future during
                  the Security Period be subject to any Lien in favour of the
                  Security Agent pursuant to the Security Documents or over any
                  Earnings of any Shipowner or Stena Charterer in relation to
                  any Mortgaged Ship; or

         (B)      create or incur any Lien (other than Permitted Liens) on or
                  with respect to any other property or assets of Stena AB or
                  any Subsidiary thereof now owned or hereafter acquired to
                  secure Debt of any person without making, or causing such
                  Subsidiary to make, effective provision for securing the
                  Outstanding Indebtedness equally and rateably with such Debt
                  or, in the event such Debt is subordinate in right of
                  payment to the Outstanding Indebtedness, prior to such Debt,
                  as to such property or assets for so long as such Debt shall
                  be so secured provided however that Stena AB and its
                  Subsidiaries may incur Liens to secure any Debt under this
                  paragraph (B) without securing the Outstanding Indebtedness
                  equally and rateably with or prior to such Debt, as
                  applicable, if the outstanding amount of Debt secured by
                  Liens created after the date of this Agreement and otherwise
                  prohibited by this Agreement does not at the time of such
                  incurrence, when aggregated with the outstanding amount of
                  Debt secured by Liens created after 1 October 1997 but
                  before the date of this Agreement otherwise prohibited by
                  the 2007 Indenture but which Liens are permitted by Section
                  10.14(b) thereof, exceed:-

                  (i)    5% of Consolidated Tangible Assets; minus;

                  (ii)   the lesser of (a) the Fair Market Value of the Related
                         Collateral and/or other property granted as additional
                         security pursuant to paragraph (O) of the definition of
                         "Permitted Liens" and subject to Liens at such time and
                         (b) the maximum amount of Debt secured at such time or
                         thereafter by such additional collateral set forth in a
                         written security or other agreement at such time or
                         thereafter with respect to such additional collateral.

<PAGE>

                                      - 79 -


10.7     Asset Dispositions

         (A)      Stena AB will not, and will not permit any Subsidiary of Stena
                  AB to, make any Asset Disposition in one or more related
                  transactions by Stena AB or a Subsidiary of Stena AB unless:-

                  (i)      Stena AB or the Subsidiary of Stena AB, as the case
                           may be, receives consideration for such disposition
                           at least equal to the Fair Market Value for the
                           shares or assets sold or disposed of as determined by
                           the Board of Directors of Stena AB or such Subsidiary
                           in good faith;

                  (ii)     at least eighty five per cent (85%) of the
                           consideration for such disposition consists of one or
                           more of the following:-

                           (w)      cash or Cash Equivalents, provided that any
                                    promissory note (or other evidence of
                                    indebtedness) received by Stena AB or such
                                    Subsidiary that is immediately converted
                                    into cash or Cash Equivalents shall be
                                    deemed to be cash for the purposes of this
                                    provision to the extent of the cash or Cash
                                    Equivalents actually received upon such
                                    conversion;

                           (x)      in the case of an Asset Disposition relating
                                    to a Vessel or Vessels, a promissory note
                                    (or other evidence of indebtedness) issued
                                    by the purchaser of the asset sold or
                                    disposed of and secured by a first perfected
                                    security interest in such asset, (provided
                                    such security interest remains in full force
                                    and perfected, or is replaced by a bank
                                    guarantee, letter of credit or cash
                                    collateral, until all obligations arising
                                    under such promissory note (or other
                                    evidence of indebtedness) are paid in full),
                                    a bank guarantee, a letter of credit or cash
                                    collateral;

                           (y)      the assumption of Debt (which, for the
                                    purposes of the calculation of the
                                    consideration received pursuant to the Asset
                                    Disposition, shall be valued at the
                                    principal amount so assumed) of Stena AB or
                                    such Subsidiary or other obligations
                                    relating to such assets and release from all
                                    liability on such Debt or other obligations
                                    assumed;

                           (z)      in the case of an Asset Disposition relating
                                    to a Vessel or Vessels, notes received in
                                    consideration for such disposition,
                                    provided, that at no time shall there be, in
                                    the aggregate, more than $15,000,000 of
                                    notes received under this sub-clause (z)
                                    outstanding (exclusive of notes complying
                                    with the requirements of clauses (w) or (x)
                                    above); and

                  (iii)    no Default or Event of Default (as defined in either
                           Indenture or any Successor Financing) shall have
                           occurred and be continuing at the time of, or after
                           giving effect to, such Asset Disposition.

         (B)      The Net Available Proceeds of any Asset Disposition shall
                  subject to Clauses 5.3 and 5.4 be applied by Stena AB or any
                  Subsidiary of Stena AB (as the case

<PAGE>

                                      - 80 -

                  may be) within three hundred and sixty (360) days after such
                  Asset Disposition:-

                  (i)  first, to repay permanently any outstanding Debt of:-

                       (a)  Stena AB that ranks senior to or pari passu with the
                            Notes or any Successor Financing; or

                       (b)  any Subsidiary of Stena AB that does not constitute
                            Subordinated Debt,

                       in each case as required by the terms thereof,

                  (ii) second, to the extent of any then remaining Net
                       Available Proceeds and to the extent Stena AB or such
                       Subsidiary so elects:-

                       (a)  to the prepayment of Debt of:-

                            (x) Stena AB that ranks senior to or pari passu with
                                the Notes or any Successor Financing; or

                            (y) any Subsidiary of Stena AB that does not
                                constitute Subordinated Debt; and/or

                       (b)  to an investment (which shall be deemed to include
                            entering into a legally binding agreement, subject
                            to customary conditions, to invest) in assets, other
                            than Cash Assets, that will be used in the business
                            of Stena AB and its Subsidiaries subject to the
                            limitations of Clause 10.11; provided that Stena AB
                            or any Subsidiary of Stena AB may deem that the
                            amount of any prior investment (including, without
                            limitation, any payments made in respect of Vessel
                            Construction Contracts) made in connection with the
                            delivery or acquisition of any Vessel, equal to the
                            difference between the Ready for Sea Cost of such
                            Vessel and the aggregate Debt Incurred to finance
                            the purchase of such Vessel (or related assets)
                            occurring within one (1) year prior to such Asset
                            Disposition, shall be considered an investment
                            made with the Net Available Proceeds of such Asset
                            Disposition.

                       If any legally binding agreement to invest any Net
                       Available Proceeds is terminated, then Stena AB, or
                       any Subsidiary of Stena AB, may invest such Net
                       Available Proceeds, prior to the end of the one (1)
                       year period after such Asset Disposition or six (6)
                       months from such termination, whichever is later, in
                       the business of Stena AB and Subsidiaries of Stena AB
                       as provided above. The amount of such Net Available
                       Proceeds neither used to repay or prepay Debt nor
                       used or invested (or deemed used or invested) as set
                       forth in the preceding sentences constitutes "Excess
                       Proceeds."

<PAGE>

                                      - 81 -


         (C)      If at any time the aggregate amount of Excess Proceeds not
                  previously applied pursuant to this Clause 10.7 equals
                  $30,000,000 or more, Stena AB shall apply such Excess
                  Proceeds:-

                  (i)    first, to the extent of the remaining Excess Proceeds
                         at Stena AB's option, (a) to make an offer to purchase
                         the outstanding 2005 Notes (as required by the 2005
                         Indenture or any Successor Financing) at one hundred
                         per cent (100%) of their principal amount plus accrued
                         interest to the date of purchase or (b) to make an
                         offer to purchase the outstanding 2007 Notes at one
                         hundred per cent (100%) of their principal amount plus
                         accrued interest to the date of purchase;

                  (ii)   second, if an offer to purchase is made under (C)(i)(a)
                         above and there are any, and to the extent of any,
                         remaining Excess Proceeds following completion of such
                         purchase, to make an offer to purchase the outstanding
                         2007 Notes (as required by the 2007 Indenture or any
                         Successor Financing) at one hundred per cent (100%) of
                         their principal amount plus accrued interest to the
                         date of purchase;

                  (iii)  third, to the extent of any remaining Excess Proceeds
                         following the completion of the offer to purchase, to
                         the repayment of other Debt (other than Subordinated
                         Debt) of Stena AB and its Subsidiaries to the extent
                         permitted by the agreements governing such Debt; and

                  (iv)   fourth, to the extent of any then remaining Excess
                         Proceeds, for general corporate purposes of Stena AB
                         and its Subsidiaries,

         (D)      This Clause 10.7 will not apply to a transaction consummated
                  in compliance with Section 8.1 (Mergers, Consolidations and
                  Certain Sales and Purchases of Assets) of each of the
                  Indentures (or the corresponding provision in any Successor
                  Financing).

10.8     Incurrence of Debt by Stena AB

         (A)      Stena AB shall not Incur any Debt unless:-

                  (i)    immediately after giving effect to the Incurrence of
                         such Debt and the receipt and application of the
                         proceeds thereof, the Consolidated Interest Coverage
                         Ratio for the four full fiscal quarters for which
                         quarterly or annual financial statements are available
                         next preceding the Incurrence of such Debt, calculated
                         on a pro forma basis as if such Debt had been Incurred
                         (and the receipt and application thereof had been made)
                         at the beginning of such four full fiscal quarters,
                         would be greater than 2 to 1; and

                  (ii)   no Default or Event of Default (as defined in the Notes
                         or any Successor Financing) shall have occurred and be
                         continuing at the time of, or after giving effect to,
                         the Incurrence of such Debt.

         (B)      Notwithstanding the foregoing limitation, Stena AB may Incur
                  the following Debt:-

<PAGE>

                                      - 82 -

                  (i)    Existing Debt;

                  (ii)   Debt pursuant to the 2005 Notes or any Successor
                         Financing (to the extent not included in the
                         definition Existing Debt);

                  (iii)  Debt pursuant to the 2007 Notes or any Successor
                         Financing (to the extent not included in the
                         definition Existing Debt);

                  (iv)   Debt to finance the replacement of a Vessel owned or
                         leased under a Capitalised Lease Obligation by Stena
                         AB or any Subsidiary of Stena AB secured by a Lien of
                         the type described under paragraph (D) of the
                         definition of "Permitted Liens" upon a total loss,
                         destruction, condemnation, confiscation, requisition,
                         seizure, forfeiture or other taking of title to or
                         use of such Vessel (provided that such loss,
                         destruction, condemnation, confiscation, requisition,
                         seizure, forfeiture or other taking of title to or
                         use of such Vessel was covered by insurance or
                         resulted in the payment of compensation or similar
                         payments to such person) (collectively, a "RELEVANT
                         TOTAL LOSS") in an aggregate amount up to the Ready for
                         Sea Cost for such replacement Vessel less all
                         compensation, damages and other payments (including
                         insurance proceeds other than in respect of business
                         interruption insurance, protection and indemnity
                         insurance or other third-party liability insurance)
                         received from any person in connection with the
                         Relevant Total Loss in excess of amounts actually used
                         to repay Debt secured by the Vessel subject to the
                         Relevant Total Loss;

                  (v)    Debt under any interest rate swap, foreign currency
                         hedge, exchange or similar agreements to the extent
                         entered into to hedge any other Debt permitted under
                         this Agreement or otherwise entered into in the
                         ordinary course of business;

                  (vi)   Debt to renew, extend, refinance, replace or refund
                         (herein, "REFINANCE") any Debt permitted to be
                         Incurred under Clause 10.8(A) (including, without
                         limitation, Debt in respect of binding commitments
                         for Post-Delivery Financing permitted under Clause
                         10.8(A)), any Existing Debt or any Debt permitted to
                         be incurred under paragraphs (ii), (iii), (v), (vi)
                         or (viii) of this Clause 10.8(B) provided that:-

                        (a)         the amount of such Debt does not exceed:-

                                    (x)     except as provided in (y) below, the
                                            principal amount of Debt to be so
                                            refinanced (which amount shall be
                                            deemed to include the amount of any
                                            undrawn or available amounts under
                                            any committed credit or lease
                                            facility being so refinanced); or

                                    (y)     in the case of the refinancing of
                                            the Post-Delivery Financing of a
                                            Vessel within two hundred and
                                            seventy (270) days after the
                                            acquisition or delivery of such
                                            Vessel pursuant to a Capitalised
                                            Lease Obligation, one


<PAGE>

                                      - 83 -

                                            hundred per cent (100%) of the Ready
                                            for Sea Cost of such Vessel

                                    plus, in either case, the amount of any
                                    premium required to be paid in connection
                                    with such refinancing pursuant to the terms
                                    of the Debt refinanced or the amount of any
                                    premium reasonably determined by Stena AB as
                                    necessary to accomplish such refinancing by
                                    means of a tender offer or privately
                                    negotiated repurchase, plus the expenses of
                                    Stena AB or any of its Subsidiaries Incurred
                                    in connection with such refinancing; and

                           (b)      the Incurrence of Debt the proceeds of which
                                    are used to refinance Debt shall only be
                                    permitted if the refinancing Debt by its
                                    terms, or by the terms of any agreement or
                                    instrument pursuant to which such Debt is
                                    issued, has an Average Life and Stated
                                    Maturity which is equal to or greater than
                                    that of the Debt to be refinanced at the
                                    time of the Incurrence of such refinancing
                                    Debt;

                  (vii)    Debt owed by Stena AB to any Subsidiary of Stena AB;
                           provided that upon either:-

                           (a)      the transfer or other disposition by any
                                    such Subsidiary of any Debt so permitted to
                                    a person other than Stena AB or a Subsidiary
                                    of Stena AB or

                           (b)      the issuance, sale, transfer or other
                                    disposition (other than a pledge of the
                                    shares of such Subsidiary permitted under
                                    Clause 10.6) of shares of Capital Stock
                                    (including by consolidation or merger) of
                                    such Subsidiary to a person other than Stena
                                    AB or a Subsidiary of Stena AB which, after
                                    giving effect thereto, results in such
                                    Subsidiary ceasing to be a Subsidiary of
                                    Stena AB,

                           the provisions of this paragraph (vii) shall no
                           longer be applicable to such Debt and such Debt shall
                           be deemed to have been Incurred at the time of such
                           transfer or other disposition;

                  (viii)   Debt Incurred pursuant to this Agreement or under the
                           Revolving Credit Facilities and/or the Unsecured
                           Revolving Credit Facility and Debt Incurred by Stena
                           AB as guarantor in respect of the Stena Discovery
                           Facility Agreement and/or the ABN Standby Facility
                           Agreement; and

                  (ix)     Debt of Stena AB not otherwise permitted to be
                           Incurred pursuant to paragraphs (ii) to (viii) above,
                           which, together with:-

                           (a)      any other outstanding Debt Incurred pursuant
                                    to this paragraph (ix) and/or Clause 10.9(I)
                                    (and any outstanding Preferred Stock issued
                                    by Subsidiaries of Stena AB pursuant to
                                    Clause

<PAGE>

                                      - 84 -


                                    10.10(D)); and

                           (b)      any other outstanding Debt Incurred after 1
                                    October 1997 but before the date of this
                                    Agreement pursuant to Section 10.8(vii)
                                    and/or Section 10.9(viii) of the 2007
                                    Indenture (and any outstanding Preferred
                                    Stock issued by Subsidiaries of Stena AB
                                    after 1 October 1997 but before the date of
                                    this Agreement pursuant to Section 10.10(iv)
                                    of the 2007 Indenture)

                           has an aggregate principal amount (and/or liquidation
                           preference) not in excess of $50,000,000 at any time
                           outstanding.

10.9     Incurrence of Debt by Subsidiaries

         Stena AB will not permit any Subsidiary of Stena AB to Incur any Debt
         except:-

         (A)      Debt to finance the replacement of a Vessel owned or leased
                  under a Capitalised Lease Obligation by that Subsidiary
                  secured by a Lien of the type described under paragraph (D)
                  of the definition of "Permitted Lien" upon a Relevant Total
                  Loss of such Vessel (as defined in Clause 10.8(B)(iv)) in an
                  aggregate amount up to the Ready for Sea Cost for such
                  replacement Vessel less all compensation, damages and other
                  payments (including insurance proceeds other than in respect
                  of business interruption insurance, protection and indemnity
                  insurance or other third-party liability insurance) received
                  from any person in connection with the Relevant Total Loss
                  in excess of amounts actually used to repay Debt secured by
                  the Vessel subject to the Relevant Total Loss; provided that
                  if the Debt Incurred by that Subsidiary in financing the
                  Vessel subject to the Relevant Total Loss is subordinated to
                  the Debt Incurred under this Agreement, the Debt Incurred to
                  finance the replacement Vessel shall be subordinated to the
                  same degree;

         (B)      Debt under any interest rate swap, foreign currency hedge,
                  exchange or similar agreements to the extent entered into by
                  that Subsidiary to hedge any other Debt permitted to be
                  Incurred by it under this Agreement or otherwise entered into
                  in the ordinary course of business;

         (C)      Debt owed to Stena AB or a Subsidiary of Stena AB provided
                  that upon either (x) the transfer or other disposition by
                  Stena AB or such Subsidiary of any Debt so permitted to a
                  person other than Stena AB or a Subsidiary of Stena AB or (y)
                  the issuance, sale, transfer or other disposition (other than
                  a pledge of the shares of such Subsidiary permitted under
                  Clause 10.6) of shares of Capital Stock (including by
                  consolidation or merger) of such Subsidiary to a person other
                  than Stena AB or another such Subsidiary which, after giving
                  effect thereto, results in such Subsidiary ceasing to be a
                  Subsidiary of Stena AB, the provisions of this paragraph (C)
                  shall no longer be applicable to such Debt and such Debt shall
                  be deemed to have been Incurred at the time of such transfer
                  or other disposition;

         (D)      subject to the satisfaction of the incurrence test set forth
                  in Clause 10.8(A), Debt Incurred by a person prior to the time
                  (a) such person became a Subsidiary of Stena AB, (b) such
                  person merges with or into or consolidates

<PAGE>

                                      - 85 -


                  with a Subsidiary of Stena AB or (c) another Subsidiary of
                  Stena AB merges with or into or consolidates with such
                  person (in a transaction in which such person becomes a
                  Subsidiary of Stena AB), which Debt was not Incurred or
                  issued in anticipation of such transaction and was
                  outstanding prior to such transaction;

         (E)      subject to the satisfaction of the incurrence test set forth
                  in Clause 10.8(A), Debt of a Subsidiary of Stena AB secured by
                  a Lien of the type described under paragraph (D) of the
                  definition of "Permitted Liens";

         (F)      Debt to refinance Existing Debt of any Subsidiary and Debt to
                  refinance any Debt permitted to be Incurred pursuant to
                  paragraphs (A), (D), (E), (F) and (G) of this Clause 10.9
                  provided that:-

                  (i)      the amount of such Debt does not exceed:-

                           (a)      except as provided in (b) below, the
                                    principal amount of Debt to be so refinanced
                                    (which amount shall be deemed to include the
                                    amount of any undrawn or available amounts
                                    under any committed credit or lease facility
                                    being so refinanced); or

                           (b)      in the case of the refinancing of the
                                    Post-Delivery Financing of a Vessel within
                                    270 days after the acquisition or delivery
                                    of such Vessel pursuant to a Capitalised
                                    Lease Obligation, 100% of the Ready for Sea
                                    Cost of such Vessel

                           plus, in either case, the amount of any premium
                           required to be paid in connection with such
                           refinancing pursuant to the terms of the Debt
                           refinanced or the amount of any premium reasonably
                           determined by Stena AB as necessary to accomplish
                           such refinancing by means of a tender offer or
                           privately negotiated repurchase, plus the expenses of
                           Stena AB or any of its Subsidiaries Incurred in
                           connection with such refinancing;

                  (ii)     such refinancing Debt shall not be used to refinance
                           outstanding Debt or Preferred Stock of Stena AB; and

                  (iii)    such refinancing Debt by its terms, or by the terms
                           of any agreement or instrument pursuant to which such
                           Debt is issued, has an Average Life and Stated
                           Maturity which is equal to or greater than that of
                           the Debt to be refinanced at the time of the
                           Incurrence of such refinancing Debt;

         (G)      Debt Incurred under this Agreement and/or the Stena Discovery
                  Facility Agreement and/or the ABN Standby Facility Agreement
                  and/or the Revolving Credit Facilities including, without
                  limitation, Debt Incurred pursuant to guarantees made by
                  Subsidiaries of Stena AB in respect of this Agreement and/or
                  the Stena Discovery Facility Agreement and/or the ABN Standby
                  Facility Agreement and/or the Revolving Credit Facilities;

         (H)      Debt of any Subsidiary pursuant to a guarantee issued pursuant
                  to the first paragraph of Section 10.13 of either Indenture or
                  the corresponding provision

<PAGE>

                                      - 86 -

                  of any Successor Financing;

         (I)      Debt of Subsidiaries of Stena AB not otherwise permitted to be
                  Incurred pursuant to paragraphs (A) through (H) above which
                  together with:-

                  (i)      any other outstanding Debt Incurred pursuant to this
                           paragraph (I) and/or Clause 10.8(B)(ix) (and any
                           outstanding Preferred Stock issued by Subsidiaries of
                           Stena AB pursuant to Clause 10.10(D)); and

                  (ii)     any other outstanding Debt Incurred after 1 October
                           1997 but before the date of this Agreement pursuant
                           to Section 10.8(vii) and/or Section 10.9(viii) of the
                           2007 Indenture (and any outstanding Preferred Stock
                           issued by Subsidiaries of Stena AB after 1 October
                           1997 but before the date of this Agreement pursuant
                           to Section 10.10(iv) of the 2007 Indenture)

                  has an aggregate principal amount (and/or liquidation
                  preference) not in excess of $50,000,000 at any time
                  outstanding.

10.10    Limitation on Preferred Stock of Subsidiaries

         Stena AB will not permit any of its Subsidiaries to issue, directly or
         indirectly, any Preferred Stock except:-

         (A)      Preferred Stock of a Subsidiary of Stena AB issued to and held
                  by Stena AB or any of its Wholly Owned Subsidiaries, provided
                  that any subsequent issuance or transfer of any Capital Stock
                  which results in such Wholly Owned Subsidiary ceasing to be a
                  Wholly Owned Subsidiary of Stena AB or any transfer of such
                  Preferred Stock by any such Wholly Owned Subsidiary will, in
                  each case, be deemed an issuance of Preferred Stock;

         (B)      Preferred Stock issued by a person prior to the time (i) such
                  person becomes a Subsidiary of Stena AB, (ii) such person
                  merges with or into or consolidates with a Subsidiary of Stena
                  AB or (iii) another Subsidiary of Stena AB merges with or into
                  or consolidates with such person (in a transaction in which
                  such person becomes a Subsidiary of Stena AB), which Preferred
                  Stock was not issued in anticipation of such transaction;

         (C)      Preferred Stock (other than Disqualified Stock) which is
                  exchanged for Preferred Stock permitted to be outstanding
                  pursuant to paragraphs (A) and (B) above or which is used to
                  refinance Debt (or any refinancing thereof), having a
                  liquidation preference not to exceed the liquidation
                  preference of the Preferred Stock in the principal amount of
                  the Debt so refinanced; and

         (D)      Preferred Stock issued by Subsidiaries of Stena AB not
                  otherwise permitted to be issued pursuant to paragraphs (A)
                  through (C) above which together with:-

                  (i)      any other Preferred Stock outstanding pursuant to
                           this paragraph (D);

                  (ii)     any Debt of Subsidiaries of Stena AB Incurred
                           pursuant to Clause 10.9(I);

<PAGE>


                                     - 87 -

                  (iii)    any Debt of Stena AB Incurred pursuant to
                           Clause 10.8(B)(ix); and

                  (iv)     any other outstanding Debt Incurred after 1 October
                           1997 but before the date of this Agreement pursuant
                           to Section 10.8(vii) and/or Section 10.9(viii) of the
                           2007 Indenture (and any outstanding Preferred Stock
                           issued by Subsidiaries of Stena AB after 1 October
                           1997 but before the date of this Agreement pursuant
                           to Section 10.10(iv) of the 2007 Indenture)

                  has an aggregate principal amount (and/or liquidation
                  preference) not in excess of $50,000,000 at any time
                  outstanding.

10.11    Limitation on Investments

         Except with the prior written consent of the Majority Banks, the
         Borrower and Stena AB will not, and shall procure that no other member
         of the Stena AB Group will, make any Investment in any person (other
         than Stena AB, any Subsidiary of Stena AB or any person which, after
         giving effect to such Investment, would become a Subsidiary of Stena
         AB) except Permitted Investments.

10.12    Business activities

         Stena AB will not, and will not permit any of its Subsidiaries (other
         than any Unrestricted Subsidiaries) to, engage in any type of business
         other than the business Stena AB and its Subsidiaries are engaged in on
         the date of this Agreement, other business activities within the
         shipping, offshore oilfield services and real estate investment and
         management industries and (as determined in good faith by the Board of
         Directors of Stena AB) other business activities complementary,
         incidental or reasonably related thereto.

10.13    Mergers and consolidation

         Except with the prior written consent of the Majority Banks, neither
         the Borrower nor any other Security Party will merge or consolidate
         with any other person save for a merger or consolidation by operation
         of law with one or more other entities into a single surviving entity
         which is the Borrower or (as the case may be) such other Security Party
         and which succeeds by operation of law to all of the assets and
         liabilities of the Borrower or (as the case may be) such other Security
         Party immediately prior to such merger or consolidation.

10.14    Restricted payments by Stena AB Group

         Stena AB will not, and will not permit any Subsidiary of Stena AB
         (other than an Unrestricted Subsidiary) to, directly or indirectly:-

         (A)      declare or pay any dividend, or make any distribution of any
                  kind or character (whether in cash, property or securities),
                  in respect of any class of Stena AB's Capital Stock to the
                  holders thereof, excluding any dividends or distributions
                  payable solely in shares of the Capital Stock of Stena AB or
                  in options, warrants or other rights to acquire the Capital
                  Stock of Stena AB;

         (B)      purchase, redeem, defease, or otherwise acquire or retire for
                  value:-

<PAGE>


                                      -88-

                  (i)      any Capital Stock of Stena AB or any Related Person
                           of Stena AB; or

                  (ii)     any options, warrants or rights to purchase or
                           acquire shares of Capital Stock of Stena AB or any
                           Related Person of Stena AB or any securities
                           convertible or exchangeable into shares of Capital
                           Stock of Stena AB or any Related Person of Stena AB,
                           in either case other than acquisitions of Capital
                           Stock or options, warrants or rights to acquire such
                           Capital Stock pursuant to paragraph (C) of the
                           definition of "Permitted Investments";

         (C)      make any Investment in any Affiliate or Related Person of
                  Stena AB (other than Stena AB or a Subsidiary of Stena AB) and
                  other than a person which becomes a Subsidiary of Stena AB as
                  a result of such Investment) provided that this paragraph (C)
                  shall not prohibit the making of an Investment otherwise
                  permitted under Clause 10.11;

         (D)      redeem, defease, repurchase, retire or otherwise acquire or
                  retire for value prior to any scheduled maturity, repayment or
                  sinking fund payment, Debt of Stena AB which is subordinate in
                  right of payment to the 2005 Notes and the 2007 Notes or any
                  Successor Financing, except to the extent that payment for
                  such Debt is made from the proceeds of a simultaneous
                  refinancing of such Debt otherwise permitted under the
                  Indentures or any Successor Financing; or

         (E)      declare or pay any dividend or make any distribution of any
                  kind or character (whether in cash, property or securities) on
                  any Capital Stock of any Subsidiary of Stena AB (except where
                  Stena AB or any Subsidiary of Stena AB receives a rateable
                  portion of such dividend or distribution) to any person (other
                  than Stena AB or any Subsidiary of Stena AB) or purchase,
                  redeem or otherwise acquire or retire for value any Capital
                  Stock of any Subsidiary of Stena AB held by any person (other
                  than Stena AB or any Subsidiary of Stena AB)

         each of the matters described in paragraphs (A) to (E) being a
         "Restricted Payment" if at the time thereof:-

                  (i)      a Default or Event of Default as defined in the
                           Indentures shall have occurred and is continuing; or

                  (ii)     upon giving effect to such Restricted Payment, Stena
                           AB could not Incur at least $1 of additional Debt
                           pursuant to Clause 10.8(A); or

                  (iii)    upon giving effect to such Restricted Payment, the
                           aggregate of all Restricted Payments, together with,
                           (a) payments on guarantees of obligations of
                           Affiliates or Related Persons (other than Stena AB or
                           a Subsidiary of Stena AB) of Stena AB in effect on
                           the date of the 2007 Indenture but only to the extent
                           such payments have not been reimbursed in accordance
                           with the terms of the relevant guarantee or other
                           agreement, and (b) outstanding Investments made
                           pursuant to paragraph (B) of the definition of
                           "Permitted Investments" (or, in respect of
                           Investments made prior to the date of this Agreement,
                           paragraph (ii) of the definition of "Permitted
                           Investments" in the 2007


<PAGE>


                                      -89-


                           Indenture) in either case made after the date of the
                           2007 Indenture exceeds the greater of:-

                           (a)  the sum of (x) fifty per cent (50%) of
                                cumulative Consolidated Net Income of Stena AB
                                (or, if cumulative Consolidated Net Income of
                                Stena AB shall be negative, less one hundred per
                                cent (100%) of such deficit) since the end of
                                the most recent fiscal quarter of Stena AB ended
                                on or prior to the date of the 2007 Indenture
                                through the last day of the period for which
                                quarterly or annual financial statements of
                                Stena AB are available, plus (y) one hundred per
                                cent (100%) of the aggregate net proceeds
                                received after the date of the 2007 Indenture,
                                including the fair value of property other than
                                cash, from the issuance of Capital Stock (other
                                than Disqualified Stock) of Stena AB and
                                warrants, rights or options on Capital Stock
                                (other than Disqualified Stock) of Stena AB and
                                the principal amount of Debt that has been
                                converted into Capital Stock (other than
                                Disqualified Stock) of Stena AB after the date
                                of the 2007 Indenture, plus (z) $50,000,000; or

                           (b)  $50,000,000.

         The foregoing provisions will not prohibit the payment of any dividend
         on Capital Stock of any class within sixty (60) days after the
         declaration thereof if, on the date when the dividend was declared,
         such dividend could have been paid in accordance with the provisions of
         the foregoing covenant.

         Under Swedish law, any shareholder of a Swedish corporation owning ten
         per cent (10%) or more of the outstanding shares of such corporation
         has the right to demand the payment of dividends from the profits of
         the corporation in accordance with the Swedish Companies Act. Whilst
         this Agreement cannot prevent the payment of a dividend by Stena AB
         under such circumstances, the declaration or payment by Stena AB of
         dividends (or other distributions) in excess of the amount then
         permitted under this Clause 10.14 shall constitute an Event of Default
         under this Agreement.

10.15    Financial year

         Except with the prior written consent of the Agent (such consent not to
         be unreasonably withheld or delayed), the Borrower and Stena AB will
         not alter their respective financial years.

10.16    Ownership of Stena AB Group companies

         Stena AB will procure that each of the Security Parties which are at
         the date hereof members of the Stena AB Group (other than Stena AB
         itself) remain Subsidiaries of Stena AB and that none of the shares of
         any person which is a Security Party at any time during the Security
         Period shall (except in favour of the Security Agent) be pledged to any
         person.

10.17    Stena International Group working capital


<PAGE>


                                      -90-


         (A)      Stena AB and the Borrower will procure that:-

                  (i)      the aggregate of (i) the Consolidated Current Assets
                           and (ii) Available Facilities shall be not less than
                           one hundred and twenty five per cent (125%) of the
                           Consolidated Current Liabilities; and

                  (ii)     the aggregate of (i) Consolidated Liquid Assets and
                           (ii) Available Facilities shall be not less than
                           $50,000,000.

         (B)      The requirements contained in this Clause 10.17 as to the
                  financial condition of the Stena International Group shall be
                  tested as at 30 September 2001 and each of the dates falling
                  three (3) monthly thereafter in each case by reference to the
                  Audited Stena International Financial Statements and the
                  unaudited financial statements delivered to the Agent pursuant
                  to Clause 10.2 provided however that no breach shall be deemed
                  to have arisen under this Clause 10.17 unless and until the
                  Borrower shall, within ten (10) Banking Days following receipt
                  by the Borrower of written notification from the Agent that a
                  shortfall has occurred under this Clause 10.17 have failed to
                  satisfy the Agent that such shortfall has been eliminated.

         (C)      For the purposes of this Clause 10.17, accounting terms are
                  used and shall be construed in accordance with Dutch GAAP but
                  so that:-

                  "AVAILABLE FACILITIES" means, at any relevant time, the
                  undrawn amount of any committed loan or overdraft facilities
                  (including the facilities provided under this Agreement)
                  available to one or more members of the Stena International
                  Group at the date of such financial statements;

                  "CONSOLIDATED CURRENT ASSETS" means the aggregate at the date
                  of computation of the consolidated stocks, assets held for
                  sale, receivables and prepayments, intercompany receivables,
                  securities, cash at banks and in hand and other current assets
                  (as determined in accordance with Dutch GAAP) of the Stena
                  International Group;

                  "CONSOLIDATED CURRENT LIABILITIES" means the aggregate at the
                  date of computation of intercompany payables and other current
                  liabilities (as determined in accordance with Dutch GAAP) of
                  the Stena International Group;

                  "CONSOLIDATED LIQUID ASSETS" means the aggregate of:-

                  (i)      the cash and Cash Equivalents of the Borrower and its
                           Subsidiaries; and

                  (ii)     the market value of shares or other marketable debt
                           or equity securities held by members of the Stena
                           International Group which are quoted on any
                           recognised stock exchange or over the counter or
                           similar market in any member of the European Union or
                           European Economic Area, U.S.A., Canada, Hong Kong,
                           Tokyo, Singapore or as otherwise approved by the
                           Agent and other marketable securities having a rating
                           of no less than BBB- from Standard & Poor's
                           Corporation or Moody's


<PAGE>


                                      -91-


                           Investors Service Inc or other rating agency which
                           the Agent accepts to be of equivalent standing

                  provided that cash or Cash Equivalents expressed or
                  denominated in a currency other than Dollars shall be
                  converted into Dollars by reference to the rate of exchange
                  used for conversion of such currency in the consolidation of
                  the relevant consolidated balance sheets or, if the relevant
                  currency was not thereby involved, by reference to the rate of
                  exchange or approximate rate of exchange ruling on such date
                  and determined on such basis as the Borrower's auditors may
                  determine or approve.

10.18    Early redemption or defeasance of Notes

         Stena AB will not exercise its rights of optional redemption of any of
         the Notes under Article XI (Redemption of Securities) of either of the
         Indentures or its rights of defeasance of the Notes under Article XII
         (Defeasance and Covenant Defeasance) of either of the Indentures or
         voluntarily redeem or repay any Successor Financing unless such
         optional redemption, defeasance or voluntary repayment of the Notes or
         (as the case may be) such voluntary redemption, defeasance or repayment
         of the Successor Financing is fully financed on the date thereof by an
         Acceptable Refinancing and for the purposes of this clause:-

         "ACCEPTABLE REFINANCING" means Debt incurred by Stena AB or any
         Subsidiary of Stena AB other than the Borrower (otherwise than from
         other members of the Stena AB Group) which:-

         (A)      is for an amount not less than the amount required to effect
                  such optional redemption, defeasance or voluntary repayment of
                  the Notes or (as the case may be) voluntarily to redeem,
                  defease or repay the relevant Successor Financing;

         (B)      is on terms that the scheduled date for repayment or
                  redemption of such Debt is no earlier than the scheduled
                  maturity date of the relevant Notes or (as the case may be)
                  Successor Financing being refinanced and that the person or
                  persons to whom such Debt is owed is or are not entitled to
                  require any earlier repayment or redemption in circumstances
                  more onerous upon Stena AB or such Subsidiary of Stena AB than
                  those applicable in respect of the Notes or relevant Successor
                  Financing; and

         (C)      is not secured or preferred by any Liens over any of the
                  Mortgaged Ships or other assets or rights mortgaged, charged
                  or assigned to the Security Agent pursuant to the Security
                  Documents from time to time or any of their Insurances or
                  Requisition Compensation or by a pledge of shares of any
                  Security Party; and

         "SUCCESSOR FINANCING" means:-

         (A)      any Debt incurred for the purpose of assisting Stena AB to
                  effect optional redemption of the Notes under Article XI of
                  the Indentures or for the purpose of assisting Stena AB or any
                  other member of the Stena AB Group voluntarily to repay the
                  Notes; or


<PAGE>


                                      -92-


         (B)      any other Debt incurred for the purpose of assisting Stena AB
                  or any other member of the Stena AB Group to redeem or repay
                  any such Debt referred to in sub-paragraph (A) or which,
                  directly or indirectly, refinances any such Debt.

10.19    Application of proceeds

         Stena AB and the Borrower will procure that the facilities provided
         under this Agreement are applied for the purposes specified in Clause
         1.1.

10.20    Restrictions on guarantees, etc.

         Except as provided in this Agreement, the Borrower shall not, and shall
         procure that none of its Subsidiaries shall, give any guarantee or
         indemnify or grant any security in favour of any person in respect of
         any obligation of any member of the Stena AB Group other than the
         Borrower or a Subsidiary or another Subsidiary of the Borrower except
         that the Borrower or a Subsidiary of the Borrower may in its capacity
         as charterer of a Vessel owned by, or let under a Capitalised Lease
         Obligation to, a member of the Stena AB Group which is not the Borrower
         or a Subsidiary of the Borrower give security by way of a charterer's
         assignment of earnings and/or insurances if required in connection with
         the financing or refinancing of that Vessel where the liability of the
         Borrower or its relevant Subsidiary in respect of such financing or
         refinancing is limited to the value of the earnings and/or insurances
         so assigned by it and where, in the case of a Vessel owned by a
         relevant member of the Stena AB Group, such owner has executed a
         mortgage on the Vessel as security for such financing or refinancing.

10.21    Asset coverage calculation

         (A)      Asset coverage covenant

                  Stena AB and the Borrower will procure that the ratio of
                  Available Asset Value to Unsecured Debt shall be not less than
                  2.5:1.

         (B)      Testing of covenant

                  The requirements contained in this Clause 10.21 as to the
                  ratio of Available Asset Value to Unsecured Debt shall be
                  tested as at 31 December 2001 and each of the dates falling
                  six (6) monthly thereafter or (if so requested in writing by
                  the Agent (acting on the instructions of the Majority Banks))
                  as at the end of any other calendar quarter (each such date a
                  "REFERENCE DATE" for the purposes of this Clause 10.21), in
                  each case by reference to the Audited Stena AB Financial
                  Statements and unaudited consolidated management accounts of
                  the Stena AB Group and the Asset Coverage Compliance
                  Certificate delivered to the Agent pursuant to Clause 10.2
                  provided however that no breach shall be deemed to have arisen
                  under this Clause 10.21 if a shortfall has occurred under this
                  Clause 10.21 but the Borrower is able to satisfy the Agent
                  within ten (10) Banking Days of the Agent's receipt of the
                  Asset Coverage Certificate evidencing that such shortfall has
                  been eliminated.


<PAGE>


                                      -93-

         (C)      Defined terms

                  For the purposes of this Clause 10.21 and Clause 10.2(F),
                  accounting terms are used and shall be construed in accordance
                  with Swedish GAAP but so that as at any Reference Date:-

                  "APPRAISED VALUE OF RESTRICTED GROUP ASSETS" means the value,
                  determined in accordance with this Clause 10.21, of the
                  following assets of the Restricted Group, on a consolidated
                  basis:-

                  (i)      completed vessels owned by or, pursuant to a
                           Capitalised Lease Obligation, chartered to any member
                           of the Restricted Group;

                  (ii)     ongoing newbuilding and other projects;

                  (iii)    machinery and equipment;

                  (iv)     ports and other real estate owned by or, pursuant to
                           a Capitalised Lease Obligation, leased to members of
                           the Restricted Group;

                  (v)      all other assets and properties of the Restricted
                           Group

                  but excluding Strategic Investments, Cash and Marketable
                  Securities, Net Market Value of the Unrestricted Group and
                  Other Assets and Working Capital;

                  "AVAILABLE ASSET VALUE" means the amount which is the sum,
                  determined on a consolidated basis of:-

                  (i)      the Appraised Value of Restricted Group Assets; minus

                  (ii)     Secured Debt; plus

                  (iii)    Strategic Investments; plus

                  (iv)     Cash and Marketable Securities; plus

                  (v)      Net Market Value of the Unrestricted Group; plus

                  (vi)     Other Assets and Working Capital;

                  "CASH AND MARKETABLE SECURITIES" means the aggregate value
                  determined on a consolidated basis, of all:-

                  (i)      cash and cash equivalents;

                  (ii)     shares or other marketable equities;

                  (iii)    bonds, floating rate notes and other marketable debt
                           securities

                  owned by members of the Restricted Group less the amount of
                  any Debt owing by any member of the Restricted Group in
                  relation to the property referred to in paragraphs (ii) and
                  (iii) of this definition;

<PAGE>


                                      -94-


                  "NET MARKET VALUE OF THE UNRESTRICTED GROUP" means the amount,
                  determined on a consolidated basis, which is the sum of:-

                  (vii)    the capital stock, reserves, any convertible
                           subordinated debentures and deferred income taxes of
                           the Unrestricted Group plus the amount by which the
                           aggregate value of the assets of the Unrestricted
                           Group determined on a consolidated basis and in
                           accordance with this Clause 10.21 exceeds the
                           aggregate book value of such assets or minus the
                           amount by which such aggregate value as so determined
                           is less than such aggregate book value; plus

                  (viii)   the value of any Debt owed to members of the
                           Restricted Group by members of the Unrestricted
                           Group;

                  "OTHER ASSETS AND WORKING CAPITAL" means the value determined
                  on a consolidated basis of all current and other assets of the
                  Restricted Group (excluding the Appraised Value of Restricted
                  Group Assets, Strategic Investments, Cash and Marketable
                  Securities and Net Market Value of the Unrestricted Group)
                  less the amount of the current liabilities of the Restricted
                  Group and less deferred tax as shown in the balance sheet;

                  "RESTRICTED GROUP" means all members of the Stena AB Group
                  which are not Unrestricted Subsidiaries;

                  "SECURED DEBT" means the aggregate of all outstanding Debt of
                  the Restricted Group on a consolidated basis which is at such
                  time owed to parties who are not members of the Stena AB Group
                  and is secured by a Lien in respect of any asset of the
                  Restricted Group or, in the case of Debt in respect of a
                  Capitalised Lease Obligation, the Debt outstanding under the
                  relevant lease but excluding Debt owing by any member of the
                  Restricted Group in relation to the property referred to in
                  paragraphs (ii) and (iii) of the definition of "Cash and
                  Marketable Securities";

                  "STRATEGIC INVESTMENT" means the value, determined on a
                  consolidated basis, of all Investments owned by members of the
                  Restricted Group which Stena AB considers to be of a strategic
                  nature (which, as at the date of this Agreement presently
                  comprises the P&O Stena Shares and the P&O Stena Loan Stock);

                  "UNRESTRICTED GROUP" means all members of the Stena AB Group
                  which are Unrestricted Subsidiaries;

                  "UNSECURED DEBT" means the aggregate of all outstanding Debt
                  of the Restricted Group on a consolidated basis which is at
                  such time owed to parties who are not members of the Stena AB
                  Group and is not secured by a Lien in respect of any asset of
                  the Restricted Group but excluding Debt owing by any member of
                  the Restricted Group in relation to the property referred in
                  paragraphs (ii) and (iii) of the definition of "Cash and
                  Marketable Securities",

                  each as at the relevant Reference Date and so that the value
                  of any assets or property is determined in accordance with the
                  following provisions of this


<PAGE>


                                      -95-

                  Clause 10.21 and the amount of any liability shall be
                  determined in the same manner in which it is determined for
                  the purpose of the balance sheet of the relevant member of
                  the Stena AB Group as at the Reference Date in accordance
                  with Swedish GAAP.

         (D)      Valuation of vessels and linkspans


                  Every completed vessel owned by or, pursuant to a Capitalised
                  Lease Obligation, chartered to any member of the Stena AB
                  Group (for the purposes of this Clause 10.21, a "RELEVANT
                  VESSEL") shall be valued in the manner and at the times
                  specified below.

                  The value of each Relevant Vessel shall be determined as being
                  the mortgage free value thereof. For these purposes, the
                  mortgage free value of each such Relevant Vessel shall be
                  assessed:-

                  (i)      annually on the dates falling at twelve (12) monthly
                           intervals from 31 December 2001 as being the mean of
                           the valuations of the charter-free market value
                           thereof on a willing buyer/willing seller basis as
                           assessed as at the relevant date by, in the case of
                           any ro-ro or ferry, three leading European
                           shipbrokers active in the ro-ro/ferry market
                           appointed by the Borrower from the following list of
                           brokers:-

                           Barry Rogliano Salles

                           Brax Shipping HB

                           Simsonship AB

                           Maersk Sales

                           Parimar Francharte S.A.

                           English White Shipping Ltd.

                           Nor Ocean

                           in the case of any drilling rig, by three leading
                           shipbrokers active in the offshore market appointed
                           by the Borrower from the following list of brokers:-

                           Fearnleys A/S

                           Kennedy Marr

                           Bassoe Offshore A/S

                           Barry Rogliano Salles

                           Seascope Offshore


<PAGE>


                                      -96-


                           in the case of any crude oil or other products
                           tanker, by three leading shipbrokers active in the
                           tanker market appointed by the Borrower from the
                           following list of brokers:-

                           Mallory Jones Lynch Flynn & Associates

                           H Clarkson & Co. Ltd.

                           Bassoe A/S

                           Fearnleys A/S

                           Simpson Spence & Young Shipbrokers

                           Brostrom Tankers AB

                           or any other brokers nominated by the Borrower and
                           approved by the Agent;

                  (ii)     annually on the dates falling at twelve (12) monthly
                           intervals from 30 June 2002 as being the market value
                           thereof as approved as at the relevant date by the
                           Board of Directors.

                  For this purpose, any current valuation of a Mortgaged Ship
                  provided pursuant to Clause 5.3(G) shall satisfy the
                  Borrower's obligation to provide a broker valuation for such
                  Mortgaged Ship pursuant to Clause 10.21(D)(i).

                  The value of any linkspan owned by any member of the Stena AB
                  Group shall be its book value (as determined in accordance
                  with Swedish GAAP).

         (E)      Valuation of newbuilding contracts

                  Any vessel under construction owned by, or contracted for
                  delivery on completion to, any member of the Stena AB Group
                  (whether as owner or pursuant to a Capitalised Lease
                  Obligation) and any contract entered into for the construction
                  of such a vessel shall be valued at its book value (as
                  determined in accordance with Swedish GAAP).

         (F)      Valuation of Ports

                  The value of any port shall be the amount (expressed in
                  Swedish kronor by reference to exchange rates prevailing on
                  the Reference Date) determined as the earnings before
                  interest, taxes, depreciation and amortisation in respect of
                  the relevant port as shown in the then latest audited accounts
                  of the owner of the relevant port multiplied by six and one
                  half (6.5).

                  For this purpose, any current valuation of Holyhead Port and
                  Stranraer Port provided pursuant to Clause 5.3(H) shall
                  satisfy the Borrower's obligation to provide a valuation for
                  such Port pursuant to this Clause 10.21(F).

         (G)      Valuation of other real estate


<PAGE>


                                      -97-


                  The value of any real estate (other than ports) owned by any
                  member of the Stena AB Group shall be the value thereof as
                  determined by the management of the relevant owning company as
                  being its market value.

         (H)      Valuation of P&O Stena Shares

                  The value of the P&O Stena Shares held by any member of the
                  Stena AB Group shall be the amount (expressed in Swedish
                  kronor by reference to exchange rates prevailing on the day of
                  computation) which is the Stena percentage of the sum of:-

                  (i)      the earnings before interest, taxes, depreciation and
                           amortisation of P&O Stena for the twelve month period
                           as shown in the then latest audited accounts of P&O
                           Stena multiplied by six point five (6.5); plus

                  (ii)     the cash and working capital (being, for this
                           purpose, the current assets minus current liabilities
                           but excluding interest bearing debt, pension
                           liabilities and other similar provisions) of P&O
                           Stena as shown in its then latest audited accounts;
                           minus

                  (iii)    interest bearing debt and leases as shown in its then
                           latest audited accounts; minus

                  (iv)     (without double counting) the amount of any
                           outstanding loans stock of P&O Stena as shown in its
                           then latest audited accounts

                  and, for this purpose, "STENA PERCENTAGE" means share capital
                  in P&O Stena owned by members of the Stena AB Group at the
                  relevant time (currently 40%).

         (I)      Value of other Strategic Investments

                  The value of any Strategic Investment other than P&O Stena
                  Shares held or owned by any member of the Stena AB Group shall
                  be:-

                  (i)      in the case of P&O Stena Loan Stock, its book value
                           as determined in accordance with Swedish GAAP and the
                           accounting policies of the Stena AB Group;

                  (ii)     in the case of any listed securities or shares, their
                           market value; and

                  (iii)    in the case of any other Strategic Investment, its
                           book value as determined in accordance with Swedish
                           GAAP and the accounting policies of the Stena AB
                           Group or otherwise as determined by such method of
                           valuation as shall from time to time be agreed
                           between the Agent (acting on the instructions of the
                           Majority Banks) and the Borrower having regard to the
                           nature of the relevant Strategic Investment.

         (J)      Valuation of other assets

                  The value of any other assets not referred to in (D) to (I)
                  above owned by any


<PAGE>


                                      -98-


                  member of the Stena AB Group shall be the book value thereof
                  as determined in accordance with Swedish GAAP and the
                  accounting policies of the Stena AB Group.

11.      SHIP AND LINKSPAN COVENANTS : INSURANCE

11.1     Duration

         Stena AB and the Borrower undertake to the Agent, the Security Agent,
         the Co-Arrangers and the Banks that throughout the Security Period they
         will procure that in relation to each Mortgaged Ship and each Mortgaged
         Linkspan:-

         (A)      during any period for which the Ship or Linkspan is in service
                  under a bareboat charter to a charterer which is not a member
                  of the Stena AB Group, the Shipowner and each Stena Charterer
                  of the relevant Ship or Linkspan will use its reasonable
                  endeavours to procure that:-

                  (i)      the covenants as to insurance of the relevant Ship or
                           Linkspan in such bareboat charter are complied with
                           by such charterer so that the insurances are
                           maintained in force in accordance with the
                           requirements of the Commercial Documents;

                  (ii)     the rights of the Security Agent are protected by the
                           endorsement of loss payable clauses on the Insurances
                           (other than any Insurances for the benefit of such
                           charterer and which are not for the benefit of the
                           Shipowner or are effected in excess of the amount of
                           cover required to be effected by the charterer under
                           the terms of the relevant charterer) which will
                           provide for payment to the Security Agent of all
                           moneys in respect of Total Loss proceeds and, in the
                           case of a Mortgaged Ship or Mortgaged Linkspan (but
                           only on terms that such claims shall be paid to the
                           relevant charterer insofar as the relevant moneys
                           belong to the charterer and may not be applied by the
                           relevant Shipowner or any Stena Charterer in or
                           towards payment of any amounts owing to them by such
                           charterer pursuant to the relevant charter and shall
                           not otherwise be applied in or towards payment of
                           amounts owing under any of the Security Documents)
                           Major Casualty claims; and

                  (iii)    in the case of a Mortgaged Ship or Mortgaged Linkspan
                           which is let on bareboat charter hereafter, the
                           relevant bareboat charter includes obligations on the
                           charterer not materially less favourable to the
                           Shipowner or Stena Charterer as disponent owner than
                           those set out in Schedule 20;

                  provided that following the occurrence of an Event of Default
                  and for so long as such Event of Default is continuing the
                  Borrower shall procure that the Shipowners and each Stena
                  Charterer will comply with the directions of the Security
                  Agent in relation to the exercise of its rights in relation to
                  the Insurances relating to each Mortgaged Ship and Mortgaged
                  Linkspan;

         (B)      during any period for which the Ship or Linkspan is not
                  employed on such a bareboat charter, the Shipowner will comply
                  and/or procure that any Stena


<PAGE>

                                      -99-


                  Charterer who is chartering the Ship or Linkspan under a
                  bareboat charterer will comply with the covenants set out in
                  Clauses 11.2 through 11.19 and will execute and deliver in
                  favour of the Security Agent or, in the case of m.v. "STENA
                  GERMANICA" (as long as she remains owned by Scandlines
                  subject to the Stena Germanica Mortgage), the Borrower a
                  Charterer's Subordination Undertaking and a Charterer's
                  Insurance Assignment on or before delivery of the Ship
                  and/or Linkspan to the relevant Stena Charterer under the
                  charter; and

         (C)      the aggregate value of the Insurances placed in respect of
                  Total Loss and which, subject to the relevant Ship Mortgage
                  and/or Insurance Assignment and/or Charterer's Insurance
                  Assignment are receivable and which may be retained pursuant
                  to the Commercial Documents by the Shipowners in respect of
                  the Mortgaged Ships and by the sellers of any Transferred
                  Ships from time to time (when aggregated to the value of the
                  insurances taken out in respect of the Ports pursuant to
                  Clause 13.2) is at all times during the Security Period not
                  less than 120% of the total of the Commitments.

11.2     Risks insured and amount of cover

         Each Shipowner shall insure its Mortgaged Ship and Mortgaged Linkspans
         (if any) and keep them insured in the name of the Shipowner and any
         other persons with an insurable interest therein against:-

         (A)      in the case of a Mortgaged Ship, fire and insurance marine
                  risks (including excess risks) and war risks on an agreed
                  value basis for not less than the market value of the Ship
                  (for which purpose the Ship shall be assessed with the benefit
                  of any charterparty being or to be performed by the Ship
                  unless the value would be greater if that charterparty were
                  not taken into account in which case the Ship shall be valued
                  without the benefit of any such charterparty);

        (B)       in the case of a Mortgaged  Ship,  protection and indemnity
                  risks for the full value and tonnage of the Ship which, in
                  respect of all risks within the protection and indemnity
                  insurances other than oil pollution risks, shall be in an
                  unlimited amount or (if unlimited cover ceases to be
                  available from any member of the "International Group" of
                  protection and indemnity associations or any successor
                  association or body of such associations) in the maximum
                  amount available to the Shipowner for the Ship from any
                  member of the International Group or such successor
                  association or body as may be selected by the relevant
                  Shipowner or Stena Charterer and which, in respect of oil
                  pollution liability risks included within the protection and
                  indemnity insurances, shall be in the maximum amount
                  available to the Shipowner for the Ship from time to time
                  through its ordinary basic entry with its protection and
                  indemnity association;

         (C)      in the case of a Mortgaged Ship, all other risks whatsoever
                  which are customarily insured against by leading operators of
                  vessels of the same age and type as in accordance with then
                  current industry practice and taking account of the areas in
                  which the Ships may trade from time to time;

         (D)      in the case of a Mortgaged Linkspan, loss or damage by fire,
                  theft, storm or


<PAGE>


                                     -100-


                  accident and such other risks and matters in respect of
                  which the Linkspan is for the time being required by statute
                  or otherwise to be insured against and generally in
                  accordance with any relevant good shipping industry
                  practice, for not less than the original cost of the
                  Linkspan;

         (E)      in the case of a Mortgaged Linkspan, third party claims
                  arising in respect of damage to and loss of property or death
                  or injury to third parties arising directly or indirectly out
                  of the ownership, management, use or operation of the Linkspan
                  or the chartering thereof; and

         (F)      in the case of a Mortgaged Linkspan, all other risks
                  whatsoever which are customarily insured against by leading
                  operators of linkspans of the same age and type as the
                  Linkspan in accordance with then current industry practice and
                  taking account of the area in which the Linkspan is from time
                  to time located.

11.3     Port risk cover

         While a Mortgaged Ship is laid up, port risk insurance may be taken out
         on such Ship by the relevant Shipowner instead of hull insurance, on
         normal market terms.

11.4     Terms of cover

         Each Shipowner shall procure that the Insurances for its Mortgaged Ship
         and Mortgaged Linkspans (if any) shall:-

         (A)      be effected through the Approved Brokers and reputable
                  independent insurance companies and/or underwriters in Europe,
                  North America, the Far East and other established insurance
                  markets in OECD countries except that the insurances against
                  protection and indemnity risks and war risks may be effected
                  by the entry of the Ship with such protection and indemnity
                  and war risks associations which are members of the
                  International Group or successor association or body or other
                  leading protection and indemnity and war risks associations;

         (B)      provide that all amounts payable thereunder shall be payable
                  in Dollars, Sterling, Euro or any other currency approved by
                  the Security Agent (such approval not to be unreasonably
                  withheld);

         (C)      in all other respects be in a form and on terms customary in
                  the insurance markets in which the cover is placed and/or as
                  otherwise approved by the Security Agent (such approval not to
                  be unreasonably withheld or delayed).

11.5     Notice of assignment of insurances and endorsement of the Security
         Agent's interests


         Each Shipowner and Stena Charterer (as the case may be) shall forthwith
         upon execution by it of the relevant Insurance Assignment or Deed of
         Covenants or Charterer's Insurance Assignment to be entered into by it
         in respect of any Mortgaged Ship or Mortgaged Linkspan:-

         (A)      execute a Notice of Assignment of Insurances in respect of the
                  relevant Ship or Linkspan in the form required by the terms of
                  such Insurance Assignment or Deed of Covenant or Charterer's
                  Insurance Assignment and in accordance

<PAGE>


                                     -101-

                  with normal market practice serve the same on all brokers,
                  insurance companies, underwriters, protection and indemnity
                  and/or war risks associations through whom any of the
                  policies or entries relating to the Insurances of such Ship
                  or Linkspan are effected; and

         (B)      procure that the interests of the Security Agent in the
                  Insurances of such Ship or Linkspan shall be endorsed upon all
                  slips, cover notes, policies, certificates of entry and other
                  instruments of insurance issued or to be issued in connection
                  with the Insurances by means of the incorporation therein of
                  the relevant Loss Payable Clause required by the terms of such
                  Insurance Assignment or Deed of Covenant or Charterer's
                  Insurance Assignment and the attachment thereto of the
                  relevant Notice of Assignment of Insurances referred to in
                  paragraph 11.5(A) above and/or by such other means and/or in
                  such other form as is customary or appropriate in the
                  insurance market in which the cover is placed and/or as the
                  Security Agent shall otherwise reasonably require

         and, in the event that any further Mortgaged Ship or Mortgaged Linkspan
         is delivered to any Stena Charterer under a demise charter after the
         date of the relevant Charterer's Insurance Assignment entered into by
         it, such Stena Charterer shall perform its obligations under paragraphs
         (A) and (B) above in respect of such Mortgaged Ship or Mortgaged
         Linkspan forthwith upon its delivery to such Stena Charterer.

11.6     Letters of undertaking

         Each Shipowner shall procure that the Approved Brokers and any
         protection and indemnity or war risks association in which its Ship may
         from time to time be entered shall deliver to the Security Agent a
         letter or letters of undertaking in such form as the Security Agent may
         reasonably require having regard to the then current market practice
         and the practices prescribed by the International Group or successor
         association or body and/or the Lloyds Insurance Brokers' Committees
         and/or any other professional association of which the Approved Brokers
         are members.

11.7     Deposit and production of insurance documents

         Each Shipowner shall procure in respect of its Mortgaged Ship and
         Mortgaged Linkspans (if any):-

         (A)      that all original slips, cover notes, policies, certificates
                  of entry and other instruments of insurance issued from time
                  to time in respect of those of the Insurances in respect of
                  its Ship and Linkspans (if any) which are effected through
                  Approved Brokers shall forthwith be deposited with such
                  Approved Brokers and thereafter be held by the Approved
                  Brokers to the order of the Security Agent upon and subject to
                  such terms as the Security Agent shall reasonably require
                  having regard to the then current market practice and subject
                  to the rights of any prior assignee thereof;

         (B)      that, as soon as reasonably practicable upon the Security
                  Agent's request therefor, certified copies of the instruments
                  of insurance referred to in paragraph (A) above shall be
                  produced to the Security Agent by the Approved Brokers;

<PAGE>


                                     -102-


         (C)      that, forthwith upon the Security Agent's request therefor,
                  certified copies of all certificates of entry and policies
                  relating to the Ship's entry with any protection and indemnity
                  association or war risks association shall be produced to the
                  Security Agent by such protection and indemnity and/or war
                  risks association (as appropriate).

11.8     Payment of premiums and calls

         Each Shipowner shall punctually pay all premiums, calls, contributions
         or other sums payable in respect of the Insurances and shall produce to
         the Security Agent all relevant receipts or other evidence of payment
         when so required by the Security Agent.

11.9     Waiver of broker's lien

         Where any of the insurances effected through Approved Brokers form part
         of a fleet cover and such Approved Brokers are or would be entitled to
         exercise rights of set-off or cancellation in relation to claims under
         such Insurances relating to a Mortgaged Ship or Mortgaged Linkspan for
         non-payment of premiums in respect of other vessels or linkspans
         covered by the same Insurances, such Shipowner shall use its reasonable
         endeavours (having regard to then current market practice including the
         practice prescribed by the Lloyds Insurance Brokers' Committee and/or
         any other professional association of which the Approved Brokers are
         members) to procure that the Approved Brokers shall undertake to the
         Security Agent:-

         (A)      not to exercise against the policy or against any claims in
                  respect of the Ship or Linkspan (as the case may be) any lien
                  or right of set off for unpaid premiums in respect of vessels
                  or linkspans other than the Ship or Linkspan covered under
                  such fleet cover or for unpaid premiums in respect of any
                  other such policies of insurance;

         (B)      not to cancel the insurances for the Ship or Linkspan or by
                  reason of the non-payment of premiums for vessels or linkspans
                  (other than any Mortgaged Ships or Mortgaged Linkspans)
                  covered by such fleet cover;

         or, in lieu of the undertakings referred to in paragraphs (A) and (B)
         to issue a separate policy of insurance in respect of the Ship or
         Linkspan (as the case may be) as and when the Security Agent may
         reasonably so require.

11.10    Renewal of Insurances

         Each Shipowner shall renew the Insurances (or relevant part thereof) in
         respect of its Mortgaged Ship and Mortgaged Linkspans (if any) before
         the relevant policies, contracts or entries expire and shall procure
         that the Approved Brokers and/or the relevant protection and indemnity
         association or war risks association or relevant Approved Manager shall
         promptly confirm in writing to the Security Agent as and when each such
         renewal has been effected.

11.11    Execution of guarantees

         Each Shipowner shall promptly arrange for the execution and delivery of
         such guarantees in respect of its Mortgaged Ship as may from time to
         time be required by


<PAGE>


                                     -103-


         any protection and indemnity or war risks association in accordance
         with its rules or the terms of entry of the Ship.

11.12    Information from brokers

         Each Shipowner shall procure that the Approved Brokers and the managers
         of any protection and indemnity and/or war risks association with which
         its Ship is entered shall give to the Security Agent such information
         as to the Insurances relating thereto as the Security Agent may
         reasonably request.

11.13    Restriction on amendments to cover

         No Shipowner shall without the prior consent of the Security Agent
         (such consent not to be unreasonably withheld or delayed), make any
         alteration to the terms of any of the Insurances of a Mortgaged Ship or
         Mortgaged Linkspan which would or could reasonably be expected to have
         a material adverse effect on the rights or interests of the Security
         Agent nor shall any Shipowner take any action or omit to take any
         action or suffer any act or omission which would or would be likely to
         render any of the Insurances invalid, void, voidable, suspended,
         defeated or unenforceable or render any sum payable thereunder
         repayable in whole or in part (save and to the extent that replacement
         cover has been effected in accordance with this Clause 11).

11.14    Major Casualties relating to Mortgaged Ships

         In the event of a Major Casualty relating to any Mortgaged Ship the
         proceeds of insurance claims in respect of such Major Casualty shall,
         subject to the rights of any charterer (other than a Stena Charterer),
         be paid to the Security Agent in accordance with the relevant Loss
         Payable Clauses and:-

         (A)      if no Event of Default has occurred and is continuing, such
                  proceeds shall be applied by the Security Agent in or
                  towards payment on behalf of the relevant Shipowner or
                  bareboat charterer to the relevant repairer, salvor or other
                  relevant creditor in respect of the cost of repairs, salvage
                  or other charges unless the Shipowner or bareboat charterer
                  has first fully repaired the damage or secured complete
                  discharge of the liability insured against or otherwise made
                  good the loss in which case the Security Agent shall
                  reimburse the Shipowner or bareboat charterer therefor up to
                  the amount received by the Security Agent provided however
                  that the insurers with whom the fire and usual marine risks
                  insurances are effected may, in the case of a Major
                  Casualty, make payment on account of repairs in the course
                  of being effected; or

         (B)      if an Event of Default has occurred and is continuing, and the
                  Agent has given notice in accordance with Clause 15.2 the
                  Security Agent shall be entitled to apply such proceeds in the
                  manner specified in Clause 7.10.

11.15    Minor casualties relating to Mortgaged Ships; casualties relating to
         Mortgaged Linkspans


         Each Shipowner or relevant Stena Charterer shall apply all sums
         receivable under the Insurances in respect of its Mortgaged Ship or
         Mortgaged Linkspans (as the case may


<PAGE>


                                     -104-


         be) as are paid to it in accordance with the relevant Loss Payable
         Clauses for the purpose of fully repairing the damage or securing
         complete discharge of the liability insured against or otherwise
         making good the loss in respect of which such sums shall have been
         received and/or reimbursing itself for the expense of having
         previously carried out such repairs, discharging such liability or
         making good such loss.

11.16    Total Losses relating to Mortgaged Linkspans

         In the event of a Total Loss relating to any Mortgaged Linkspan the
         proceeds of insurance claims in respect of such Total Loss shall be
         paid to the Security Agent in accordance with the relevant Loss Payable
         Clauses and:-

         (A)      if no Event of Default has occurred and is continuing, such
                  proceeds shall be applied by the Security Agent in or
                  towards payment on behalf of the relevant Shipowner for the
                  purchase of a replacement Linkspan (it being a condition of
                  such payment that the relevant Shipowner execute a Linkspan
                  Mortgage in favour of the Security Agent immediately upon
                  its acquisition of title to such replacement Linkspan and
                  that, to the extent that to do so is consistent with market
                  practice, the Shipowner assign to the Security Agent the
                  benefit of the relevant building contract and any refund
                  guarantee (or provide other security acceptable to the
                  Majority Banks) where any proceeds of the Total Loss are
                  paid over to the manufacturer or supplier of the replacement
                  Linkspan before the relevant Shipowner acquires title
                  thereto); and

         (B)      if an Event of Default has occurred and is continuing, and the
                  Agent has given notice in accordance with Clause 15.2 the
                  Security Agent shall be entitled to apply such proceeds in the
                  manner specified in Clause 7.10.

11.17    Receipt of proceeds by the Shipowner

         If, despite the provisions of the relevant Loss Payable Clauses, any
         Shipowner or relevant Stena Charterer receives any proceeds of an
         insurance claim in respect of a Major Casualty relating to its
         Mortgaged Ship or Total Loss relating to its Mortgaged Linkspan before
         having repaired the damage or discharged the liability or otherwise
         made good the loss in respect of which the moneys are paid, such
         Shipowner shall, subject to the rights of any prior assignee thereof,
         immediately pay such proceeds to the Security Agent who shall apply
         them in accordance with the relevant provisions of Clause 11.14 or
         Clause 11.16 and until payment thereof to the Security Agent the
         relevant Shipowner or relevant Stena Charterer shall hold the proceeds
         on trust for the Security Agent.

11.18    Restriction on settlement of claims

         Subject to the rights of any charterer (other than a Stena Charterer),
         no Shipowner shall without the prior written consent of the Security
         Agent settle, compromise or abandon any claim under the Insurances for
         a Total Loss or Major Casualty relating to its Mortgaged Ship or
         Mortgaged Linkspan (if any).

11.19    Assistance by the Shipowner


<PAGE>


                                     -104-


         Subject to the rights of any prior assignee of the Insurances each
         Shipowner undertakes to do all things and provide all documents,
         evidence and information as may be necessary to enable the Security
         Agent to collect or recover any moneys which at any time become due in
         respect of the Insurances relating to its Mortgaged Ship or Mortgaged
         Linkspans (if any) and for such purpose (but without limitation) such
         Shipowner shall permit the Security Agent if necessary to sue in that
         Shipowner's name.

11.20    Employment in conformity with insurance cover

         No Shipowner will at any time employ its Mortgaged Ship or Mortgaged
         Linkspans (if any) or suffer them to be employed except in conformity
         with the terms of the Insurances (including any express or implied
         warranties) without first obtaining the consent to such employment of
         the insurers and complying with such requirements as to extra premium
         or otherwise as the insurers may prescribe and before allowing its Ship
         to enter or trade to any zone which is declared a war zone by any
         government or by the Ship's war risks insurers or which is rendered
         dangerous by reason of hostility in any part of the world (whether war
         be declared or not) to effect such special insurance cover so as to
         ensure that such Ship is fully insured against war risks in accordance
         with this Clause 11 while in such zone.

12.      SHIP AND LINKSPAN COVENANTS : OPERATION AND MAINTENANCE

12.1     Duration

         Stena AB and the Borrower undertake to the Agent, the Security Agent,
         the Banks and the Co-Arrangers that throughout the Security Period they
         will procure that in relation to each Mortgaged Ship and each Mortgaged
         Linkspan:-

         (A)      during any period for which the Ship or Linkspan is in service
                  under a bareboat charter to a charterer which is not a member
                  of the Stena AB Group, the Shipowner and each Stena Charterer
                  of the relevant Ship or Linkspan will use its reasonable
                  endeavours to procure that:-

                  (i)      the covenants as to registration, operation and
                           maintenance of the relevant Ship or Linkspan are
                           complied with by the person on whom such obligations
                           are imposed; and

                  (ii)     in the case of a Mortgaged Ship or Mortgaged Linkspan
                           which is let on bareboat charter hereafter, the
                           relevant bareboat charter includes obligations on the
                           charterer not materially less favourable to the
                           Shipowner or Stena Charterer as disponent owner than
                           those set out in Schedule 20;

                           provided that following the occurrence of an Event of
                           Default and for so long as such Event of Default is
                           continuing the Borrower shall procure that the
                           Shipowners and each Stena Charterer will comply with
                           the directions of the Security Agent in relation to
                           the exercise of its rights under the Commercial
                           Documents relating to its Mortgaged Ship and
                           Mortgaged Linkspans (if any) and any charter or other
                           contract for the employment of the Ship or Linkspans
                           entered into hereafter; and


<PAGE>


                                     -106-


         (B)      during any period for which the Ship or Linkspan is not
                  employed on a bareboat charter as described in paragraph (A)
                  above, the Shipowner will comply and/or procure that any Stena
                  Charterer who is chartering the Ship or Linkspan under a
                  bareboat charter will comply with the covenants set out in
                  Clauses 12.3 through 12.17.

12.2     Ship and Linkspan registration

         Each Shipowner shall:-

         (A)      maintain the registration of its Mortgaged Ship under the
                  registry of the Flag State at the Port of Registry; and

         (B)      maintain the registration of its Mortgaged Linkspan under the
                  registry of the Flag State (but only if such Linkspan is
                  capable of registry in a ship registry or other central or
                  public registry)

         and (save pursuant to and in accordance with Clause 19.5) shall not do
         or omit to do anything or suffer any act or omission whereby such
         registration may be forfeited or imperilled.

12.3     Standard of maintenance

         Each Shipowner shall keep its Mortgaged Ship and Mortgaged Linkspans
         (if any) in a good and efficient state of repair so as (in the case of
         each Ship) to entitle such Ship to its Classification with a
         Classification Society free of any requirement or recommendation
         affecting class which has not been complied with in accordance with its
         terms and (in the case of each Ship and Linkspan) so as to comply with
         all material legislation of the Flag State and all other legislation,
         regulations and requirements of any government, governmental agency or
         other regulatory authority (statutory or otherwise) from time to time
         applicable to such Ship and Linkspans. Each Shipowner shall procure
         that all appropriate repairs to or replacements of any damaged, worn or
         lost parts or equipment are carried out (both as regards workmanship
         and quality of materials) so as not to diminish the value or class of
         its Mortgaged Ship or Mortgaged Linkspans.

12.4     Removal of parts and equipment

         No part or item of equipment whose removal would materially reduce the
         value of any Mortgaged Ship or Mortgaged Linkspan shall be removed from
         such Ship or Linkspan unless it is replaced promptly by a suitable part
         or item and the replacement part or item:-

         (A)      is in the same or better condition than that part or item
                  removed or enhances the value and/or earning capacity of such
                  Ship or Linkspan;

         (B)      is (or upon its installation on board such Ship or Linkspan
                  will become) legally and beneficially wholly owned by the
                  relevant Shipowner;

         (C)      is free from Liens other than Permitted Ship Liens; and

         (D)      with effect from its installation on board such Ship or
                  Linkspan is subject to


<PAGE>


                                     -107-


                  the security constituted by the Ship Mortgage or Linkspan
                  Mortgage (as the case may be) thereon.

12.5     Restriction on modifications

         No Shipowner shall, without the prior consent of the Agent (such
         approval not to be unreasonably withheld or delayed), make any
         modifications to its Mortgaged Ship or any Mortgaged Linkspan or any
         part thereof which would or might materially and adversely alter the
         structure, type or performance characteristics of such Ship or Linkspan
         or materially reduce its value.

12.6     Equipment belonging to third parties

         No Shipowner shall, without the prior consent of the Agent (such
         approval not to be unreasonably withheld or delayed), install on its
         Mortgaged Ship or Mortgaged Linkspan any equipment belonging to a third
         party which cannot be removed without causing significant damage to the
         structure or fabric of such Ship or Linkspan.

12.7     Survey

         Each Shipowner shall submit its Mortgaged Ship to such periodical or
         other surveys as may be required for classification purposes and, if so
         required by the Agent, such Shipowner shall supply to the Security
         Agent copies of all survey reports in respect thereof.

12.8     Inspection

         Each Shipowner shall permit surveyors or other persons appointed by the
         Agent to board its Mortgaged Ship at all reasonable times (but so as
         not to interfere with the ordinary operation of the Ship) for the
         purpose of inspecting her condition and her class or other records or
         satisfying themselves as to repairs proposed or already carried out
         subject to such persons and the Security Agent signing an indemnity
         and/or waiver letter reasonably required by the relevant shipyard or
         the Shipowner or relevant bareboat charterer. Each Shipowner shall
         afford all proper and reasonable facilities for such inspections and
         also for inspections of the Mortgaged Linkspans if reasonably required
         by the Agent.

12.9     Employment of Ships

         No Shipowner shall knowingly or recklessly employ its Mortgaged Ship or
         suffer her employment in any trade or business which is forbidden by
         any applicable law or is otherwise illicit or in carrying illicit or
         prohibited goods or in any manner whatsoever which may render her
         liable to condemnation in a prize court or to destruction, seizure or
         confiscation or that may expose such Ship to penalties or sanctions.

12.10    Information

         Each Shipowner shall promptly provide the Agent with all such
         information which the Agent may periodically and reasonably require
         regarding its Mortgaged Ship and its Mortgaged Linkspans (if any),
         their employment, position and engagements, particulars of all towages
         and salvages and copies of all charters and other contracts for her
         employment or otherwise concerning such Ship or Linkspans.

<PAGE>


                                     -108-


12.11    Payment of trading expenses and wages

         Each Shipowner shall promptly pay all tolls, dues and other outgoings
         whatsoever in respect of its Mortgaged Ship, its Mortgaged Linkspans
         (if any) and their Insurances and keep accounts in respect thereof in
         accordance with its current practice. As and when the Agent may so
         reasonably require each Shipowner shall make such accounts available
         for inspection on behalf of the Agent and shall provide evidence
         satisfactory to the Security Agent that the wages and allotments and
         the insurance and pension contributions of the master and crew are
         being regularly paid, that all deductions from crew's wages in respect
         of any tax and/or social security liability are being properly
         accounted for and that the master has no claim for disbursements other
         than those incurred in the ordinary course of trading on the voyage (if
         any) then in progress or completed prior to such inspection.

12.12    Avoidance and discharge of other liens

         Each Shipowner shall in accordance with good shipping industry practice
         pay and discharge or cause to be paid and discharged all debts, damages
         and liabilities whatsoever which have given rise, or may give rise, to
         maritime, statutory or possessory liens on or claims enforceable
         against its Mortgaged Ship or its Mortgaged Linkspans (if any) under
         the laws of all countries to whose jurisdiction such Ship or Linkspans
         may from time to time be subject. If any Mortgaged Ship or Mortgaged
         Linkspan is arrested pursuant to legal process or detained in exercise
         or purported exercise of any such lien or claim as aforesaid the
         relevant Shipowner shall use all reasonable endeavours to procure the
         release of the Ship or Linkspan from such arrest or detention as soon
         as reasonably practicable after receiving notice thereof by providing
         bail or taking such other steps as the circumstances may require (but,
         in the case of an arrest or detention as a consequence of claims or
         alleged claims against a charterer of such Ship or Linkspan which is
         not a member of the Stena AB Group, the relevant Shipowner or Stena
         Charterer may defer procuring such release if it reasonably considers
         it to be in the best commercial interests of the Stena AB Group and
         provided that, unless otherwise agreed by the Agent, and for so long as
         so doing does not involve any imminent likelihood of a sale of such
         Ship or Linkspan by order of any court of competent jurisdiction).

12.13    Notice of mortgage

         Each Shipowner will do everything necessary under the laws of any
         relevant jurisdiction for the purpose of perfecting and maintaining the
         Ship Mortgage in relation to its Mortgaged Ship and the Linkspan
         Mortgage in relation to each of its Mortgaged Linkspans (if any) as a
         valid and enforceable mortgage and for preserving the priority of such
         Ship Mortgage and Linkspan Mortgage and, in particular (but without
         limitation), it will keep on board its Ship each such document or
         record as may be required by law and cause such particulars relating to
         the relevant Ship Mortgage and Linkspan Mortgages to be recorded as may
         be required by law.

12.14    Notification of certain events

         Each Shipowner shall notify the Agent by telefax promptly upon the same
         coming to its knowledge and in reasonable detail of:-

<PAGE>


                                     -109-


         (A)      any casualty to its Mortgaged Ship which is or is likely to be
                  a Major Casualty;

         (B)      any occurrence in consequence whereof its Mortgaged Ship or
                  any Mortgaged Linkspan has become or is likely to become a
                  Total Loss;

         (C)      any requirement or recommendation made by its Classification
                  Society or by any competent authority in respect of its
                  Mortgaged Ship which has not been complied with by the date by
                  which it is required to be complied with (as extended by
                  agreement with the Classification Society) other than any such
                  requirement or recommendation the imposition of which is being
                  contested in good faith by the relevant Shipowner;

         (D)      any arrest or detention of its Mortgaged Ship or any Mortgaged
                  Linkspan or the exercise or purported exercise of any lien on
                  such Ship or Linkspan;

         (E)      its Mortgaged Ship or, if capable of registration, its
                  Mortgaged Linkspan ceasing to be registered under the laws of
                  its Flag State or anything which is done or omitted to be done
                  whereby such registration may be imperilled.

12.15    Restrictions on chartering-out

         Except with the prior written consent of the Agent, no Shipowner and no
         Stena Charterer shall let or employ a Mortgaged Ship or a Mortgaged
         Linkspan:-

         (A)      on demise charter for any period;

         (B)      on any time or consecutive voyage charter for a term which
                  exceeds or which by virtue of any optional extensions therein
                  contained may exceed twenty-five (25) months' duration; or

         (C)      on terms which permit the charterer to purchase the Ship or
                  Linkspan (save for an option price which reflects the market
                  value of such Ship or Linkspan at the time the relevant option
                  is exercisable or a reasonable pre-estimate of such value
                  having regard to the other terms of the relevant charter and
                  save for a charter which is a hire purchase or conditional
                  sale agreement on Credit Terms);

         provided however that:-

                  (i)      no such consent shall be required in respect of a
                           charter to a Stena Charterer provided that the
                           relevant Stena Charterer has executed and delivered
                           to the Agent a Charterer's Subordination Undertaking
                           and (if the charter is a demise charter) a
                           Charterer's Insurance Assignment in relation to the
                           Mortgaged Ship and (if relevant) the Mortgaged
                           Linkspans and the Approved Manager shall have
                           delivered to the Security Agent a Manager's
                           Subordination Undertaking in relation thereto; and

                  (ii)     in respect of the matters referred to in
                           sub-paragraph (B) of this Clause 12.15 the Agent's
                           consent shall be deemed to have been given thereto if
                           the relevant Shipowner shall not have been informed
                           by the Agent

<PAGE>


                                     -110-


                           either in writing or by word of mouth that such
                           consent is refused within two (2) Banking Days in
                           Gothenburg and London of the time at which the
                           relevant Shipowner's application for such consent was
                           received by the Agent; and

                  (iii)    the Agent shall not unreasonably withhold its consent
                           to any charter and it shall not for this purpose be
                           reasonable to withhold consent or to impose
                           conditions on its consent either (a) by reason of the
                           failure of the proposed charterer (other than a Stena
                           Charterer) to agree to grant an assignment of its
                           interest in the Insurances of the Ship and/or
                           Linkspan and/or to agree to subordinate its rights in
                           respect of the Ship and/or Linkspan and/or to agree
                           to subordinate its rights in respect of the Ship
                           and/or Linkspan to those of the security Agent as its
                           mortgagee and/or assignee of its Insurances (in each
                           case either at all or on terms required by the Agent)
                           and/or to agree the terms of the relevant charter
                           reflecting or containing the provisions of Clauses 11
                           and/or 12 or (b) by reason of the duration of the
                           charter and/or the identity and/or creditworthiness
                           of the charterer or (c) by reason of the relevant
                           Shipowner and/or any charterer (including a Stena
                           Charterer) failing to agree to assign its rights
                           under the relevant charter and/or in respect of the
                           Earnings of the Ship and/or Linkspan as security for
                           the obligations of the Borrower pursuant to the
                           Security Documents.

12.16    Management

         No Shipowner or Stena Charterer shall appoint any manager of a
         Mortgaged Ship or Mortgaged Linkspan other than an Approved Manager and
         each Approved Manager of a Mortgaged Ship or Mortgaged Linkspan so
         appointed by any Shipowner or Stena Charterer shall execute and deliver
         to the Security Agent a Manager's Subordination Undertaking in relation
         to each of the Mortgaged Ships and Mortgaged Linkspans from time to
         time managed by it.

12.17    ISM Compliance

         Each Shipowner shall comply, or procure that any other relevant person
         such as the Approved Manager or bareboat charterer who has assumed the
         responsibility for operation of its Mortgaged Ship for the purposes of
         the ISM Code will comply, with the ISM Code or any replacement thereof.

13.      COVENANTS IN RESPECT OF THE PORTS

13.1     Duration

         Stena AB and the Borrower undertake to the Agent, the Security Agent,
         the Co-Arrangers and the Banks that throughout the Security Period they
         will procure that in relation to each Mortgaged Port the Port Owner
         will comply with the covenants set out in Clauses 13.2 through 13.16.

13.2     Insurance

         Save where the provisions of Clause 13.4 are applicable, each Port
         Owner shall:-


<PAGE>


                                     -111-


         (A)      insure and keep insured all such buildings, fixtures,
                  fittings, plant and machinery on its Mortgaged Port as are in
                  each case used or required in the ordinary course of the Stena
                  AB Group's business (other than those in respect of which the
                  Security Agent agrees that insurance is not reasonably
                  required) with such insurer and against such risks and in such
                  amounts (being no less than their full reinstatement value if
                  realistically capable of being so severely damaged as to
                  require reinstatement) and otherwise upon such terms as the
                  Security Agent may reasonably require;

         (B)      use its best endeavours to procure that a note of the Security
                  Agent's interest is endorsed on all insurance policies
                  relating thereto; and

         (C)      (if the Security Agent so requires) produce to or deposit with
                  the Security Agent all such insurance policies in respect of
                  its Mortgaged Port and the receipts for all premiums and other
                  payments necessary for effecting and keeping up such policies.

13.3     Security Agent's right to remedy breach of insurance covenants

         If a Port Owner fails to comply with any of its obligations under
         Clause 13.2 in respect of its Mortgaged Port (whether or not the Port
         Mortgage relating thereto shall have become enforceable) the Security
         Agent may, but without being under any duty to do so, itself insure and
         keep insured any of the buildings, fixtures, fittings, plant and
         machinery which the relevant Port Owner has in Clause 13.2 covenanted
         to insure in each case in accordance with the provisions of Clause 13.2
         and the Port Owner shall be liable to the Security Agent for the
         expense of the Security Agent in so doing.

13.4     Leasehold property insured by lessor

         If the interest of any Port Owner in its Mortgaged Port or any part
         thereof is leasehold and the lessor (or any superior lessor) covenants
         to insure (or procure the insurance of) the same the relevant Port
         Owner shall:-

         (A)      provide the Security Agent with details of the insurance of
                  such Port and provide the Security Agent with a copy of the
                  insurance policies and any subsequent endorsements if such
                  Port Owner has the right to obtain the same from the landlord
                  and has so obtained the same;

         (B)      provide the Security Agent with receipts or other evidence of
                  the payment of all premiums under such policies of insurance
                  if such Port Owner has the right to obtain the same from the
                  landlord and has so obtained the same;

         (C)      insure separately (in accordance with the provisions of Clause
                  13.2) against such risks as are referred to in Clause 13.2 for
                  additional sums required by the Security Agent (or failing
                  such requirement in accordance with the practice in respect of
                  assets of the same type from time to time current amongst
                  prudent businessmen) not insured by the lessor but only to the
                  extent that such Port Owner is not prohibited from doing so
                  under the terms of the relevant lease; and

         (D)      take all steps open to it to enforce the insurance and (unless
                  the Security Agent


<PAGE>


                                     -112-


                  agrees otherwise) reinstatement covenants on the part of the
                  lessors and any superior lessors. The Security Agent shall
                  not unreasonably withhold its approval to a request from the
                  relevant Port Owner that it terminate the relevant lease in
                  lieu of enforcing the reinstatement covenants therein if, in
                  the reasonable opinion of such Port Owner, it would be
                  commercially advantageous to it to do so.

13.5     Notification and settlement of insurance claims

         The relevant Port Owner shall as soon as possible give notice to the
         Security Agent of all claims in respect of its Mortgaged Port made
         under each policy of insurance referred to in Clause 13.2 and 13.4
         estimated to be in excess of $2,000,000 (or the equivalent in any other
         currency) and of all facts and matters relating to such claims. Subject
         to complying with its obligations to any lessor or tenant under any
         existing lease, the relevant Port Owner shall not agree to the
         settlement of any such claim without the prior written consent of the
         Security Agent.

13.6     Application of insurance proceeds

         Subject to the obligations of the relevant Port Owner to any tenant in
         respect thereof, all sums at any time payable under any policies of
         insurance relating to its Mortgaged Port shall be paid to the Security
         Agent and shall be applied in making good or recouping expenditure in
         respect of the loss or damage for which such moneys are received or as
         the Security Agent may otherwise require (and if the same is not paid
         directly to the Security Agent by the insurers then the relevant Port
         Owner shall hold the same on trust for the benefit of the Security
         Agent and shall account to the Security Agent accordingly) provided
         however that until the Security Agent otherwise requires by notice in
         writing to the relevant Port Owner, such Port Owner will not be
         required so to pay to the Security Agent any such sums in respect of
         any claim for $2,000,000 (or the equivalent in any other currency) or
         less.

13.7     Repair

         Each Port Owner shall keep its Mortgaged Port in good and substantial
         repair and condition and (when necessary) replace all such buildings,
         fixtures, fittings, plant and machinery thereon as are in each case
         used or required in the ordinary course of the Stena AB Group's
         business but not where the relevant Port Owner reasonably considers
         that repair or replacement is not necessary or desirable to enable it
         efficiently to carry on its business.

13.8     Security Agent's right to remedy breach of repair covenants

         If a Port Owner fails to comply with any of its obligations under
         Clause 13.7 in respect of its Mortgaged Port (whether or not the Port
         Mortgage relating thereto shall have become enforceable) the Security
         Agent may, but without being under any duty to do so, itself repair any
         such buildings, fixtures, fittings, plant and machinery which the
         relevant Port Owner has in Clause 13.7 covenanted to repair (and for
         such purpose the Security Agent may enter upon the Mortgaged Port or
         any part thereof without being deemed to have gone into possession
         thereof).

<PAGE>


                                     -113-

13.9     Maintenance

         None of the Port Owners will, without the prior written consent of the
         Security Agent (such consent not to be unreasonably withheld), pull
         down or remove the whole or any part of any buildings on its Mortgaged
         Port or sever or unfix or remove any of the fixtures thereon or (except
         for the purpose of effecting necessary repairs thereto or of replacing
         the same with new or improved models or substitutes) remove any of the
         plant and machinery forming part of such Mortgaged Port except where:-

         (A)      it is required to do so pursuant to any mandatory local
                  authority or other requirement;

         (B)      the effect of doing so will not materially reduce the value of
                  such Mortgaged Port;

         (C)      if there is a material reduction in the value of such
                  Mortgaged Port following the removal of any plant or machinery
                  therefrom, such plant or machinery is removed to another
                  Mortgaged Port which is subject to a Port Mortgage in favour
                  of the Security Agent and there is an increase in the value of
                  that Mortgaged Port commensurate with the decrease in value of
                  the first Mortgaged Port; or

         (D)      the relevant building, fixture, plant or machinery is disposed
                  of in accordance with Clause 5.3.

13.10    Notification of planning authority notices, etc.

         Each of the Port Owners will, within seven (7) days after becoming
         aware thereof, give to the Security Agent a copy of any notice, order,
         direction, designation, resolution or proposal having specific
         application to its Mortgaged Port or any part thereof or to the
         locality in which the same is situate given or made by any planning
         authority or other public body or authority whatsoever the compliance
         with which is likely to have a material adverse effect on the value of
         the Mortgaged Port concerned and (if the Security Agent so requires or
         if such Port Owner is obliged by law to do so and so decides) that it
         will forthwith and at the cost of such Port Owner take all reasonable
         and necessary steps to comply with any such notice, order, direction,
         designation or resolution and make or join with the Security Agent in
         making such objections or representations in respect of any such
         proposal as the Security Agent may require.

13.11    Performance of covenants

         Each of the Port Owners will:-

         (A)      observe and perform all material covenants, stipulations and
                  conditions to which its Mortgaged Port or any part thereof or
                  the user thereof is now or may hereafter be subjected so far
                  as the same are still subsisting and capable of being enforced
                  and of which such Port Owner receives written notice that it
                  is in breach thereof from the person entitled to enforce the
                  same (including all material covenants and obligations of such
                  Port Owner as lessor);


<PAGE>


                                     -114-


         (B)      (without prejudice to the generality of the foregoing) as
                  regards any lease under which all or any part of its Mortgaged
                  Port is held, duly and punctually pay all rents due or to
                  become due thereunder and perform and observe all the material
                  covenants and conditions on the part of the tenant which are
                  therein contained; and

(C)               notify the Security Agent of any material claim, notice or
                  proceedings in respect of any (alleged) breach of any of the
                  foregoing.

13.12    Restriction on licences, tenancies and leases

         Except with the prior written consent of the Security Agent (which
         consent shall not be unreasonably withheld and which shall not be
         withheld at all where the relevant Port Owner is contractually obliged
         to any existing lessor or tenant to perform the act for which the
         Security Agent's consent is required), no Port Owner shall grant or
         agree to grant or vary or agree to vary any licence or tenancy
         affecting all or any part of its Mortgaged Port nor exercise the powers
         of leasing or agreeing to lease or of accepting or agreeing to accept
         surrenders conferred by Sections 99 and 100 of the Law of Property Act
         1925 nor in any other way dispose or agree to dispose of or create any
         legal or equitable estate or interest in or otherwise part with or
         share possession or occupation of its Mortgaged Port or any part
         thereof to or with any person (other than another member of the Stena
         AB Group) where this would materially and adversely affect the value of
         the Port or the profitability of the business carried out thereat.

         It is agreed for the purpose of this Clause 13.12 that there will be no
         material and adverse effect on the value of a Mortgaged Port or the
         profitability of any business carried out thereat where:-

         (A)      the relevant Port Owner grants a lease or licence of any part
                  of the Port for a term not exceeding twenty five (25) years on
                  proper commercial terms with rents to be reviewed at
                  reasonable intervals of not more than five (5) years if
                  appropriate and at either:-

                  (i)      the best rent reasonably obtainable in the open
                           market without taking a fine or premium or other
                           capital consideration; or

                  (ii)     at a lower rent where the relevant Port Owner is
                           satisfied that it is in the best commercial interests
                           of the business carried on at the Port that the lease
                           or licence should be granted; and

         (B)      in any case where the term of any lease is for not more than
                  five (5) years the letting excludes the provisions of
                  Sections 24 to 28 of the Landlord and Tenant Act 1954

         and such lease or licence would have no material adverse effect on the
         use of the Port for the purpose of any undertaking carried on at the
         Port.

13.13    Land Registration Acts 1925 to 1986

         Each of the Port Owners shall procure that no person shall be
         registered under the Land Registration Acts 1925 to 1986 as proprietor
         of its Mortgaged Port or any part


<PAGE>


                                     -115-


         thereof who is not now or when the same is acquired by the relevant
         Port Owner so registered without the prior written consent of the
         Security Agent (provided always that this restriction shall not apply
         to any lease granted pursuant to Clause 13.12) and the relevant Port
         Owner shall be liable for the costs incurred by the Security Agent in
         lodging from time to time cautions against the first registration of
         title at H.M. Land Registry to its Mortgaged Port.

13.14    Restriction on development

         Each of the Port Owners undertakes in respect of its Mortgaged Port
         that, where this would materially and adversely affect the value of its
         Mortgaged Port, it will not without the prior written consent of the
         Security Agent:-

         (A)      carry out or permit or suffer to be carried out any
                  development (as defined in the Planning Acts) on such
                  Mortgaged Port or any part thereof; or

         (B)      materially change or permit or suffer to be materially changed
                  the user of the such Mortgaged Port or any part thereof.

13.15    Compliance with Planning Acts

         None of the Port Owners will do or omit or permit or suffer to be done
         or omitted any act, matter or thing in, on or respecting its Mortgaged
         Port or any part thereof which is required to be omitted or done by the
         Planning Acts or any other Acts or statutory provisions whatever or
         which shall contravene the provisions of such Acts or any of them and
         each Port Owner will at all times indemnify and keep indemnified the
         Security Agent against all actions, proceedings, costs, expenses,
         claims and demands whatsoever in respect of any such matter or thing
         contravening the provisions of the said Acts or any of them as
         aforesaid.

13.16    Payment of outgoings

         Each of the Port Owners will pay, and indemnify the Banks against, all
         claims in respect of rates, taxes, duties, charges, assessments and
         outgoings assessed or charged upon its Mortgaged Port or payable by the
         owner or occupier.

13.17    Inspection

         Each of the Port Owners undertakes in respect of its Mortgaged Port
         that it will permit the Security Agent and any duly authorised agent,
         architect or surveyor of the Security Agent to have access to such Port
         or any part thereof at all reasonable times (but so as not to interfere
         with the ordinary conduct of business at such Port) upon prior
         appointment for the purpose of inspecting the same.

14.      CONDITIONS

14.1     Documents and evidence

         The obligation of each Bank to make its Commitment available shall be
         subject to the condition that the Agent, or its duly authorised
         representative, shall have received all the documents and evidence
         specified in Schedule 5 in form and substance satisfactory to the
         Agent.


<PAGE>


                                     -116-


14.2     General conditions precedent

         The obligation of each Bank to make its Commitment available shall be
         subject to the further conditions that, as at the Availability Date:-

         (A)      the representations and warranties contained in Clauses 9.1
                  and 9.2 are true and correct on and as of the Availability
                  Date as if each was made with respect to the facts and
                  circumstances existing at such time;

         (B)      no Default shall have occurred and be continuing or would
                  result from the making of an Advance on the Availability Date;
                  and

         (C)      no material adverse change has occurred in the business,
                  financial condition or prospects of the Stena AB Group or the
                  Stena International Group as a whole from that shown in the
                  information memorandum dated June 2001 prepared by J. P.
                  Morgan plc and received by the Banks.

14.3     Waiver of conditions precedent

         The conditions specified in this Clause 14 are inserted solely for the
         benefit of the Banks and may be waived on their behalf in whole or in
         part and with or without conditions by the Agent acting on the
         instruction of the Banks without prejudicing the right of the Agent
         acting on such instructions to require fulfilment of such conditions in
         whole or in part in respect of any other Advance.

14.4     Notification to Banks

         The Agent shall notify the Banks promptly after receipt by it of the
         documents and evidence referred to in Clause 14.1 in form and substance
         satisfactory to it.

15.      DEFAULT

15.1     Events of default

         Each of the events set out below is an Event of Default:-

         (A)      Non-payment

                  any Security Party does not pay within three (3) Banking Days
                  of the due date any amount payable by it under any Security
                  Document at the place and in the currency in which it is
                  expressed to be payable or, in the case of amounts due on
                  demand, within seven (7) Banking Days of receipt of the
                  relevant demand;

         (B)      Breach of other obligations

                  any Security Party fails to comply with any other provision of
                  any Security Document in a material respect and (unless in the
                  reasonable opinion of the Agent incapable of remedy) such
                  action as the Agent may require shall not have been taken
                  within a period of twenty one (21) days of the Agent notifying
                  the relevant Security Party of such default and of such
                  required action or within two (2) Banking Days of such
                  notification in relation to any


<PAGE>


                                     -117-


                  breach of any insurance covenant leading to a possible
                  avoidance of insurance cover;

         (C)      Misrepresentation

                  any representation or warranty made or repeated by any
                  Security Party in any Security Document or in any certificate,
                  statement or opinion delivered by or on behalf of any Security
                  Party thereunder or in connection therewith is incorrect in a
                  material respect when made or repeated and (unless in the
                  reasonable opinion of the Agent incapable of remedy) action
                  has not been taken by the relevant Security Party to ensure
                  that such representation or warranty is rendered correct
                  within twenty one (21) days of the Agent notifying the
                  relevant Security Party;

         (D)      Cross-acceleration

                  at any time the aggregate amount at such time of:-

                  (i)      the amount of any Debt of the Security Parties which
                           is not paid when due or within any originally
                           applicable grace period relating thereto and remains
                           unpaid or which has been declared due and payable
                           prior to the date when it would otherwise have become
                           due (unless as a result of the exercise by the
                           relevant person of a voluntary right of prepayment or
                           upon mandatory prepayment as a result of a change of
                           law or other circumstances not constituting an event
                           of default under, or breach of, any agreement
                           regulating and/or securing the relevant Debt) and
                           such declaration has not been cancelled or withdrawn;
                           and

                  (ii)     any amounts demanded of, but not paid when due and
                           remaining unpaid by, the Security Parties under any
                           guarantee in respect of Debt (other than Debt
                           referred to in sub-paragraph (i) of this paragraph)

                  exceeds $15,000,000;

         (E)      Winding-up

                  any order is made or resolution passed or other action taken
                  without the prior written consent of the Majority Banks for
                  the suspension of payments or resulting in the dissolution,
                  termination of existence, liquidation, winding-up or
                  bankruptcy of any Security Party, unless in each case such
                  proceeding is revoked within fourteen (14) days of such order
                  being made, resolution passed or action taken;

         (F)      Moratorium or arrangement with creditors

                  a moratorium in respect of all or a significant part of the
                  debts of any Security Party, or a composition or an
                  arrangement with creditors of any Security Party or any
                  similar proceeding or arrangement by which the assets of any
                  Security Party are submitted to the control of its creditors,
                  is applied for, ordered or declared;

<PAGE>


                                     -118-


         (G)      Appointment of liquidators etc.

                  a liquidator, trustee, administrator, receiver, manager or
                  similar officer is appointed in respect of any Security Party
                  or in respect of all or any substantial part of the respective
                  assets of any Security Party;

         (H)      Insolvency

                  any Security Party becomes or is declared insolvent or
                  suspends payment or is unable, or admits in writing its
                  inability, to pay its debts as they fall due or becomes
                  insolvent within the terms of any applicable law;

         (I)      Legal process

                  any distress, execution, attachment or other process is levied
                  against the whole or any substantial part of the assets of any
                  Security Party and remains undischarged for a period of thirty
                  (30) days (except in the case of a Vessel);

         (J)      Analogous events

                  anything analogous to or having a substantially similar effect
                  to any of the events specified in sub-Clauses (E) to (I) of
                  this Clause 15.1 shall occur in relation to a Security Party
                  under the laws of any applicable jurisdiction;

         (K)      Unlawfulness

                  at any time it becomes unlawful or impossible for any Security
                  Party to perform any of its material obligations under any
                  Security Document to which it is a party or it is unlawful or
                  impossible for the Agent, the Security Agent or any of the
                  Banks to exercise any of their respective material rights
                  under any of the Security Documents and (unless in the
                  reasonable opinion of the Agent any such impossibility or
                  unlawfulness is incapable of rectification or remedy) the
                  relevant Security Party (with due co-operation from the Agent,
                  the Security Agent and the Banks) shall have failed to procure
                  within twenty eight (28) days of notice from the Agent to do
                  so that the foregoing is no longer impossible or unlawful;

         (L)      Material adverse change; material adverse litigation

                  either:-

                  (i)      any material adverse change in the consolidated
                           financial condition of the Stena AB Group as a whole
                           from that set forth in the Audited Stena AB Financial
                           Statements as at 31 December 2000 occurs the effect
                           of which is materially to imperil, delay or prevent
                           the due fulfilment by any Security Party of all or
                           any of their material payment obligations under any
                           Security Documents; or

                  (ii)     any final and conclusive judgment, order or award is
                           made by any court, arbitration board or other
                           tribunal against any member of the Stena AB Group the
                           effect of complying with which will materially
                           imperil, delay or prevent the due fulfilment by any
                           Security Party of all

<PAGE>


                                     -119-


                           or any of their material payment obligations under
                           any Security Documents

         and in either such case such circumstances continue unremedied for a
         period of one hundred and twenty (120) days after notification from the
         Agent to the Borrower requiring the same to be remedied provided that
         such one hundred and twenty (120) day remedy period shall only be taken
         into account if the Agent certifies to the Borrower that such
         circumstances are in the opinion of the Majority Banks capable of
         remedy and the Borrower demonstrates to the satisfaction of the Agent
         that reasonable steps are being taken which are likely to lead to such
         circumstances being remedied within such one hundred and twenty (120)
         day period.

         For the purposes of the foregoing, the Borrower or Stena AB shall be
         deemed to have failed to perform or comply with any covenant contained
         in this Agreement or the other Security Documents requiring the
         Borrower or Stena AB to cause certain actions to be taken (or to
         prohibit the taking of certain actions) by any Subsidiary of the
         Borrower or Stena AB if such Subsidiary shall have taken (or failed to
         take) such actions, even where the Borrower or Stena AB lacks the
         corporate power and authority under Book 2 of the Netherlands Civil
         Code or the Swedish Companies Act (1975:1385) respectively to cause or
         prohibit such actions.

15.2     Termination

         The Agent if so requested by the Majority Banks shall, without
         prejudice to any other rights of the Agent, the Security Agent, the
         Co-Arrangers and the Banks, at any time after the happening of an Event
         of Default by notice to the Borrower:-

         (A)      declare that the obligation of each Bank to make its
                  Commitment available shall be terminated, whereupon the
                  Commitments shall be reduced to zero forthwith; and/or

         (B)      declare that all outstanding Advances and all interest and
                  commitment commission accrued and all other sums payable under
                  the Security Documents have become due and payable, whereupon
                  the same shall, immediately or in accordance with the terms of
                  such notice, become due and payable.

15.3     Demand basis

         If, pursuant to Clause 15.2(B) the Agent declares all outstanding
         Advances to be due and payable on demand, the Agent may (and, if so
         instructed by the Majority Banks, shall) by written notice to the
         Borrower (i) call for repayment of the Advances on such date as may be
         specified whereupon the Advances shall become due and payable on the
         date so specified together with all interest and any commitment
         commission accrued and all other sums payable under this Agreement or
         (ii) withdraw such declaration with effect from the date specified in
         such notice.

16.      INDEMNITIES

16.1     Miscellaneous indemnities

         The Borrower shall on demand indemnify each Bank, the Co-Arrangers, the
         Security Agent and the Agent, without prejudice to any of their other
         rights under any of the


<PAGE>


                                     -120-


         Security Documents, against any loss or expense which such Bank, the
         Co-Arrangers, the Security Agent or the Agent shall certify as
         sustained or incurred by it as a consequence of:-

         (A)      any default in payment by the Borrower of any sum under any of
                  the Security Documents when due; or

         (B)      the occurrence of any other Event of Default; or

         (C)      as a consequence of or arising in any way whatsoever in
                  connection with the performance of its obligations hereunder;
                  or

         (D)      receiving or recovering all or any part of a sum unpaid
                  otherwise than on the due date for the payment of interest
                  in respect thereof; or

         (E)      any prepayment of any Advance or part thereof being made under
                  Clauses 5.3, 5.6, 5.7, 5.8, 5.9, 5.10 or 17.1, or any other
                  repayment of any Advance or part thereof, being made otherwise
                  than on its Maturity Date or due date for repayment; or

         (F)      any Advance not being made for any reason (excluding any
                  default by the Agent, the Co-Arrangers, the Security Agent or
                  any Bank) after a Drawdown Notice or request for drawing has
                  been given

         including, in any such case, but not limited to, any loss or expense
         sustained or incurred by any Bank, the Security Agent or the Agent in
         maintaining or funding its Contribution or any part thereof or its
         portion of any other sum to be paid by it hereunder or in liquidating
         or re-employing deposits from third parties acquired or contracted for
         to fund, effect or maintain its Contribution or any part thereof or any
         other amount owing to the such Bank, the Security Agent or the Agent.

16.2     Currency indemnity

         If any sum due from the Borrower or Stena AB under any of the Security
         Documents or any order or judgment given or made in relation thereto
         has to be converted from the currency (the "FIRST CURRENCY") in which
         the same is payable under the relevant Security Document or under such
         order or judgment into another currency (the "SECOND CURRENCY") for the
         purpose of (i) making or filing a claim or proof against the Borrower
         or Stena AB, (ii) obtaining an order or judgment in any court or other
         tribunal or (iii) enforcing any order or judgment given or made in
         relation to any of the Security Documents, the Borrower and Stena AB
         shall indemnify and hold harmless the Agent, the Co-Arrangers, the
         Security Agent and each Bank from and against any loss suffered as a
         result of any difference between (a) the rate of exchange used for such
         purpose to convert the sum in question from the first currency into the
         second currency and (b) the rate or rates of exchange at which the
         Agent, the Co-Arrangers, the Security Agent or any Bank may in the
         ordinary course of business purchase the first currency with the second
         currency upon receipt of a sum paid to it in satisfaction, in whole or
         in part, of any such order, judgment, claim or proof. Any amount due
         from the Borrower or Stena AB under this Clause 16.2 shall be due as a
         separate debt and shall not be affected by judgment being obtained for
         any other sums due under or in respect of any of the Security Documents
         and the term "RATE OF


<PAGE>


                                     -121-


         EXCHANGE" includes any premium and costs of exchange payable in
         connection with the purchase of the first currency with the second
         currency.

16.3     Waiver

         If and insofar as the Borrower has a right to invoke the nullity of any
         indemnity granted by it in this Agreement on the basis of Article 2.7
         Netherlands Civil Code, it hereby explicitly waives its right to invoke
         such nullity on the basis of Article 2.7 Netherlands Civil Code.

17.      UNLAWFULNESS AND INCREASED COSTS

17.1     Unlawfulness

         If at any time after the date of this Agreement the introduction,
         imposition, variation or change of any law, regulation or regulatory
         requirement or any judgment, order or direction of any court, tribunal
         or authority binding upon a Bank in the jurisdiction in which it is
         formed or has its principal office or the office identified against its
         name in this Agreement (or in any Transfer Certificate, in the case of
         a Transferee Bank) or in which any action is required to be performed
         by it for the purposes of this Agreement (whether or not in force
         before the date of this Agreement) causes any Bank to believe that it
         has become unlawful for it to contribute to the Advances or to fund its
         Contribution then that Bank shall promptly inform the Agent and the
         Agent shall notify the Borrower whereupon:-

         (A)      the relevant Bank (the "AFFECTED PARTY") shall, following
                  consultation with the Borrower, use all reasonable efforts to
                  avoid the effects of such introduction, imposition, variation
                  or change and in particular shall consider, subject to
                  obtaining any necessary consents, transferring at par its
                  rights and obligations under this Agreement to another legal
                  entity approved by the Borrower not affected by such law;

         (B)      if the Affected Party is unable, within ninety (90) days
                  following the date upon which the Affected Party became
                  aware of any such introduction, imposition, variation or
                  change, or such shorter period permitted thereby, to avoid
                  the effect thereof, or the Borrower fails to agree to any
                  proposal put forward by the Affected Party to avoid the
                  effects of such introduction, imposition variation or
                  change, then the Agent shall, at the request and on behalf
                  of the Affected Party, give notice to the Borrower that on
                  such date or on a future specified date, in either case not
                  being earlier than the latest date permitted by such
                  introduction, imposition, variation or change, the Affected
                  Party's Commitment shall be reduced to zero and the Borrower
                  shall be obliged to prepay the Contribution of such Bank
                  either (a) forthwith or (b) on a future specified date not
                  being earlier than the latest date permitted by the relevant
                  law or regulation;.

17.2     Increased costs

         If the result of any change in, or in the interpretation or application
         of, any law or regulation (including, without limitation, those
         relating to Taxation, capital adequacy, liquidity, reserve assets and
         special deposits) after the date of this Agreement is to:-

<PAGE>


                                     -122-

         (A)      subject any Bank to Taxes or change the basis of Taxation of
                  any Bank with respect to any payment under any of the Security
                  Documents (other than Taxes or Taxation on the overall net
                  income, profits or gains of such Bank imposed in the
                  jurisdiction in which its principal or lending office under
                  this Agreement is located); and/or

         (B)      increase the cost to, or impose an additional cost on, any
                  Bank in making or keeping its Commitment available or
                  maintaining or funding its Contribution or otherwise in
                  maintaining its obligations under this Agreement; and/or

         (C)      reduce the amount payable or the effective return to any Bank
                  under any of the Security Documents; and/or

         (D)      reduce any Bank's rate of return on its capital by reason of a
                  change in the manner in which it is required to allocate
                  capital resources to its obligations under any of the Security
                  Documents; and/or

         (E)      require any Bank to make a payment or forgo a return on or
                  calculated by reference to any amount received or receivable
                  by it under any of the Security Documents,

         then and in each such case (but subject to Clause 17.3):-

                  (i)      such Bank shall notify the Borrower in writing of
                           such event promptly upon its becoming aware of the
                           same specifying reasonable details of the relevant
                           event and of any increased cost, reduction in any
                           rate of return or liability and its method of
                           calculation and attribution to its obligations under
                           this Agreement; and

                  (ii)     the Borrower shall on demand, made at any time
                           whether or not the relevant Bank's Contribution has
                           been repaid, pay to the Agent for the account of such
                           Bank the amount which such Bank specifies (in a
                           certificate setting forth the basis of the
                           computation of such amount in reasonable detail but
                           not including any matters which such Bank regards as
                           confidential in relation to its funding arrangements)
                           is required to compensate such Bank for such
                           increased cost, reduction, payment or forgone return.

17.3     Exception

         Nothing in Clause 17.2 shall entitle any Bank to compensation for any
         such increased costs, reduction, payment or foregoing return to the
         extent that the same is the subject of an additional payment under
         Clause 7.7.

17.4     Mitigation

         If circumstances arise which would, or would upon the giving of notice,
         result in:-

         (A)      the Borrower being required to make an increased payment to a
                  Bank pursuant to Clause 7.7;


<PAGE>


                                     -123-


         (B)      the reduction of the Commitment of a Bank to zero or the
                  Borrower being required to prepay the Contribution of a Bank
                  pursuant to Clause 17.1; or

         (C)      the Borrower being required to make a payment to a Bank to
                  compensate such Bank for an increased cost, reduction, payment
                  or forgone return pursuant to Clause 17.2

         then, without in any way limiting, reducing or otherwise qualifying the
         obligations of the Borrower under Clauses 7.7 and 17, the relevant
         Bank, Co-Arranger, Agent or Security Agent (as the case may be) shall
         endeavour to take such reasonable steps as may be open to it to
         mitigate or remove such circumstances including (without limitation)
         the transfer of its rights and obligations under this Agreement to
         another bank or financial institution acceptable to the Borrower unless
         to do so might (in its opinion) be prejudicial to it or be in conflict
         with its general banking policies or involve it in expense or an
         unreasonable increased administrative burden.

18.      SET-OFF AND PRO-RATA PAYMENTS

18.1     Set-off

         The Borrower and Stena AB each authorise each Bank (without prejudice
         to any such Bank's rights at law, in equity or otherwise), at any time
         when an Event of Default has occurred and is continuing and without
         notice to the Borrower or Stena AB:-

         (A)      to apply any credit balance to which the Borrower or Stena AB
                  is then entitled standing upon any account of the Borrower or
                  Stena AB with any branch of such Bank in or towards
                  satisfaction of any sum due and payable from the Borrower or
                  Stena AB to such Bank under any of the Security Documents;

         (B)      in the name of the Borrower and/or Stena AB and/or such Bank
                  to do all such acts and to execute all such documents as may
                  be necessary or expedient to effect such application; and

         (C)      to combine and/or consolidate all or any accounts in the name
                  of the Borrower and/or Stena AB with such Bank.

         For such purposes, each Bank is authorised to purchase with the moneys
         standing to the credit of such account such other currencies as may be
         necessary to effect such application. No Bank shall be obliged to
         exercise any right given to it by this Clause 18.1. Each Bank shall
         notify the Agent and the Borrower forthwith upon the exercise or
         purported exercise of any right of set-off giving full details in
         relation thereto and the Agent shall inform the other Banks.

18.2     Pro rata payments

         (A)      If at any time any Bank, (the "RECOVERING BANK") receives or
                  recovers any amount owing to it by the Borrower or Stena AB
                  under this Agreement by direct payment, set-off or in any
                  manner other than by payment through the Agent pursuant to
                  Clause 7.1 or 7.10 (not being a payment received from an
                  assignee, a Transferee Bank or a sub-participant in such
                  Bank's Contribution or any other payment of an amount due to
                  the Recovering Bank for its sole account pursuant to Clauses
                  4.5, 6, 7.7, 16.1, 16.2, 17.1 or 17.2) the


<PAGE>


                                     -124-


                  Recovering Bank shall, within two Banking Days of such
                  receipt or recovery (a "RELEVANT RECEIPT") notify the Agent
                  of the amount of the Relevant Receipt. If the Relevant
                  Receipt exceeds the amount which the Recovering Bank would
                  have received if the Relevant Receipt had been received by
                  the Agent and distributed pursuant to Clause 7.1 or 7.10 as
                  the case may be then:-

                  (i)      within two Banking Days of demand by the Agent, the
                           Recovering Bank shall pay to the Agent an amount
                           equal (or equivalent) to the excess;

                  (ii)     the Agent shall treat the excess amount so paid by
                           the Recovering Bank as if it were a payment made by
                           the Borrower and shall distribute the same to the
                           Banks (other than the Recovering Bank) in accordance
                           with Clause 7.10; and

                  (iii)    as between the Borrower or, as the case may be, Stena
                           AB, and the Recovering Bank the excess amount so
                           re-distributed shall be treated as not having been
                           paid but the obligations of the Borrower and Stena AB
                           to the other Banks shall, to the extent of the amount
                           so re-distributed to them, be treated as discharged.

         (B)      If any part of the Relevant Receipt subsequently has to be
                  wholly or partly refunded by the Recovering Bank (whether to a
                  liquidator or otherwise) each Bank to which any part of such
                  Relevant Receipt was so re-distributed shall on request from
                  the Recovering Bank repay to the Recovering Bank such Bank's
                  pro rata share of the amount which has to be refunded by the
                  Recovering Bank.

         (C)      Each Bank shall on request supply to the Agent such
                  information as the Agent may from time to time request for the
                  purpose of this Clause 18.2.

         (D)      Notwithstanding the foregoing provisions of this Clause 18.2
                  no Recovering Bank shall be obliged to share any Relevant
                  Receipt which it receives or recovers pursuant to legal
                  proceedings taken by it to recover any sums owing to it under
                  this Agreement with any other party which has a legal right
                  to, but does not, either join in such proceedings or commence
                  and diligently pursue separate proceedings to enforce its
                  rights in the same or another court (unless the proceedings
                  instituted by the Recovering Bank are instituted by it without
                  prior notice having been given to such party through the
                  Agent).

18.3     No release

         For the avoidance of doubt it is hereby declared that failure by any
         Recovering Bank to comply with the provisions of Clause 18.2 shall not
         release any other Recovering Bank from any of its obligations or
         liabilities under Clause 18.2.

18.4     No charge

         The provisions of this Clause 18 shall not, and shall not be construed
         so as to, constitute a charge by a Bank over all or any part of a sum
         received or recovered by it in the circumstances mentioned in Clause
         18.2.

<PAGE>


                                     -125-


18.5     Partial realisation of security

         If, by reason of the transfer or purported transfer by any Bank of all
         or any of its rights, title and interest hereunder by means of a
         Transfer Certificate or otherwise, the indebtedness of the Borrower to
         any successor in title, assignee or transferee (including a Transferee)
         of such Bank constitutes, or is deemed to constitute, at the time of
         such transfer or purported transfer by operation of law or otherwise
         indebtedness ("NEW INDEBTEDNESS") separate and distinct from the
         indebtedness ("ORIGINAL INDEBTEDNESS") owed by the Borrower to the
         other Banks (including the Bank making the transfer insofar as it does
         not transfer all of its rights, title and interest hereunder) and if
         the New Indebtedness is not secured by any particular Security Document
         or, if so secured, if such security ranks in priority after the
         security constituted thereby in respect of the Original Indebtedness,
         the proceeds of realisation of that particular Security Document
         received by the Agent from the Security Agent shall be applied by the
         Agent:-

         (A)      insofar as the proceeds of realisation relate to the Original
                  Indebtedness, in distribution thereof between the Banks to
                  whom the Original Indebtedness is owed pro rata to their
                  respective contributions to the Original Indebtedness; and

         (B)      insofar as the proceeds of realisation relate to the New
                  Indebtedness, in distribution thereof to the relevant
                  successors in title, assignees or transferees (including any
                  Transferees) in respect of the Bank making the transfer (being
                  the persons to whom the New Indebtedness is owed) pro rata to
                  their respective contributions to the New Indebtedness.

19.      SECURITY

19.1     Continuing security

         The security created under the Security Documents is a continuing
         security and shall remain in full force and effect until all moneys,
         obligations and liabilities from time to time due, owing or incurred by
         the Borrower under the Security Documents shall have been paid or
         satisfied in full, and is in addition to and not in substitution for,
         and shall not be prejudiced or affected by, any other security or
         guarantee from time to time held by the Agent, the Security Agent, the
         Co-Arrangers or any Bank for the payment or satisfaction of such
         moneys, obligations or liabilities.

19.2     Amendments

         The liability of the Borrower and Stena AB under the Security Documents
         shall not be lessened or impaired by (i) any time, indulgence or relief
         being given by Agent, the Security Agent, the Co-Arrangers or any Bank
         to any other person liable, (ii) the taking, variation, compromise,
         renewal or release of or refusal or neglect to perfect or enforce any
         rights, remedies or securities against any other person liable, (iii)
         any legal limitation, disability, incapacity or other circumstances
         relating to any other person liable, whether or not known to the Agent,
         the Security Agent, the Co-Arrangers or any Bank, (iv) any invalidity
         in or irregularity or unenforceability of the obligations of any other
         person liable or (v) anything done or omitted which but for


<PAGE>


                                     -126-



         this provision might constitute a legal or equitable discharge or
         defence of the Borrower or Stena AB.

19.3     Waiver by Borrower and Stena AB

         The Borrower and Stena AB hereby waive all rights they may have of
         first requiring the Agent, the Security Agent, any Bank or the
         Co-Arrangers to proceed against or enforce any guarantee or security
         of, or claim payment from, the Borrower or Stena AB or any other person
         liable to make any claim or file any proof in the bankruptcy,
         insolvency or liquidation of the Borrower or Stena AB or any other
         person liable.

19.4     Settlement or discharge

         Any settlement or discharge between the Agent, the Security Agent, any
         Bank or the Co-Arrangers and the Borrower and/or Stena AB shall be
         conditional upon no security or payment to the Agent, the Security
         Agent, any Bank or the Co-Arrangers by the Borrower or any other person
         being avoided or set aside or ordered to be refunded or reduced by
         virtue of any provision or enactment relating to bankruptcy, insolvency
         or liquidation for the time being in force and the Agent, the Security
         Agent, any Bank and the Co-Arrangers shall be entitled to recover from
         the Borrower and/or Stena AB the value which the Agent, the Security
         Agent, such Bank or the Co-Arrangers have placed upon such security or
         the amount of any such payment as if such settlement or discharge has
         not occurred.

19.5     Reflagging

         (A)      Reflagging Notice

                  At any time and from time to time during the Security Period
                  provided that no Event of Default has occurred and is
                  continuing, the Borrower may give a notice (a "REFLAGGING
                  NOTICE") to the Agent that the Shipowner of a Mortgaged Ship
                  or Mortgaged Linkspan wishes:-

                  (i)      to transfer the port of registry of such Ship or
                           Linkspan from one port of registry (the "EXISTING
                           PORT OF REGISTRY") in the Ship's or Linkspan's Flag
                           State to another port of registry (a "NEW PORT OF
                           REGISTRY") in such Flag State (a "TRANSFER OF PORT OF
                           REGISTRY"); or

                  (ii)     to redocument and reregister such Ship or Linkspan
                           under the laws of any jurisdiction (the "NEW FLAG
                           STATE") other than its existing Flag State (the
                           "EXISTING FLAG STATE") (a "TRANSFER OF FLAG"); or

                  (iii)    to transfer ownership of such Ship or Linkspan to the
                           sole ownership of another member of the Stena AB
                           Group (the "NEW Owner") (a "TRANSFER OF OWNERSHIP");
                           or

                  (iv)     to suspend the use of the flag of such Ship's or
                           Linkspan's Flag State (the "PRIMARY FLAG STATE")
                           while such Ship or Linkspan is on bareboat charter
                           and where it is proposed that, for the duration of
                           such bareboat charter, such Ship or Linkspan will fly
                           the flag of another jurisdiction (the "SECONDARY FLAG
                           STATE") selected by such charterer (a "DUAL
                           REGISTRATION").

<PAGE>


                                     -127-


         (B)      Contents of Reflagging Notice

                  Any Reflagging Notice delivered by the Borrower to the Agent
                  shall contain the following particulars:-

                  (i)      the name of the Mortgaged Ship or Mortgaged Linkspan
                           which is the subject of such Reflagging Notice;

                  (ii)     the name of the relevant Shipowner;

                  (iii)    in the case of a Transfer of Port of Registry, the
                           proposed New Port of Registry;

                  (iv)     in the case of a Transfer of Flag, the proposed New
                           Flag State;

                  (v)      in the case of a Transfer of Ownership, the full
                           name, place of incorporation and principal place of
                           business of the proposed New Owner;

                  (vi)     if applicable, any proposed new name of such Ship or
                           Linkspan on a Transfer of Port of Registry, Transfer
                           of Flag, Transfer of Ownership and/or Dual
                           Registration;

                  (vii)    in the case of a Transfer of Ownership taking place
                           in conjunction with a Transfer of Port of Registry
                           and/or a Transfer of Flag, details of the name of the
                           proposed New Flag State and (if applicable) proposed
                           New Port of Registry of the Ship or Linkspan upon
                           completion of the Transfer of Ownership; and

                  (viii)   in the case of a Dual Registration, details of the
                           Secondary Flag State, the bareboat charter and the
                           charterer.

         (C)      Release of Security Documents on Transfer of Flag and/or
                  Transfer of Ownership


                  Subject to fulfilment of the conditions specified in Clause
                  19.5(F), the Agent shall instruct the Security Agent to, and
                  the Security Agent shall, duly release and discharge the Ship
                  Mortgage in respect of the relevant Mortgaged Ship or (as the
                  case may be) the Linkspan Mortgage in respect of the relevant
                  Mortgaged Linkspan, and release and re-assign the Deed of
                  Covenant or Insurance Assignment and, if so requested by the
                  Borrower, any Charterer's Insurance Assignment executed in
                  respect of such Ship or Linkspan by a Stena Charterer upon
                  reasonable notice from the Borrower to enable the Transfer of
                  Flag of such Ship or Linkspan and/or the Transfer of Ownership
                  of such Ship or Linkspan.

         (D)      Consent to Transfer of Port of Registry

                  The Agent shall give instructions to the Security Agent to,
                  and the Security Agent shall, give any requisite consents
                  required by any applicable ship registrar or other official to
                  enable a Mortgaged Ship or Mortgaged Linkspan to be
                  transferred from its Existing Port of Registry to the New Port
                  of Registry


<PAGE>


                                     -128-


                  provided that the Ship Mortgage over such Ship or (as the
                  case may be) the Linkspan Mortgage over such Linkspan will
                  continue to be registered against such Ship or Linkspan at
                  the New Port of Registry or in any applicable central
                  register of ship mortgages in the Flag State.

         (E)      Consent to Dual Registration

                  Subject to fulfilment of the conditions specified in Clause
                  19.5(G), the Agent shall instruct the Security Agent to, and
                  the Security Agent shall, give any requisite consents required
                  by any applicable ship registrar or other official in the
                  Primary Flag State and/or the Secondary Flag State to permit
                  the Dual Registration of a Mortgaged Ship or Mortgaged
                  Linkspan.

         (F)      Conditions to Transfer of Ownership and/or Transfer of Flag


                  Upon completion of the Transfer of Ownership and/or Transfer
                  of Flag, the Borrower shall deliver or procure the delivery to
                  the Agent of:-

                  (i)      a Shipowner's Guarantee and a Ship Mortgage or (in
                           the case of a Linkspan) a Linkspan Mortgage together
                           with a Deed of Covenant (in the case of a Designated
                           Ship) or an Insurance Assignment (in the case of a
                           Linkspan or any other Ship) in respect of the
                           Mortgaged Ship or Mortgaged Linkspan executed by the
                           relevant Shipowner or (in the case of a Transfer of
                           Ownership) the New Owner;

                  (ii)     in the case of a Ship or Linkspan managed by another
                           member of the Stena AB Group, a Manager's
                           Subordination Undertaking;

                  (iii)    in the case of a Ship or Linkspan let on bareboat
                           charter to a Stena Charterer, a Charterer's
                           Subordination Undertaking and a Charterer's Insurance
                           Assignment;

                  (iv)     a notice of assignment of insurances in relation to
                           the Ship or Linkspan executed by the New Owner and
                           any Stena Charterer;

                  (v)      evidence that the Ship or Linkspan has been insured
                           in accordance with the requirements of the Deed of
                           Covenant, Insurance Assignment and any Charterer's
                           Insurance Assignment;

                  (vi)     opinions satisfactory to the Banks in relation to the
                           registration of the Ship and the Ship Mortgage or (as
                           the case may be) the Linkspan and the Linkspan
                           Mortgage, the due execution and authorisation of any
                           documents executed pursuant to paragraphs (i) to (iv)
                           above and such other matters as the Banks may
                           reasonably require in relation to English law and to
                           the jurisdictions of incorporation of the Shipowner,
                           any Stena Charterer, any other charterer and the
                           registry or registries of the Ship or Linkspan;

                  (vii)    evidence that the New Owner of the Ship or Linkspan
                           has acquired good marketable title to the Ship or
                           Linkspan and that the Ship or Linkspan is
                           unencumbered save for the new Ship Mortgage or new
                           Linkspan Mortgage (as the case may be) and Permitted
                           Ship Liens;

<PAGE>



                                -129-


                  (viii)   in the case of a Transfer of Flag, evidence that the
                           New Flag State shall be an Approved Flag State

                  and the obligations of the Agent and the Security Agent under
                  Clause 19.5(D) shall be subject to the condition that the
                  Agent has received all of such documents and evidence.

         (G)      Conditions to Dual Registration

                  Upon suspension of the use of the flag of the Primary Flag
                  State and commencement of the use of the flag of the Secondary
                  Flag State, the Borrower shall deliver or procure the delivery
                  to the Agent of the following documents and/or evidence:-

                  (i)      evidence that the Secondary Flag State shall be an
                           Approved Flag State;

                  (ii)     an opinion satisfactory to the Agent from lawyers
                           qualified or accustomed to advise on the laws of the
                           Primary Flag State and the Secondary Flag State that
                           the Dual Registration is permitted by their
                           respective laws for the duration of the relevant
                           charter period or a specified part thereof and that
                           the Ship Mortgage over the relevant Ship or (as the
                           case may be) the Linkspan Mortgage over the relevant
                           Linkspan and the relevant Shipowner's title thereto
                           remain duly registered under the laws of the Primary
                           Flag State following the Dual Registration and that
                           on termination of the charter by virtue of which the
                           Ship or Linkspan is registered in the Secondary Flag
                           State or a judicial sale of the Ship or Linkspan the
                           Dual Registration will be terminated without delay
                           and without any discretionary consents from
                           authorities in the Secondary Flag State;

                  (iii)    if the laws of the Secondary Flag State require that
                           the Ship Mortgage or Linkspan Mortgage be noted or
                           registered against the Ship or Linkspan (as the case
                           may be) in the Secondary Flag State, evidence
                           reasonably satisfactory to the Agent that such
                           notation or registration will be effected upon or
                           within an appropriate period following commencement
                           of the Dual Registration

                  and the obligations of the Agent and the Security Agent under
                  Clause 19.5(E) shall be subject to the condition that the
                  Agent has received all of such documents and evidence.

         (H)      Combined transactions

                  Where a combined Transfer of Ownership and/or Transfer of Flag
                  and/or Dual Registration is proposed, Clauses 19.5(C) and (E)
                  and Clauses 19.5(F) and (G) shall respectively be read
                  together.

         (I)      Approved Flag States

                  For the purposes of this Agreement, "APPROVED FLAG STATE"
                  means any of the following:-

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                                     -130-


                  (i)      the United Kingdom, Bermuda, the Cayman Islands, any
                           other British Dependent Territory, the Channel
                           Islands, the Isle of Man and Hong Kong;

                  (ii)     Sweden and any other Member State of the European
                           Union or Switzerland;

                  (iii)    Norway (including, without limitation, the Norwegian
                           International Shipping Register) and any other member
                           of the European Economic Area;

                  (iv)     United States of America and Canada;

                  (v)      Australia and New Zealand;

                  (vi)     the Bahamas, Cyprus, Greece, Liberia and Panama;

                  (vii)    if the European Union establishes a register of ships
                           for the European Union as a whole (whether instead
                           of, in addition to or as an alternative to
                           registration in a Member State of the European
                           Union), the European Union shall, in relation to the
                           registration of a Mortgaged Ship in such register, be
                           deemed to be an Approved Flag State for the purposes
                           of this Agreement; and

                  (viii)   any other state approved by the Majority Banks which
                           approval shall not be unreasonably withheld in the
                           case of a state in which significant numbers of
                           vessels owned by entities whose ultimate parent
                           companies and/or shareholders are resident in North
                           America or the European Union, European Economic Area
                           or Switzerland are registered and/or where such state
                           is proposed as the Secondary Flag State for the
                           relevant Ship.

         (J)      Reflagging of Transferred Ships

                  If the purchaser of a Transferred Ship requests the relevant
                  Shipowner to consent to a change of the flag state in which a
                  Transferred Ship is registered, the relevant Shipowner may
                  agree to such change of flag provided that:-

                  (i)      the requirements of this Clause 19.5 are satisfied in
                           relation to the Ship;

                  (ii)     the Agent has received evidence satisfactory to it
                           that the Ship is insured in accordance with the terms
                           of the Commercial Documents;

                  (iii)    the Agent is satisfied that the obligation of the
                           purchaser of the Transferred Ship is effectively
                           secured by an assignment in favour of the Security
                           Agent of a first priority mortgage over the Ship and
                           first priority assignment in favour of the Security
                           Agent of the purchaser's interest in the insurances
                           of the Ship in the event of a Total Loss.

<PAGE>


                                     -131-


19.6     Release of security

         Provided that no declaration has been made by the Agent under Clause
         15.2 the Agent shall instruct the Security Agent to, and the Security
         Agent shall, release and discharge the Ship Mortgage and the Deed of
         Covenants or Insurance Assignment in respect of any Mortgaged Ship
         which is sold by the relevant Shipowner (whether on Credit Terms or
         otherwise) on terms that ownership of the relevant Mortgaged Ship
         passes from the relevant Shipowner as and when ownership of the
         relevant Ship is to pass to the relevant purchaser, in exchange for the
         purchase price, or relevant portion thereof, payable to the Shipowner
         by the relevant purchaser upon transfer of title to such purchaser (to
         be applied in accordance with the provisions of this Agreement and the
         other Security Documents) and provided that (in the case of a sale on
         Credit Terms) the relevant Shipowner has executed a Receivables
         Assignment in relation to the sale of such Ship in accordance with the
         provisions of this Agreement.

20.      ASSIGNMENT, TRANSFER AND LENDING OFFICE

20.1     Benefit and burden

         This Agreement shall be binding upon, and enure for the benefit of,
         each of the Banks, the Agent, the Co-Arrangers, the Security Agent, the
         Borrower, Stena AB and their respective successors.

20.2     No assignment by Borrower

         Neither of the Borrower nor Stena AB may assign or transfer any of
         their rights or obligations under any of the Security Documents.

20.3     Transfers

         Any Bank (the "TRANSFEROR BANK") may at any time cause all or any part
         of its rights, benefits and/or obligations under this Agreement and the
         Security Documents to be transferred to its Subsidiaries, affiliates or
         associates or to a federal reserve bank, central bank or other monetary
         or regulatory authority having jurisdiction over such Bank without the
         consent of the Borrower or the Agent or, with the consent of the
         Borrower and the Agent (such consents not to be unreasonably withheld
         and for this purpose it shall be deemed reasonable to withhold consent
         on the grounds that the number of Banks would thereby exceed fifteen
         (15) or that the Commitment of any Bank would thereby be less than
         three point seven five per cent (3.75%) of the total of the
         Commitments), to any other bank or financial institution (a "TRANSFEREE
         BANK") by delivering to the Agent a Transfer Certificate duly completed
         and duly executed by the Transferor Bank and the Transferee Bank. Any
         transfer by a Bank shall be offered and effected in compliance with all
         applicable laws and regulations. If the Borrower or the Agent fails to
         respond to a request for such consent within ten days of such request
         being made, the Borrower or the Agent (as the case may be) shall be
         deemed to have given such consent. No such transfer is binding on, or
         effective in relation to, the Borrower, the Agent or the Security Agent
         unless it is effected or evidenced by a Transfer Certificate which
         complies with the provisions of this Clause 20.3 and is signed by or on
         behalf of the Transferor Bank, the Transferee Bank and the Agent (on
         behalf of itself, the Borrower and Stena AB, the Security Agent, the
         Co-Arrangers and the other Banks). Upon signature of any such Transfer
         Certificate


<PAGE>


                                     -132-


         by the Agent, which signature shall be effected as promptly as is
         practicable after such Transfer Certificate has been delivered to the
         Agent, and subject to the terms of such Transfer Certificate, such
         Transfer Certificate shall have effect as set out below.

         The following further provisions shall have effect in relation to any
         Transfer Certificate:-

         (A)      a Transfer Certificate may be in respect of a Bank's rights in
                  respect of all or part of its Commitment and shall be in
                  respect of the same proportion of its Contribution;

         (B)      a Transfer Certificate shall only be in respect of rights and
                  obligations of the Transferor Bank in its capacity as a Bank
                  and shall not transfer its rights and obligations as Agent or
                  Security Agent, or in any other capacity, as the case may be
                  and such other rights and obligations may only be transferred
                  in accordance with any applicable provisions of this
                  Agreement;

         (C)      a Transfer Certificate shall take effect in accordance with
                  English law as follows:-

                  (i)      to the extent specified in the Transfer Certificate,
                           the Transferor Bank's payment rights and all its
                           other rights (other than those referred to in
                           paragraph (B) above) under this Agreement are
                           assigned to the Transferee Bank absolutely, free of
                           any defects in the Transferor Bank's title and of any
                           rights or equities which the Borrower had against the
                           Transferor Bank;

                  (ii)     the Transferor Bank's Commitment is discharged to the
                           extent specified in the Transfer Certificate;

                  (iii)    the Transferee Bank becomes a Bank with a
                           Contribution and a Commitment of the amounts
                           specified in the Transfer Certificate;

                  (iv)     the Transferee Bank becomes bound by all the
                           provisions of this Agreement and the Security
                           Documents which are applicable to the Banks
                           generally, including those about pro rata sharing and
                           the exclusion of liability on the part of, and the
                           indemnification of, the Agent and the Security Agent
                           in accordance with the provisions of this Agreement
                           and to the extent that the Transferee Bank becomes
                           bound by those provisions, the Transferor Bank ceases
                           to be bound by them;

                  (v)      an Advance or part of an Advance which the Transferee
                           Bank makes after the Transfer Certificate comes into
                           effect ranks in point of priority and security in the
                           same way as it would have ranked had it been made by
                           the Transferor Bank, assuming that any defects in the
                           Transferor Bank's title and any rights or equities of
                           any Security Party against the Transferor Bank had
                           not existed; and

                  (vi)     the Transferee Bank becomes entitled to all the
                           rights under this Agreement which are applicable to
                           the Banks generally, including but not limited to
                           those relating to the Majority Banks and those under

<PAGE>


                                     -133-


                           Clauses 4.5, 7 and 17, and to the extent that the
                           Transferee Bank becomes entitled to such rights, the
                           Transferor Bank ceases to be entitled to them;

         (D)      the rights and equities of the Borrower or of any other
                  Security Party referred to above include, but are not limited
                  to, any right of set off and any other kind of cross-claim;

         (E)      the Borrower, the Security Agent, the Banks, Stena AB and the
                  Co-Arrangers hereby irrevocably authorise and instruct the
                  Agent to sign any such Transfer Certificate on its behalf
                  (and, in the case of the Security Agent, on behalf of any
                  Security Party which has in the relevant Security Document
                  given a corresponding authorisation and instruction to the
                  Security Agent) and undertake not to withdraw, revoke or
                  qualify such authority or instruction at any time. Promptly
                  upon its signature of any Transfer Certificate, the Agent
                  shall notify the Borrower, the Security Agent, the Transferor
                  Bank and the Transferee Bank.

20.4     Reliance on Transfer Certificate

         (A)      The Agent shall be entitled to rely on any Transfer
                  Certificate believed by it to be genuine and correct and to
                  have been presented or signed by the persons by whom it
                  purports to have been presented or signed, and shall not be
                  liable to any of the parties to this Agreement and the
                  Security Documents for the consequences of such reliance.

         (B)      (i)      The Agent shall at all times during the continuation
                           of this Agreement maintain a register in which it
                           shall record the name, Commitments, Contributions and
                           administrative details (including the lending office)
                           from time to time of each Bank holding Transfer
                           Certificates and the date at which the transfer
                           referred to in such Transfer Certificate held by each
                           Bank was transferred to such Bank, and the Agent
                           shall make the said register available for inspection
                           by any Bank, the Security Agent, the Borrower and
                           Stena AB during normal banking hours upon receipt by
                           the Agent of reasonable prior notice requesting the
                           Agent to do so.

                  (ii)     The entries on the said register shall, in the
                           absence of manifest error, be conclusive in
                           determining the identities of the Commitments, the
                           Contributions and the Transfer Certificates held by
                           the Banks from time to time and the principal amounts
                           of such Transfer Certificates and may be relied upon
                           by the Agent, the Security Agent and the other
                           Security Parties for all purposes in connection with
                           this Agreement and the Security Documents.

20.5     Transfer fees and expenses

         If any Bank causes the transfer of all or any part of its rights,
         benefits and/or obligations under the Security Documents, it shall pay
         to the Agent for its own account a registration fee of $1,000 for each
         transfer, and shall also pay to the Agent on demand all costs, fees and
         expenses (including, but not limited to, legal fees and


<PAGE>


                                     -134-


         expenses), and all value added tax thereon, certified by the Agent as
         having been reasonably incurred by it in connection with such
         transfer.

20.6     Documenting assignments and transfers

         If any Bank transfers all or any part of its rights, benefits and/or
         obligations as provided in Clause 20.3 the Borrower and Stena AB
         undertake, immediately on being requested to do so by the Agent and at
         the cost of the Transferor Bank, to enter into, and procure that the
         other Security Parties shall enter into, such documents as may be
         necessary or desirable to transfer to the Transferee Bank all or the
         relevant part of such Bank's interest in the Security Documents and all
         relevant references in this Agreement to such Bank shall thereafter be
         construed as a reference to the Bank and/or its Transferee Bank (as the
         case may be) to the extent of their respective interests.

20.7     Sub-participation

         A Bank may not sub-participate all or any part of its rights and/or
         obligations under the Security Documents without the consent of the
         Borrower (such consent not to be unreasonably withheld).

20.8     Lending office

         Each Bank shall lend through its office at the address specified in
         Schedule 1 or, as the case may be, in any relevant Transfer Certificate
         or through any other office of such Bank selected from time to time by
         it through which such Bank wishes to lend for the purposes of this
         Agreement. If the office through which such Bank is lending is changed
         pursuant to this Clause 20.8, such Bank shall notify the Agent promptly
         of such change and the Agent shall notify the Borrower.

20.9     Disclosure of information

         Any Bank may disclose to a prospective assignee, substitute or
         transferee or to any other person who may propose entering into
         contractual relations with the Bank in relation to this Agreement such
         information about the Borrower and the Stena AB Group as such Bank
         shall consider appropriate if such Bank first procures that the
         relevant prospective assignee, substitute or transferee or other person
         (such person together with any prospective assignee, substitute or
         transferee being hereinafter described as the "PROSPECTIVE ASSIGNEE")
         shall undertake to the Borrower to keep secret and confidential and,
         not without the prior written consent of the Borrower, disclose to any
         third party any of the information, reports or documents supplied by
         such Bank provided however that the Prospective Assignee shall be
         entitled to disclose any such information, reports or documents in the
         following situations:-

         (A)      in relation to any proceedings arising out of this Agreement
                  or the other Security Documents to the extent considered
                  necessary by the Prospective Assignee to protect its interest;
                  or

         (B)      pursuant to a court order relating to discovery or otherwise;
                  or

         (C)      pursuant to any law or regulation or to any fiscal, monetary,
                  tax, governmental or other competent authority; or

<PAGE>


                                     -135-


         (D)      to its auditors, legal or other professional advisers.

         In addition, the Prospective Assignee shall be entitled to disclose or
         use any such information, reports or documents if the information
         contained therein shall have emanated, in conditions free from
         confidentiality, bona fide from some person other than such Bank or the
         Borrower or any member of the Stena AB Group.

20.10    No additional costs

         If at the time of, or immediately after, any transfer by a Bank of any
         part of the rights, benefits and/or obligations under this Agreement,
         or any change in the office through which it lends for the purposes of
         this Agreement, the Borrower would be obliged to pay to the Transferee
         Bank or (in the case of a change of lending office) the Bank under
         Clauses 7.7 (grossing up) or 17.2 (increased costs) any sum in excess
         of the sum (if any) which it would have been obliged to pay to the
         relevant Bank under the relevant Clause in the absence of such transfer
         or change, the Borrower shall not be obliged to pay that excess.

21.      REFERENCE BANKS, CO-ARRANGERS, AGENT AND SECURITY AGENT

21.1     Reference Banks

         If (i) the whole of the Contribution (if any) of any Reference Bank is
         prepaid, (ii) the Commitments (if any) of any Reference Bank are
         reduced to zero in accordance with Clause 17 or any other relevant
         provision hereof, (iii) a Reference Bank transfers the whole of its
         rights and obligations (if any) as a Bank under this Agreement or (iv),
         where applicable, any Reference Bank ceases to provide quotations to
         the Agent for the purposes of determining LIBOR, the Agent may, acting
         on the instructions of the Majority Banks, terminate the appointment of
         such Reference Bank and appoint another Bank to replace such Reference
         Bank.

21.2     Decision making

         (A)      Decisions requiring consent of all the Banks

                  Save as expressly provided in Clause 21.2(B) or as otherwise
                  expressly provided herein, any proposed course of action in
                  connection with any matter requiring the consent of the Banks
                  under or in connection howsoever with this Agreement or any
                  other Security Document shall only be taken with the consent
                  of all the Banks including, but without limitation to the
                  generality of the foregoing:-

                  (i)      (save as required by the terms of the Security
                           Documents) the release of any of the Security
                           Documents or the release of any Security Party from
                           any of its obligations hereunder or under any other
                           Security Document;

                  (ii)     the amendment of any of the provisions of this
                           Agreement or any other of the Security Documents;

                  (iii)    any time or other indulgence to be granted to the
                           Borrower or any other Security Party in respect of
                           its obligations under any of the


<PAGE>


                                     -136-


                           Security Documents.

         (B)      Decisions requiring consent of the Majority Banks


                  Proposals in connection with the following matters shall, in
                  the absence of agreement thereon by all of the Banks or as
                  otherwise provided in this Agreement, be determined by the
                  Majority Banks:-

                  (i)      the making of any declaration by the Agent under
                           Clause 15.2;

                  (ii)     the institution of any legal proceedings for the
                           enforcement of any rights or powers whatsoever
                           pursuant to the terms of this Agreement or any other
                           of the Security Documents;

                  (iii)    any course of action whatsoever from time to time
                           (other than the making of a demand for payment
                           hereunder) whether of a legal or commercial nature or
                           otherwise howsoever for the purpose of achieving a
                           full or partial recovery of any principal, interest
                           or other amount due and payable by the Borrower
                           hereunder or otherwise in connection therewith
                           following the making of a declaration by the Agent
                           under Clause 15.2;

                  (iv)     any other matter in respect of which this Agreement
                           or any other Security Document expressly provides
                           that the consent of the Majority Banks shall be
                           required.

         (C)      Method of soliciting agreement

                  Any determination of the Banks shall be ascertained by the
                  Agent or the Security Agent (as the case may be) either:-

                  (i)      by means of a telefax sent by the Agent or the
                           Security Agent (as the case may be) to each of the
                           Banks in identical terms on the proposal or matter in
                           issue; or

                  (ii)     by means of the vote of representatives of each Bank
                           at a meeting convened by the Agent or the Security
                           Agent (as the case may be) and held for the purpose
                           of discussing (inter alia) such proposal or matter in
                           issue.

                  Furthermore, it is hereby agreed by the Banks that:-

         (a)      where a decision of the Banks is sought by the Agent or the
                  Security Agent by means of a telefax sent in accordance with
                  paragraph (i) above and provided that the Agent or Security
                  Agent (as appropriate) verifies forthwith by telephone with
                  each relevant Bank that it has received such telefax in good
                  order, then the Agent or Security Agent (as the case may be)
                  may in its telefax:-

                  (i)      recommend a proposed course of action to be taken by
                           the Banks; and

<PAGE>


                                     -137-


                  (ii)     specify a time limit (of not less than three (3)
                           Banking Days) within which the Banks are required to
                           respond to the Agent's or Security Agent's
                           recommendation

                  so that, if any Bank fails to notify the Agent or Security
                  Agent (as appropriate) within such time limit of its
                  response to the recommendation, such Bank shall be deemed to
                  have accepted and approved the course of action proposed by
                  the Agent or the Security Agent (as the case may be); and

             (b)     where the approval of the Majority Banks is required in
                     respect of any matter, the approval shall be deemed to have
                     been given as soon as the Agent or the Security Agent (as
                     the case may be) receives the requisite number of votes in
                     favour of the proposal so that the Agent or Security Agent
                     may act on the basis of such votes without having to wait
                     for the response of (or to give any notification to) any
                     other Bank who has yet to reply to the Agent or Security
                     Agent.

21.3     The Agent

         (A)      Appointment of the Agent

                  Each of the Banks, the Co-Arrangers and the Security Agent
                  hereby appoints the Agent to act as its agent under this
                  Agreement with such rights, powers and discretions as are
                  expressly delegated to the Agent hereunder.

         (B)      Obligations of the Agent

                  The Agent shall:-

                  (i)      promptly inform the Banks of the contents of any
                           notice or request received by it from the Borrower or
                           any other Security Party under the Security Documents
                           (whether such notice or request is addressed to the
                           Agent alone or the Agent on behalf of the Banks
                           and/or the Security Agent) and of any information
                           delivered to it pursuant to Clause 10.2(C) and of any
                           other matters which the Agent considers material;

                  (ii)     promptly deliver to the Banks copies of any accounts
                           and certificates delivered to it pursuant to Clause
                           10.2 and, as soon as reasonably practicable after the
                           Availability Date, copies of the documents delivered
                           in satisfaction of the requirements of Schedule 5;

                  (iii)    promptly inform the Banks in reasonable detail of any
                           exercise by it of any of the rights, powers and/or
                           discretions vested in it hereunder (but without the
                           Agent being under any obligation to give prior notice
                           to the Banks of any such exercise);

                  (iv)     promptly notify the Banks of the occurrence of any
                           Default or any other default by a Security Party in
                           the due performance of or compliance with its
                           material obligations under any of the Security
                           Documents of which the Agent has actual knowledge or
                           actual notice

<PAGE>


                                     -138-


                           and the occurrence of which the Agent has verified;

                  (v)      if directed by the Majority Banks, exercise (or
                           refrain from exercising) any right, power or
                           discretion vested in it hereunder in accordance with
                           the directions (subject to Clause 21.2(A)) of the
                           Majority Banks provided, however, that it may refrain
                           from acting in accordance with any such directions
                           until it has received such security as it may require
                           (whether by way of payment in advance or otherwise)
                           for all costs, claims, expenses (including legal
                           fees) and liabilities which it will or may expend or
                           incur in complying with such directions and for this
                           purpose the Agent shall make a demand for such
                           security addressed to all the Banks;

                  (vi)     receive from the Borrower all payments of principal,
                           interest and other moneys expressed to be payable to
                           the Agent hereunder on behalf of all or any of the
                           Banks, the Co-Arrangers and/or the Security Agent and
                           shall receive from the Security Agent the proceeds of
                           realisation of the securities constituted by the
                           Security Documents and shall promptly distribute the
                           same amongst the Banks, the Co-Arrangers, the
                           Security Agent and itself in accordance with the
                           terms of this Agreement pending which the Agent shall
                           hold any and all such moneys on trust for the Banks,
                           the Co-Arrangers, the Security Agent and itself.

         (C)      Relationship of agent and principal


                  The relationship between the Agent on the one part and each
                  Bank, the Co-Arrangers and the Security Agent on the other is
                  that of agent and principal and, except in relation to any
                  moneys referred to in Clause 21.3(B)(vi) held by the Agent
                  pending distribution hereunder, the Agent shall not have a
                  fiduciary relationship with or be, or be deemed to be, a
                  trustee of or for any such party.

21.4     The Security Agent

         (A)      Appointment of the Security Agent

                  Each of the Banks, the Co-Arrangers and the Agent hereby
                  appoints the Security Agent to act for and on its behalf as
                  its trustee in connection with this Agreement and the other
                  Security Documents and authorises the Security Agent to enter
                  into each of the Security Documents and exercise such rights,
                  powers and discretions as are specifically delegated to it by
                  the terms thereof together with such rights, powers and
                  discretions as are reasonably incidental thereto.

         (B)      The Trust Property

                  In this Clause 21 the expression "TRUST PROPERTY" shall mean:-

                  (i)      all rights, title and interests that may at any time
                           be or have been granted, mortgaged, charged or
                           assigned in favour of the Security Agent pursuant to
                           the Security Documents (except to the extent that


<PAGE>

                                     -139-


                           such rights, title and/or interests are intended to
                           be for the sole benefit or protection of the Security
                           Agent);

                  (ii)     all moneys which are received or recovered by or on
                           behalf of the Security Agent under or by virtue of
                           any right, title and/or interest described in
                           paragraph (i) above; and

                  (iii)    all moneys and other assets accrued on, or derived
                           from, any moneys described in paragraph (ii) above
                           but shall not include any moneys which the Security
                           Agent has transferred to the Agent or (being entitled
                           to do so) has retained in accordance with the
                           provisions of Clause 21.4(D).

         (C)      Declaration of trust

                  The Security Agent shall hold the Trust Property for the
                  benefit of each of the Banks, the Co-Arrangers, the Agent and
                  itself from time to time upon the trusts and in accordance
                  with the provisions contained in this Clause 21 and the
                  obligations, rights and benefits vested or to be vested in the
                  Security Agent by this Agreement, any other Security Document
                  or any document entered into pursuant hereto or thereto shall
                  (as well before as after enforcement) be performed and (as the
                  case may be) exercised in accordance with the provisions of
                  this Clause 21.

         (D)      Application of moneys

                  Save as expressly stated to the contrary herein or in any
                  other Security Document, any moneys received or recovered by
                  the Security Agent and which form part of the Trust Property
                  shall (without prejudice to the rights of the Security Agent
                  pursuant to any Security Document to credit any moneys
                  received by it to any suspense account) be transferred
                  forthwith to the Agent for distribution in accordance with the
                  relevant provisions of this Agreement

                  Provided however that, before transferring such moneys to the
                  Agent, the Security Agent shall be entitled to deduct
                  therefrom any sum then properly due and payable under this
                  Agreement or any other Security Document to the Security Agent
                  or any receiver, attorney, agent, delegate or other person
                  appointed by it and retain that sum for its own account or (as
                  the case may be) remit such sum to the other person to whom it
                  is then due and payable.

                  For as long as Svenska Handelsbanken AB (publ) continues to
                  act as both Agent and Security Agent (or at any other time
                  when any single bank shall act in both such capacities) it
                  shall be sufficient for the purposes of complying with this
                  Clause 21.4(D) for the moneys concerned to be credited to the
                  account kept by the Agent for the purposes of dealing with
                  amounts received by it under or pursuant to the Security
                  Documents.

         (E)      Duties of the Security Agent

                  In addition to its obligations under Clause 21.4(D) the
                  Security Agent shall:-

                  (i)      promptly inform the Banks of the contents of any
                           notice or request

<PAGE>


                                     -140-


                           received by it from the Borrower or any other
                           Security Party under the Security Documents and of
                           any other matters which the Security Agent
                           considers material;

                  (ii)     promptly inform the Banks in reasonable detail of any
                           exercise by it of any of the rights, powers and/or
                           discretions vested in it hereunder (but without the
                           Security Agent being under any obligation to give
                           prior notice to the Banks of any such exercise);

                  (iii)    promptly notify the Banks of the occurrence of any
                           Default or any other default by a Security Party in
                           the due performance of or compliance with its
                           material obligations under any of the Security
                           Documents of which the Security Agent has actual
                           knowledge or actual notice and the occurrence of
                           which the Security Agent has verified;

                  (iv)     if directed by the Majority Banks, exercise (or
                           refrain from exercising) any right, power or
                           discretion vested in it hereunder in accordance with
                           the directions (subject to Clause 21.2(A)) of the
                           Majority Banks provided, however, that it may refrain
                           from acting in accordance with any such directions
                           until it has received such security as it may require
                           (whether by way of payment in advance or otherwise)
                           for all costs, claims, expenses (including legal
                           fees) and liabilities which it will or may expend or
                           incur in complying with such directions and for this
                           purpose the Security Agent shall make a demand for
                           such security addressed to all the Banks.

         (F)      Powers and discretions of the Security Agent

                  The Security Agent shall have all the powers and discretions
                  conferred upon a trustee by the Trustee Act 1925 and/or any
                  other relevant legislation from time to time in force (to the
                  extent not inconsistent herewith) and upon a receiver
                  appointed under the Security Documents or any of them (as
                  though the Security Agent were a receiver thereunder).

         (G)      Delegation of powers; appointment of co-trustees

                  The Security Agent shall be entitled:-

                  (i)      whenever it thinks fit, to delegate by power of
                           attorney or otherwise to any person or persons all or
                           any of the rights, trusts, powers, authorities and
                           discretions vested in it by this Agreement or any
                           other Security Document and such delegation may be
                           made upon such terms and subject to such conditions
                           and subject to such regulations as the Security Agent
                           may think fit and the Security Agent shall not be
                           bound to supervise the proceedings or be in any way
                           responsible for any loss incurred by reason of any
                           misconduct or default on the part of any such
                           delegate or sub-delegate provided that the Security
                           Agent shall have acted reasonably in making such
                           delegation to such delegate and the Security Agent
                           shall promptly give notice to each of the Banks, the
                           Co-Arrangers and the Agent of the appointment of any
                           delegate or


<PAGE>


                                     -141-


                           such delegate as aforesaid; and

                  (ii)     with the prior consent of the Majority Banks and the
                           Borrower, to appoint (and subsequently to dismiss)
                           such other person or persons as it thinks fit to
                           become additional trustees hereunder (but so that
                           there shall not be more than two trustees at any
                           time) to assist it in carrying out its rights and
                           duties hereunder and under the other Security
                           Documents and each such additional trustee shall be
                           entitled to the same rights and subject to the same
                           obligations hereunder as the Security Agent.

         (H)      Amendments and waivers to Security Documents


                  Each of the Banks, the Co-Arrangers and the Agent hereby
                  authorises the Security Agent to enter into any amendment to
                  any Security Document or to grant any waiver of any obligation
                  of any Security Party under any Security Document which in
                  either case has either been approved by the Banks or is, in
                  the unfettered opinion of the Security Agent, of a minor or
                  technical nature and not likely to have any material effect on
                  the obligation of the relevant Security Party under the
                  relevant Security Document.

         (I)      Security Agent to be creditor

                  The parties hereto agree that for the purpose of enforcing
                  rights established under the Security Documents in the
                  Netherlands, to the extent Netherlands law will apply thereto,
                  the Security Agent will be the joint creditor of each and
                  every obligation of the Borrower towards the Banks, the
                  Co-Arrangers and the Agent under this Agreement, so that the
                  Security Agent will have its own independent right to demand
                  performance by the Borrower of each such obligation but so
                  that payment to the Security Agent will serve as payment to
                  the Banks, the Co-Arrangers and the Agent (as appropriate) and
                  payment to any of the Banks, the Co-Arrangers and the Agent
                  will serve as payment to the Security Agent.

         (J)      Winding-up of trusts

                  If:-

                  (i)      all of the liabilities of the Borrower secured under
                           the Security Documents have been fully and finally
                           discharged; and

                  (ii)     no future or contingent liability remains
                           outstanding; and

                  (iii)    the Security Agent is satisfied that there is no
                           substantial risk of any payment or other transaction
                           under this Agreement or any other Security Document
                           being set aside in any liquidation or insolvency of
                           the Borrower or any other Security Party which has
                           previously occurred or may later occur

                  then the trusts herein created shall be wound-up and the
                  Security Agent shall release, without recourse or warranty,
                  all security granted to it pursuant to the Security Documents
                  then held by it, whereupon the Security Agent, the Banks,


<PAGE>


                                      -142-

                  the Co-Arrangers and the Agent shall each be released from
                  their respective obligations under this Clause 21.4 (except
                  those which arose prior to such winding-up).

         (K)      Perpetuity period

                  The perpetuity period under the rule against perpetuities if
                  applicable to the Trust Property shall be the period of eighty
                  (80) years from the date of this Agreement.

         (L)      Governing law

                  The trusts created by this Clause 21 shall be governed by and
                  construed in accordance with English law.

21.5     The Agent and Security Agent: common provisions

         (A)      Powers of the Agent and Security Agent generally

                  In addition to the powers expressly given to the Agent
                  and/or the Security Agent by this Agreement:-

                  (i)      the Banks may give the Agent and/or the Security
                           Agent (generally or in any particular case) any
                           powers which the Banks consider appropriate; and

                  (ii)     each of the Agent and the Security Agent has power to
                           take any other action which it considers to be
                           reasonably incidental or conducive to the performance
                           of its functions under this Agreement or otherwise
                           appropriate in the context of those functions,
                           including the exercise of any powers given to it by
                           the Banks.

         (B)      Exercise of the Agent's and Security Agent's powers

                  The rights, powers and discretions vested in the Agent and the
                  Security Agent by this Agreement and/or the other Security
                  Documents shall only be exercised by the Agent or the Security
                  Agent (as the case may be) in accordance with the instructions
                  of the Majority Banks or (if so required in accordance with
                  the provisions of Clause 21.2(A)) the Banks provided however
                  that the Agent and the Security Agent shall each be entitled
                  (but not bound) to exercise or refrain from exercising any
                  such right, power or discretion without the directions of the
                  Majority Banks or the Banks (as the case may be) if the Agent
                  or Security Agent (as appropriate) believes that the immediate
                  exercise of such right, power or discretion is necessary or
                  desirable to protect the interests of the Banks under or in
                  respect of the Security Documents or to protect or preserve
                  the security afforded thereby.

                  Where any right, power or discretion is vested in the Security
                  Agent under this Agreement or any other Security Document but
                  is expressed as being exercisable in accordance with the
                  directions of the Banks or the Majority Banks, such right,
                  power or discretion shall not be exercised by the Security


<PAGE>


                                     -143-


                  Agent without the lawful directions of the Banks or the
                  Majority Banks (as the case may be).

         (C)      Limit of Agent's and Security Agent's obligations

                  Notwithstanding anything to the contrary expressed or implied
                  herein or in any other Security Document, neither the Agent
                  nor the Security Agent shall:-

                  (i)      be bound to enquire as to the occurrence or otherwise
                           of any Default or as to the performance by any
                           Security Party of its obligations under any of the
                           Security Documents;

                  (ii)     be bound to disclose to any other person any
                           information relating to any Security Party if such
                           disclosure would or might in its opinion constitute a
                           breach of any law or regulation or be otherwise
                           actionable at the suit of any person;

                  (iii)    have any responsibility to the Banks, the
                           Co-Arrangers or each other for:-

                           (a)  the financial position, creditworthiness,
                                affairs or prospects of any of the Security
                                Parties;

                           (b)  the performance or non-performance howsoever by
                                any of the Security Parties of any of their
                                obligations hereunder or under any of the
                                Security Documents;

                           (c)  the due execution, effectiveness, genuineness,
                                validity or enforceability of any of the
                                Security Documents or any document relating
                                thereto or any filing or recording thereof or
                                the taking of any other action whatsoever and
                                howsoever in connection therewith or the
                                collectability of any sum due thereunder;

                           (d)  any computations and/or information supplied to
                                the Banks by the Agent or the Security Agent in
                                reliance upon which the Banks have entered into
                                this Agreement;

                  (iv)     be under any liability whatsoever for any consequence
                           of relying on:-

                           (a)  any written communication or document
                                believed by it to be genuine or correct and
                                to have been communicated or signed by the
                                person by whom it is purported to have been
                                communicated or signed; or

                           (b)  the advice or opinions of any professional
                                advisers selected by it;

                  (v)      be under any duty to account to any Bank, the
                           Co-Arrangers or each other for any sum received by it
                           for its own account or the profit element of any such
                           sum;

<PAGE>


                                     -144-


                  (vi)     be under any obligation other than those for which
                           express provision is made herein.

         (D)      Rights of the Agent and Security Agent

                  Each of the Agent and Security Agent may:-

                  (i)      carry out its duties hereunder through such officers,
                           directors, employees, consultants or independent
                           agents as it may in its unfettered discretion think
                           fit;

                  (ii)     assume that no Default has occurred and that none of
                           the Security Parties is in breach of its obligations
                           under any of the Security Documents unless the Agent
                           or the Security Agent (as the case may be) has actual
                           knowledge or actual notice to the contrary;

                  (iii)    engage and pay for the advice or services of any
                           internal or external lawyers, accountants, surveyors
                           or other experts whose advice or services may to it
                           seem necessary, expedient or desirable and rely upon
                           any advice so obtained;

                  (iv)     rely as to any matters of fact which might reasonably
                           be expected to be within the knowledge of any
                           Security Party upon a certificate signed by or on
                           behalf of that Security Party;

                  (v)      rely upon any communication or document believed by
                           it to be genuine.

         (E)      Responsibilities of the Banks and the Co-Arrangers

                  It is understood that each of the Banks and the Co-Arrangers
                  has itself been, and will continue to be, solely responsible
                  for making its own independent appraisal of and investigations
                  into the financial condition, creditworthiness, condition,
                  affairs, status and nature of each Security Party and,
                  accordingly, each of the Banks and the Co-Arrangers warrants
                  to both the Agent and the Security Agent that it has not
                  relied and will not rely on the Agent or the Security Agent:-

                  (i)      to check or enquire on its behalf into the adequacy,
                           accuracy or completeness of any information provided
                           by any Security Party in connection with this
                           Agreement or any other Security Document; or

                  (ii)     to assess or keep under review on its behalf the
                           financial condition, creditworthiness, condition,
                           affairs, status or nature of any Security Party.

         (F)      Administration

                  Subject to the terms of this Agreement, this Agreement and the
                  other Security Documents shall be serviced, supervised and
                  administered by the Agent and the Security Agent respectively
                  in the ordinary course of its business and in accordance with
                  its usual practices. In performing its duties and functions


<PAGE>


                                     -145-


                  hereunder, the Agent or the Security Agent (as the case may
                  be) shall exercise the same care as it normally exercises in
                  making and administering loans for its own account, but
                  assumes no further responsibility in respect of such
                  performance.

         (G)      Limitation of liability

                  Neither the Agent nor the Security Agent shall be under any
                  liability as a result of taking or omitting to take any action
                  in relation to this Agreement or any other Security Document
                  save in the case of gross negligence or wilful misconduct and
                  neither the Banks nor the Co-Arrangers will assert or seek to
                  assert against any director, officer or employee of the Agent
                  or the Security Agent (as the case may be) any claim they
                  might have against any of them in respect of the matters
                  referred to in this Clause 21.5(G).

         (H)      No restriction on other business

                  Neither the Agent nor the Security Agent (nor any officer
                  thereof) shall be precluded by reason of so acting from
                  underwriting, guaranteeing the subscription of or subscribing
                  for or otherwise acquiring, holding or dealing with any
                  debentures, shares or securities whatsoever of any Security
                  Party or from entering into any contract or financial or other
                  transaction with or from engaging in any banking or other
                  business with any Security Party and shall not be liable to
                  account for any profit made or payment received by it thereby
                  or in connection therewith.

21.6     Retirement and replacement of the Agent and the Security Agent
         --------------------------------------------------------------

         (A)      Either or both of the Agent and the Security Agent may retire
                  at any time without assigning any reason by giving to the
                  Borrower, the Banks and the Security Agent or Agent (as the
                  case may be) not less than thirty (30) days notice of its
                  intention to do so. Unless the Agent or Security Agent (as
                  appropriate) in its notice of retirement nominates any of
                  its associated companies to be its successor, the successor
                  Agent or Security Agent may be appointed by the Majority
                  Banks (with the prior written consent of the Borrower, such
                  consent not to be unreasonably withheld or delayed) during
                  such thirty (30) day period provided that, should they fail
                  to do so, the Agent or the Security Agent (as the case may
                  be) may then appoint as its successor a reputable and
                  experienced bank with an office in London.

         (B)      If any Bank is dissatisfied with the Agent and/or the Security
                    Agent and wants it to be replaced, such Bank shall consult
                    with the other relevant Banks and the Borrower for a period
                    of up to thirty (30) days to decide whether the Agent and/or
                    the Security Agent should be replaced and, if so, by whom
                    (such replacement being one of the relevant Banks or an
                    associated company thereof). If at the end of such period
                    the relevant Banks unanimously agree that the Agent and/or
                    the Security Agent (as the case may be) should be replaced
                    by a particular Bank or one of its associated companies, and
                    if the Borrower consents in writing to the identity of the
                    proposed replacement (such consent (i) not to be
                    unreasonably withheld and (ii) not to be required if an
                    Event of Default has occurred and is continuing), then
                    notice shall be given


<PAGE>


                                     -146-


                  by the relevant Banks to the Agent and/or the Security Agent
                  (as the case may be) specifying the date, being not fewer
                  than five (5) Banking Days after the date of such notice, on
                  which the appointment of the successor Agent and/or Security
                  Agent is, subject to Clause 21.6(D), to take effect.

         (C)      For the purposes of this Clause 21.6(A):-

                  (i)      an "ASSOCIATED COMPANY" of the Agent or Security
                           Agent or any Bank shall mean any company which is a
                           holding company of the Agent or Security Agent or
                           such Bank (as the case may be) or a wholly-owned
                           subsidiary of it or its parent company; and

                  (ii)     "RELEVANT BANKS" means all of the Banks other than
                           that Bank which acts as Agent or (as the case may be)
                           Security Agent or whose associated company acts in
                           such capacity.

         (D)      Any appointment of a successor Agent or Security Agent under
                  Clause 21.6(A) or (B) shall take effect upon:-

                  (i)      the successor confirming in writing its agreement to
                           be bound by the provisions of this Agreement; and

                  (ii)     notice thereof by the Agent or Security Agent and its
                           successor (which notice, in the case of a new Agent,
                           shall specify the bank in New York to which payments
                           to the new Agent shall be made thereafter) being
                           given to each of the other parties to this Agreement
                           and/or the other Security Documents; and

                  (iii)    in the case of a new Security Agent, the outgoing
                           Security Agent has transferred to its successor all
                           of its rights and obligations under the Security
                           Documents.

         (E)      If a successor to the Agent or Security Agent is appointed
                  under the provisions of this Clause 21.6:-

                  (i)      the outgoing Agent or Security Agent (as the case may
                           be) shall be discharged from any further obligation
                           under this Agreement;

                  (ii)     its successor and each of the other parties hereto
                           shall have the same rights and obligations amongst
                           themselves as they would have had if such successor
                           had been a party hereto in place of the outgoing
                           Agent or Security Agent (as the case may be);

                  (iii)    Clause 21 and the other provisions of this Agreement
                           shall remain in effect for the benefit and protection
                           of the outgoing Agent or Security Agent (as the case
                           may be) in relation to any claim or loss which may be
                           brought against or incurred by it in connection with
                           or as a result of any act, omission, breach, neglect
                           or other occurrence or matter relating to or arising
                           out of this Agreement which took place before its
                           resignation.

<PAGE>


                                     -147-


22.      NOTICES AND OTHER MATTERS

22.1     Notices

         Every notice, request, demand or other communication under this
         Agreement or (unless otherwise provided therein) under any of the other
         Security Documents shall:-

         (A)      be in writing delivered personally or by first-class prepaid
                  letter (airmail if available) or facsimile transmission or
                  other means of telecommunication in permanent written form
                  provided that any communication by facsimile transmission
                  shall be confirmed forthwith by letter;

         (B)      be deemed to have been received, subject as otherwise provided
                  in the relevant Security Document, in the case of a letter,
                  when delivered personally or 5 days after it has been put in
                  to the post and, in the case of a facsimile transmission or
                  other means of telecommunication in permanent written form, at
                  the time of despatch (provided that if the date of despatch is
                  not a business day in the country of the addressee or if the
                  time of despatch is after the close of business in the country
                  of the addressee it shall be deemed to have been received at
                  the opening of business on the next such business day); and

         (C)      be sent:-

                  (i)      to the Borrower at:-

                           Aegeristrasse 52
                           CH-6300 Zug
                           Switzerland

                           Fax: 41 41 728 8139

                           Marked for attention: Jan Larsson

                           with a copy to the Borrower at:-

                           World Trade Centre
                           Amsterdam Airport
                           Schipol Boulevard 237
                           1118 BH Schipol Airport
                           The Netherlands

                           Fax: 31 20 653 1960

                           Marked for attention: Deputy General Manager


<PAGE>


                                     -148-


                  (ii)     to Stena AB at:-

                           Masthuggskajen
                           SE-405 19 Goteborg
                           Sweden

                           Fax:  46 31 243947

                           Marked for attention: Finance Manager

                           to the Agent and the Security Agent at:-

                           Svenska Handelsbanken AB (publ)
                           Regional Bank of Western Sweden
                           SE-405 40 Goteborg
                           Sweden

                           Fax: 46 31 774 8308

                           Marked for attention: RVIC STBNL 647

                  (iii)    to each Bank or Co-Arranger at its address and fax
                           number specified in Schedule 1 or in any relevant
                           Transfer Certificate,

                  or to such other address and/or numbers as is notified by
                  one party to the other party under this Agreement;

         (D)      be sent by the Borrower or Stena AB to the Banks or the
                  Co-Arrangers by sending the same to the Agent and by the Banks
                  and the Co-Arrangers to the Borrower and Stena AB by
                  forwarding the same through the Agent.

22.2     No implied waivers, remedies cumulative

         No failure or delay on the part of the Agent, the Co-Arrangers, the
         Security Agent, the Banks or any of them to exercise any power, right
         or remedy under any of the Security Documents shall operate as a waiver
         thereof, nor shall any single or partial exercise by the Agent, the
         Co-Arrangers, the Security Agent, the Banks or any of them of any
         power, right or remedy preclude any other or further exercise thereof
         or the exercise of any other power, right or remedy. The remedies
         provided in the Security Documents are cumulative and are not exclusive
         of any remedies provided by law.

22.3     Further assurance

         The Borrower and Stena AB undertake that the Security Documents shall,
         both at the date of execution and delivery thereof and so long as any
         moneys are owing under any of the Security Documents, be valid and
         binding obligations of the respective parties thereto and the rights of
         the Agent, the Security Agent, the Banks and the Co-Arrangers
         thereunder enforceable in accordance with their respective terms and
         that they will, at their expense, execute, sign, perfect and do, and
         will procure the execution, signing, perfecting and doing by each of
         the other Security Parties of, any


<PAGE>

                                     -149-


         and every such further assurance, document, act or thing as in the
         reasonable opinion of the Agent may be necessary or desirable for
         perfecting the security contemplated or constituted by the Security
         Documents.

22.4     English language

         All certificates, instruments and other documents to be delivered under
         or supplied in connection with any of the Security Documents shall be
         in the English language or shall be accompanied by a certified English
         translation upon which the Agent shall be entitled to rely.

22.5     Third Party Rights

         A person (including any body of persons) who is not a party to this
         Agreement has no right under the Contracts (Rights of Third Parties)
         Act 1999 to enforce any term of this Agreement but this does not affect
         any right or remedy of a third party which exists or is available apart
         from that Act.

23.      GOVERNING LAW AND JURISDICTION

23.1     Law

         This Agreement is governed by and shall be construed in accordance with
         English law.

23.2     Submission to jurisdiction

         The Borrower and Stena AB each agree, for the benefit of the Agent, the
         Co-Arrangers, the Security Agent and the Banks, that any legal action
         or proceedings arising out of or in connection with this Agreement
         against the Borrower or Stena AB or any of its assets may be brought in
         the English courts. The Borrower and Stena AB each hereby irrevocably
         and unconditionally submits to the jurisdiction of such courts and
         irrevocably designates, appoints and empowers Stena (UK) Limited at
         present of 4/5 Arlington Street, London SW1 1RA to receive for it and
         on its behalf, service of process issued out of the English courts in
         any such legal action or proceedings. The submission to such
         jurisdiction shall not (and shall not be construed so as to) limit the
         right of the Agent, the Co-Arrangers, the Security Agent or the Banks
         to take proceedings against the Borrower and Stena AB in the courts of
         any other competent jurisdiction nor shall the taking of proceedings in
         any one or more jurisdictions preclude the taking of proceedings in any
         other jurisdiction, whether concurrently or not. The parties further
         agree that only the courts of England or Sweden and not those of any
         other State shall have jurisdiction to determine any claim which the
         Borrower or Stena AB may have against the Agent, the Co-Arrangers, the
         Security Agent or any Bank arising out of or in connection with this
         Agreement.

IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed as a Deed on the date first above written.



<PAGE>


                                     -150-


                                   SCHEDULE 1
                                   ----------
                         The Banks and their Commitments
                         -------------------------------
<TABLE>
<CAPTION>


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

              NAME                        ADDRESS AND FAX NUMBER               COMMITMENT          PERCENTAGE
              ----                        ----------------------               ----------          ----------
                                                                                   $                    %
---------------------------------- -------------------------------------- --------------------- ------------------
<S>                                <C>                                    <C>                   <C>
The Chase Manhattan Bank (or       125 London Wall                           22,000,000.00      8.000000
successor or nominated affiliate)  London EC2Y 5AJ
                                   England
                                   Fax: 44 20 7777 0217
                                   Attention: Morten Knudsen/
                                   Isaac Xenitides

---------------------------------- -------------------------------------- --------------------- ------------------
Svenska Handelsbanken AB (publ)    Ostra Hamngatan 23
                                   SE-405 40 Goteborg                        44,750,000.00      16.272727
                                   Sweden
                                   Fax: 46 31 774 8308
                                   Attention: RVIC STBNL 647

---------------------------------- -------------------------------------- --------------------- ------------------
Nordbanken AB                      Ostra Hamngatan 16
(publ)                             SE-405 09 Goteborg                        44,750,000.00      16.272727
                                   Sweden
                                   Fax: 46 31 771 6470
                                   Attention:  NORDEA Shipping  Offshore
                                   and Oil Services
---------------------------------- -------------------------------------- --------------------- ------------------
HSBC Bank plc                      Transport Industries
                                   Corporate & Industrial Banking            22,000,000.00      8.000000
                                   3rd Floor, 27-32 Poultry
                                   London EC2P 2BX
                                   England
                                   Fax:  44 20 7260 4495
                                   Attention:  Simon Deefholts

---------------------------------- -------------------------------------- --------------------- ------------------
Landesbank Schleswig-Holstein      Martensdamm 6
Girozentrale                       D-24103 Kiel                              22,000,000.00      8.000000
                                   Germany
                                   Fax:  49 431 900 1130
                                   Attention: Shipping
                                   Department- Matthias Happich

---------------------------------- -------------------------------------- --------------------- ------------------
The Governor and Company of the    2nd Floor, New Uberior House
Bank of Scotland                   11 Earl Grey Street                       22,000,000.00      8.000000
                                   Edinburgh EH3 9BN
                                   Scotland
                                   Fax:  44 131 343 7080
                                   Attention:  Loans Management Group
---------------------------------- -------------------------------------- --------------------- ------------------
</TABLE>


<PAGE>


                                     -151-
<TABLE>
<CAPTION>

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

              NAME                        ADDRESS AND FAX NUMBER               COMMITMENT          PERCENTAGE
              ----                        ----------------------               ----------          ----------
                                                                                   $                    %
---------------------------------- -------------------------------------- --------------------- ------------------
<S>                                <C>                                    <C>                   <C>
Den norske Bank ASA                Stranden 21
                                   N-0021 Oslo                               22,000,000.00      8.000000
                                   Norway
                                   Fax: 47 22 48 28 94
                                   Attention: Credit
                                   Administration Shipping

---------------------------------- -------------------------------------- --------------------- ------------------
Scotiabank Europe plc              Scotia House
                                   33 Finsbury Square                        16,500,000.00      6.000000
                                   London EC2A 1BB
                                   England
                                   Fax:  44 20 7826 5617
                                   Attention: Barry Hodges

---------------------------------- -------------------------------------- --------------------- ------------------
Skandinaviska  Enskilda Banken AB  Ostra Hamngatan 24
(publ)                             S-405 04 Goteborg                         22,000,000.00      8.000000
                                   Sweden
                                   Fax:  46 31 15 14 50
                                   Attention: PSF/Shipping

---------------------------------- -------------------------------------- --------------------- ------------------
ABN AMRO Bank N.V.                 P.O. Box 949
                                   3000 DD Rotterdam                         15,000,000.00      5.454545
                                   The Netherlands
                                   Fax:  31 10 402 5580
                                   Attention: Mr E J van Mastrigt
                                   and
                                   Fax: 31 10 402 4109
                                   Attention: Mr P van der Have

---------------------------------- -------------------------------------- --------------------- ------------------
Nedship Bank (Nordic)              P.O. Box 701,
                                   5501 Bergen                               22,000,000         8.000000
                                   Norway
                                   Fax: 47 55 30 94 50
                                   Attention:  Mr Jan Hjellestad

---------------------------------- -------------------------------------- --------------------- ------------------
                                   TOTAL                                     275,000,000             100
---------------------------------- -------------------------------------- --------------------- ------------------
</TABLE>



<PAGE>


                                     -152-

                                   SCHEDULE 2
                                   ----------
                                    The Ships
                                    ---------
<TABLE>
<CAPTION>

----------------------------- ------------------------------ -------------------------------- --------------------------------------
                                                                       OWNER(S) ON
            NAME                    CURRENT OWNER(S)                AVAILABILITY DATE                       CLASSIFICATION
            ----                    ----------------                -----------------                       --------------

----------------------------- ------------------------------ -------------------------------- --------------------------------------
<S>                           <C>                            <C>                              <C>

KONINGIN BEATRIX              Stena Line B.V.                Stena Line B.V.                  DNV+1A1 R280 Car Ferry A EO

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA CARISMA                 Stena Line AB                  Stena Line Scandinavia AB        DNV+1A1 HSLC RI Car Ferry A EO  ICS
----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA CARRIER                 Stena Line Shipholding B.V.    Stena Line Shipholding B.V.      LR+100 A1 Ice Class 1A+LMC+ UMS

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA DANICA                  Stena Line AB                  Stena Line Scandinavia AB        DNV+1A1 Car Ferry A EO ICE-1B

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA EUROPE                  33 shares - Stena Line         33 shares - Stena Line           DNV+1A1 Car Ferry A MCDK ICE- 1C
                              Shipholding B.V.               Shipholding B.V.

                              31 shares - Stena Line AB      31 shares - Stena Line
                                                             Scandinavia AB
----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA FREIGHTER               Stena Line AB                  Stena Line Scandinavia AB        LR+100 A1 Ice Class 1A +LMC+UMS

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA GERMANICA               Scandlines AB                  Scandlines AB                    LR+100 A1 Car Ferry, Ice Class 2+LMC
                                                                                              and UMS

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA GOTHICA                 Stena Line Shipholding B.V.    Stena Line Shipholding B.V.      DNV+1A1 MCDK EO

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA SCANDINAVICA            Stena Line AB                  Stena Line Scandinavia AB        LR+100 A1 Car Ferry, Ice Class 2+LMC
                                                                                              and UMS

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA SCANRAIL                Stena Line AB                  Stena Line Scandinavia AB        BV 1 3/3 E Roll On Roll Off Deepsea
                                                                                              ICE III

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA SEARIDER                Stena Line AB                  Stena Line Scandinavia AB        DNV+1A1 Car and Train Ferry A EO ICE
                                                                                              -1B

----------------------------- ------------------------------ -------------------------------- --------------------------------------
STENA SEATRADER               Stena Line B.V.                Stena Line B.V.                  DNV+1A1 ICE- A

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



-----------------------------  ----------------------------- ------------- ------------
                                      CLASSIFICATION          OFFICIAL
            NAME                         SOCIETY              NO./CALL        FLAG
            ----                         -------              ---------       ----
                                                                 SIGN
-----------------------------  ----------------------------- ------------- ------------
KONINGIN BEATRIX               Det norske Veritas            900301        British

-----------------------------  ----------------------------- ------------- ------------
STENA CARISMA                  Det norske Veritas            SGFV          Swedish
-----------------------------  ----------------------------- ------------- ------------
STENA CARRIER                  Lloyd's Register of Shipping  SLUY          Swedish

-----------------------------  ----------------------------- ------------- ------------
STENA DANICA                   Det norske Veritas            SKFH          Swedish

-----------------------------  ----------------------------- ------------- ------------
STENA EUROPE                   Det norske Veritas            730536        Bahamian




-----------------------------  ----------------------------- ------------- ------------
STENA FREIGHTER                Lloyd's Register of Shipping  SEPG          Swedish

-----------------------------  ----------------------------- ------------- ------------
STENA GERMANICA                Lloyd's Register of Shipping  SKPZ          Swedish


-----------------------------  ----------------------------- ------------- ------------
STENA GOTHICA                  Det norske Veritas            SCQO          Swedish

-----------------------------  ----------------------------- ------------- ------------
STENA SCANDINAVICA             Lloyd's Register of Shipping  SLYH          Swedish


-----------------------------  ----------------------------- ------------- ------------
STENA SCANRAIL                 Bureau Veritas                SLBM          Swedish


-----------------------------  ----------------------------- ------------- ------------
STENA SEARIDER                 Det norske Veritas            900102        British


-----------------------------  ----------------------------- ------------- ------------
STENA SEATRADER                Det norske Veritas            904247        British

-----------------------------  ----------------------------- ------------- ------------
</TABLE>


<PAGE>


                                     -153-


                                   SCHEDULE 3
                                   ----------
                              Commercial Documents
                              --------------------

<TABLE>
<CAPTION>
<S>     <C>                            <C>
STENA GERMANICA LOAN DOCUMENTS

1.      The Stena Germanica Loan Agreement.

MANAGEMENT AGREEMENTS IN RESPECT OF THE SHIPS

1.       m.v. "STENA SEARIDER"          A SHIPMAN 98 Management Agreement dated 28 August 2001 made between Stena
                                        Line B.V. (formerly Stena Line Holland B.V.) ("SLBV") as disponent owner
                                        and Northern Marine Management Limited ("NMML") as manager.

2.       m.v. "STENA SEATRADER"         A SHIPMAN 98 Ship Management Agreement dated 1 March 2001 made between (1)
                                        SLBV as owner and (2) NMML as manager.

CHARTER DOCUMENTS IN RESPECT OF THE SHIPS

1.       m.v. "STENA SEARIDER"          A BARECON 89 bareboat charter dated 25 September 2000 made between (1)
                                        Stena Line as owner and (2) SLBV as charterer to be amended and novated on
                                        or about the Availability Date by an addendum no. 1 to be made between (1)
                                        Stena Line, (2) SLBV and (3) Stena Line Scandinavia (so as to constitute a
                                        charter between (1) Stena Line Scandinavia as owner and (2) SLBV as
                                        charterer).

2.       m.v. "STENA CARRIER"           A BARECON 89 bareboat charter dated 1 January 1992 made between (1) Stena
                                        Carrier Ltd ("SCL") as owner and (2) Stena Line as charterer as amended and
                                        novated by addendum no. 1 dated 31 March 1995 made between (1) SCL, (2)
                                        Stena Empress Ltd ("SEL") and (3) Stena Line (so as to constitute a charter
                                        between (1) SEL as owner and (2) Stena Line as charterer) as further
                                        amended and novated by an addendum no. 2 dated 20 December 1996 made
                                        between (1) SEL, (2) Stena Line Shipholding B.V. ("SLSHBV") and (3) Stena
                                        Line (so as to constitute a charter between (1) SLSHBV as owner and (2)
                                        Stena Line as charterer) as further amended by an addendum no. 3 dated 15
                                        January 1997 made between (1) SLSHBV and (2) Stena Line and as further
                                        amended by an addendum no. 4 dated 15 January 1999, an addendum no. 5 dated
                                        15 January 2000, an addendum no. 6 dated 5 February 2001, each between (1)
                                        SLSHBV and (2) Stena Line, and to be further amended and novated on or
                                        about the Availability


<PAGE>


                                     -154-


                                        Date by an addendum no. 7 to be made between (1) SLSHBV, (2) Stena Line and
                                        (3) Stena Line Scandinavia (so as constitute a charter between (1) SLSHBV
                                        as owner and (2) Stena Line Scandinavia as charterer).

3.       m.v. "STENA GOTHICA"           A BARECON 89 bareboat charter dated 15 October 1994 made between 4 (1)
                                        Scandinavica Ltd as owner and (2) Stena Line Scandinavia AB (formerly known
                                        as Stena Line Service AB and subsequently merged into Stena Line on 1
                                        January 1999) as charterer as amended and novated by an addendum no. 1
                                        dated 31 March 1995 made between (1) Scandinavica Ltd (2) SEL and (3) Stena
                                        Line Scandinavia AB (so as to constitute a charter between (1) SEL as owner
                                        and (2) Stena Line Scandinavia AB as charterer) as further amended by an
                                        addendum no. 2 dated 9 January 1996 between (1) SEL and (2) Stena Line
                                        Scandinavia AB as further amended and novated by an addendum no. 3 dated 16
                                        December 1996 made between (1) SEL, (2) SLSHBV and (3) Stena Line
                                        Scandinavia AB (so as to constitute a charter between (1) SLSHBV as owner
                                        and (2) Stena Line Scandinavia AB as charterer) as further amended by an
                                        addendum no. 4 dated 15 January 1997 and an addendum no. 5 dated 31 August
                                        1998 each between (1) SLSHBV and (2) Stena Line Scandinavia AB and as
                                        further amended by an addendum no. 6 dated 15 January 1999, an addendum no.
                                        7 dated 17 January 2000, an addendum no. 8 dated 31 August 2000, an
                                        addendum no. 9 dated 5 February 2001 each between (1) SLSHBV and (2) Stena
                                        Line (as successor to Stena Line Scandinavia AB) an addendum no. 10 dated
                                        17 September 2001 and to be further amended and novated on or about the
                                        Availability Date by an addendum no. 11 to be made between (1) SLSHBV, (2)
                                        Stena Line and (3) Stena Line Scandinavia (so as to constitute a charter
                                        between (1) SLSHBV as owner and (2) Stena Line Scandinavia as charterer).

4.       m.v. "STENA GERMANICA"         A BARECON 89 bareboat charter dated 20 December 2000 between (1) 5
                                        Scandlines AB as owner and (2) Stena Line as charterer to be amended and
                                        novated on or about the Availability Date by an addendum no. 1 to be made
                                        between (1) Scandlines AB, (2) Stena Line and (3) Stena Line Scandinavia
                                        (so as to constitute a charter between (1) Scandlines AB as owner and (2)
                                        Stena Line Scandinavia as charterer).


<PAGE>


                                     -155-



5.       m.v. "STENA EUROPE"            A BARECON 89 bareboat charter dated 26 May 1997 between (1) SLSHBV as
                                        33/64th owner and Stena Line as 31/64th owner and (2) Stena Line as
                                        charterer as amended by an addendum no. 1 dated 25 June 2001 and to be
                                        further amended and novated on or about the Availability Date by an
                                        addendum no. 2 to be made between (1) SLSHBV, (2) Stena Line and (3) Stena
                                        Line Scandinavia (as so to constitute as charter between (1) SLSHBV as
                                        33/64th owner and Stena Line Scandinavia as 31/64th owner and (2) Stena
                                        Line Scandinavia as charterer).

6.       m.v. "KONINGIN BEATRIX"        A BARECON 89 bareboat charter dated 9 June 1997 between (1) SLBV 7 as owner
                                        and (2) Stena Line Limited ("SLL") as charterer as amended by an addendum
                                        no. 1 dated 1 June 1999, an addendum no. 2 dated 5 February 2001 and to be
                                        amended on or about the Availability Date by an addendum no. 3 each between
                                        (1) SLBV and (2) SLL.
</TABLE>












<PAGE>


                                     -156-

                                   SCHEDULE 4
                                   ----------
                             Form of Drawdown Notice
                             -----------------------



To:      SVENSKA HANDELSBANKEN AB (PUBL)
         SE-405 40 GOTEBORG
         SWEDEN
         Attention: RVIC STBNL 647
                                                                          o 20 o



                                U.S.$275,000,000
                         Facility Agreement dated o 2001
                         -------------------------------


We refer to the above Facility Agreement and hereby give you notice that we wish
to draw an Advance of $o on o 20o [and select a Term in respect thereof of o
months]. The funds should be credited to [NAME AND NUMBER OF ACCOUNT] with [NEW
YORK CITY].

We confirm that the borrowing to be effected by such Advance will be within our
corporate powers, has been validly authorised by appropriate corporate action
and will not cause any limit on our borrowings (whether imposed by statute,
regulation, agreement or otherwise) to be exceeded.

Words and expressions defined in the Facility Agreement shall have the same
meanings where used herein.

                              For and on behalf of
                            STENA INTERNATIONAL B.V.


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











<PAGE>


                                     -157-


                                   SCHEDULE 5
                                   ----------
                              Conditions Precedent
                              --------------------
                          (referred to in Clause 14.1)


1.       Facility Agreement and Guarantees

1.1      Originals of this Agreement executed by all of the parties hereto (in
         sufficient copies so that each Bank will be able to retain one original
         for itself).

1.2      Original Shipowner's Guarantees executed by each of the Shipowners
         (other than Scandlines).

1.3      An original Port Owner's Guarantee executed by Stena Line Ports.

2.       The Ships and Linkspans

2.1      Such evidence as the Agent may require in respect of each Ship that
         such Ship (and, where appropriate, each of its associated Linkspans)
         is:-

         (A)   registered in the sole name of the relevant Shipowner shown in
               Schedule 2 free from all Liens except for Permitted Ship Liens;

         (B)   classified 1A1 with its Classification Society;

         (C)   technically managed by its Approved Manager (if any); and

         (D)   (together with its operator) compliant with the requirements of
               the ISM Code.

2.2      Written confirmation from the insurance brokers and the managers of any
         protection and indemnity or war risks association through whom any
         Insurances of a Ship or Linkspan have been placed that they will each
         issue a letter of undertaking in a form acceptable to the Agent upon
         receipt of the Notice(s) of Assignment of Insurances relating to such
         Ship or Linkspan.

2.3      Originals of the Security Documents to be entered into in respect of
         each Ship and Linkspan duly executed by the Security Parties which are
         party thereto together with all relevant notices, acknowledgements and
         other ancillary documents to be executed thereunder or pursuant
         thereto, namely:-

         (A)   in the case of m.v.'s "STENA DANICA", "STENA SCANDINAVICA",
               "STENA FREIGHTER", "STENA SCANRAIL", "STENA CARRIER", "STENA
               CARISMA", "LINKSPAN I", "LINKSPAN II" and "STENA GOTHICA":-

               (i)  first priority instruments of pledge in the form set out in
                    Schedule 8 executed by the relevant Shipowner in respect of
                    the Swedish law ship mortgages thereon registered or to be
                    registered against each of the above Ships and Linkspans in
                    the following amounts:-


<PAGE>


                                     -158-

<TABLE>
<CAPTION>

                           Ship                                                                       Amount
                           ----                                                                      -------
                           <S>                                                                       <C>
                           "STENA DANICA"                                                        $57,000,000
                           "STENA SCANDINAVICA"                                                 $115,000,000
                           "STENA FREIGHTER"                                                     $12,570,000
                           "STENA SCANRAIL"                                                       $8,000,000
                           "STENA CARISMA"                                                       $62,500,000
                           "LINKSPAN I"                                                           $4,000,000
                           "LINKSPAN II"                                                          $3,000,000
                           "STENA CARRIER"                                                        $8,500,000
                           "STENA GOTHICA"                                                       $14,437,500
</TABLE>

               (ii) the original mortgage deeds as referred to in (i) above in
                    respect of each of the above Ships and Linkspans; and

               (iii) a Deed of Covenant and Notices of Assignment of Insurances
                    in the form of Schedule 1 thereto each executed by the
                    relevant Shipowner in respect thereof;

         (B)   in the case of m.v.'s "STENA EUROPE", "STENA SEARIDER", "STENA
               SEATRADER" and "KONINGIN BEATRIX":-

               (i)  a first priority statutory ship mortgage thereon
                    incorporating the text set out in Schedule 10 executed by
                    the relevant Shipowner;

               (ii) a Deed of Covenant and Notices of Assignment of Insurances
                    in the form of Schedule 1 thereto executed by the relevant
                    Shipowner in respect thereof;

         (C)   in the case of m.v. "STENA GERMANICA":-

               (i)  the Stena Germanica Assignment;

               (ii) the notice of assignment in the form of Schedule 1 to the
                    Stena Germanica Assignment executed by the Borrower and the
                    acknowledgement thereof in the form of Schedule 2 to the
                    Stena Germanica Assignment executed by Scandlines;

               (iii) the notice of assignment in the form of Schedule 3 to the
                    Stena Germanica Assignment executed by the Borrower and the
                    acknowledgement thereof in the form of Schedule 4 to the
                    Stena Germanica Assignment executed by Stena Line
                    Scandinavia;

               (iv) the Notice of Assignment of Insurances in the form of
                    Schedule 5 to the Stena Germanica Assignment executed by the
                    Borrower;

         (D)   in the case of each of the Mortgaged Ships and Mortgaged
               Linkspans:-

               (i)  the Charterer's Insurance Assignment (if any) executed by
                    any Stena Charterer of such Ship or Linkspan;

<PAGE>


                                     -159-


               (ii) the Charterer's Subordination Undertaking (if any) executed
                    by any Stena Charterer of such Ship or Linkspan;

               (iii) the Manager's Subordination Undertaking (if any) executed
                    by any Approved Manager of such Ship or Linkspan.

2.4      In the case of each Ship and Linkspan, evidence that the relevant
         mortgage in favour of the Security Agent on such Ship or Linkspan has
         been registered against such Ship or Linkspan with first priority at
         the appropriate ship registry.

3.       Holyhead Port

3.1      A clear H.M. Land Registry search in favour of the Security Agent
         against such part of Holyhead Port as is registered or is in the course
         of registration, with priority expiring no earlier than twenty eight
         (28) days after the Availability Date.

3.2      An original of the Holyhead Charge executed by Stena Line Ports.

3.3      A certificate of title in respect of Holyhead Port (including
         details of the insurances of the relevant port) in form and substance
         acceptable to the Agent.

4.       Stranraer Port

4.1      A clear search in the property register and in the computerised
         presentment book in respect of Stranraer Port to be continued to a date
         twenty two (22) days after the date of recording of the Stranraer
         Charge and a clear search in the personal register in respect of Stena
         Line Ports.

4.2      An original of the Stranraer Charge executed by Stena Line Ports.

4.3      A certificate of title in respect of Stranraer Port (including details
         of the insurances of the relevant port) in form and substance
         acceptable to the Agent.

5.       Constitutional documents

         Certified copies of the Certificate of Incorporation and Memorandum and
         Articles of Association or equivalent constitutive documents of the
         Borrower and each other Security Party.

6.       Corporate authorisations

6.1      Certified copies of resolutions of each Security Party approving the
         Security Documents to which such Security Party is a party and
         approving the transactions contemplated thereby and authorising the
         execution of such documents by an officer or attorney of the relevant
         Security Party.

6.2      Original or certified copies of the powers of attorney, if any, issued
         pursuant to the resolutions referred to above.

<PAGE>


                                     -160-


7.       Certificate of incumbency

         Certified copies of a certificate of incumbency or extract from the
         commercial register in respect of the Borrower and each other Security
         Party.

8.       Consents and approvals

         Such evidence as the Agent may require that all such consents have been
         obtained as may be required from any authority by each of the Borrower
         and each other Security Party for the execution of and performance by
         them of their respective obligations under those of the Security
         Documents to which they are respectively a party.

9.       Fees

9.1      The agency fee letter agreement referred to in Clause 6.1 executed by
         the Borrower, Stena AB and Svenska Handelsbanken AB (publ).

9.2      The arrangement fee letter agreement referred to in Clause 6.3 executed
         by the Borrower and the Agent.

9.3      Evidence that such fees referred to in Clause 6 as are payable on or
         before the Availability Date have been received by the Agent.

10.      Insurance opinion

         An opinion on the Insurances by HSBC Insurance Brokers Limited dated
         not more than thirty (30) days before the Availability Date, such
         report to be in form and substance acceptable to the Agent.

11.      Legal opinions

         Legal opinions in form and substance acceptable to the Agent (or
         confirmation satisfactory to the Agent that such legal opinions will be
         issued in form and substance acceptable to it) from:-

         (A)   Messrs. Sinclair Roche & Temperley concerning such matters of
               English law as the Agent may reasonably require;

         (B)   Messrs. Mannheimer Swartling concerning such matters of Swedish
               law as the Agent may reasonably require;

         (C)   Messrs. Loyens & Loeff concerning such matters of Netherlands law
               as the Agent may reasonably require; and

         (D)   Messrs. Wright, Johnston & Mackenzie concerning such matters of
               Scottish law as the Agent may reasonably require.

12.      Valuations

         Valuations of the Mortgaged Ships, such valuations to be determined in
         accordance with Clause 5.3(G).

<PAGE>


                                     -161-


13.      Financial condition

         Evidence that there is no breach of the asset coverage test contained
         in Clause 10.21.

14.      Process agent

         Written confirmation from Stena (UK) Limited that it will act as the
         process agent for service of process in England of the Borrower and
         each other Security Party.

15.      Commercial Documents

15.1     A certified copy of the Stena Germanica Loan Agreement as amended and
         transferred out of the name of Stena Line into the name of the Borrower
         as lender to Scandlines thereunder, such agreement to be on terms
         whereby the principal loan amount outstanding thereunder is $52,000,000
         and the repayment date thereof falls after the Termination Date
         hereunder.

15.2     Certified copies of the Stena Germanica Mortgage and the Stena
         Germanica Deed of Covenants together with certified copies of the
         agreement or agreements by which such documents have been assigned from
         Stena Line to the Borrower (including all appropriate notices and
         acknowledges of assignment given to and/or by Scandlines and Stena Line
         Scandinavia), all such documents to be in form and substance acceptable
         to the Agent.

15.3     Certified copies of the Stena Germanica  Charterer's  Insurance
         Assignment and the Stena Germanica  Charterer's  Subordination
         Undertaking.

15.4     Certified copy of the Stena Line Asset Purchase Agreement.

15.5     Certified copies of the other Commercial Documents.

16.      Cancellation of Stena Line Revolving Credit Facility

         Evidence that simultaneously with drawdown of the first Advance all
         outstandings in respect of the Stena Line Revolving Credit Facility
         will be repaid in full and such facility finally and irrevocably
         cancelled.










<PAGE>

                                     -162-


                                   SCHEDULE 6
                                   ----------

                          Form of Transfer Certificate
                          ----------------------------
                          (referred to in Clause 20.3)

                              Transfer Certificate
                              --------------------

Banks are advised not to employ Transfer Certificates or otherwise to assign or
transfer interests in the Facility Agreement without further ensuring that the
transaction complies with all applicable laws and regulations, including the
Financial Services Act 1986 and regulations made thereunder and similar statutes
which may be in force in other jurisdictions


To:      Svenska  Handelsbanken  AB (publ),  as agent on its own behalf and for
         and on behalf of the Borrower, the Security Agent, the Banks, the
         Co-Arrangers and Stena AB defined in the Facility Agreement referred
         to below.

                                                                         o 20 o
Attention:   RVIC STBNL 647

This certificate ("TRANSFER CERTIFICATE") relates to a US$275,000,000 facility
agreement dated          2001 (as amended, novated and/or restated from time to
time the "FACILITY AGREEMENT") and made between (1) Stena International B.V.
(the "BORROWER"), (2) the banks and financial institutions defined therein as
banks (the "BANKS"), (3) J. P. Morgan plc, Nordbanken AB (publ) and Svenska
Handelsbanken AB (publ) as Co-Arrangers, (4) Svenska Handelsbanken AB (publ) as
Agent, (5) Svenska Handelsbanken AB (publ) as Security Agent and (6) Stena AB as
guarantor for a facility of up to $275,000,000. Terms defined in the Facility
Agreement shall, unless otherwise defined herein, have the same meanings herein
as therein. In this Certificate:

the "TRANSFEROR" means [FULL NAME] of [LENDING OFFICE]; and

the "TRANSFEREE" means [FULL NAME] of [LENDING OFFICE].

1.       The Transferor as beneficial owner assigns to the Transferee absolutely
         all rights and interests (present, future or contingent) which the
         Transferor has as Bank under or by virtue of the Facility Agreement and
         all the Security Documents in relation to [ ] per centum ([ ]%) of the
         Contribution of the Transferor (or its predecessors in title) which are
         set out below:-

         Date of Contribution           Amount             Maturity Date
         --------------------           ------             -------------


2.       By virtue of this Transfer  Certificate and Clause 20 of the Facility
         Agreement,  the Transferor is discharged  [entirely from its Available
         Commitment which amounts to $[          ]][from [      per centum (
         [  ]%) of its Available  Commitment, which  percentage represents
         $[          ]].


<PAGE>


                                     -163-


3.       [The Transferee acknowledges that the Contribution of the Transferor
         referred to in Clause 1 above relates to Advances having Maturity Dates
         which fall after the date hereof which have been funded as to its
         relevant portion by the Transferor and in respect of which the
         Transferor has incurred and continues to incur funding costs at an
         annual rate of interest per annum approximate to the relevant rate of
         LIBOR for each such Advance as determined by the Agent prior to the
         drawdown thereof. In consider of the Transferor agreeing to execute
         this Transfer Certificate in favour of the Transferee, the Transferee
         undertakes that upon the Maturity Date of each such Advance, the
         Transferee will pay to the Transferor a sum in Dollars for value on
         such Maturity Date equal to the aggregate of:-

         (A)   the amount of principal repaid to the Transferee under the
               Facility Agreement in respect of the relevant portion of such
               Advance transferred by the Transferor to the Transferee
               hereunder;

         (B)   the amount of all interest earned and received by the Transferee
               under the Facility Agreement in respect of the relevant portion
               of such Advance transferred by the Transferor to the Transferee
               hereunder which is attributable to LIBOR (i.e. so that it
               excludes that part of such interest which is attributable to the
               Margin); and

         (C)   the amount of all interest earned and received by the Transferee
               under the Facility Agreement in respect of the relevant portion
               of such Advance transferred by the Transferor to the Transferee
               hereunder which is earned during the period from its drawdown
               date up to (but not including) the date of this Transfer
               Certificate and which is attributable to the Margin.

         By its execution and delivery of this Transfer Certificate the
         Transferee hereby irrevocably and unconditionally authorises and
         instructs the Agent to effect on its behalf the payments to be made to
         the Transferor as referred to in this Clause from the corresponding
         payments of interest and repayment of principal received by it on
         behalf of the Banks under the Facility Agreement.]

4.       The Transferee hereby requests the Borrower, the Agent, the Security
         Agent, the Banks and Stena AB to accept the executed copies of this
         Transfer Certificate as being delivered pursuant to and for the
         purposes of Clause 20.3 of the Facility Agreement so as to take effect
         in accordance with the terms thereof on [DATE OF TRANSFER].

5.       The Transferee:-

         (A)   confirms that it has received a copy of the Facility Agreement
               and the Security Documents together with such other documents and
               information as it has required in connection with the transaction
               contemplated thereby;

         (B)   confirms that it has not relied and will not hereafter rely on
               the Transferor, the Agent or the Security Agent to check or
               enquire on its behalf into the legality, validity, effectiveness,
               adequacy, accuracy or completeness of the Facility Agreement, any
               of the Security Documents or any such documents or information;

<PAGE>


                                     -164-


         (C)   agrees that it has not relied and will not rely on the
               Transferor, the Agent, the Security Agent, the Co-Arrangers or
               the Banks to assess or keep under review on its behalf the
               financial condition, creditworthiness, condition, affairs, status
               or nature of the Borrower or any other Security Party (save as
               otherwise expressly provided therein);

         (D)   warrants that it has power and authority to become a party to the
               Facility Agreement and has taken all necessary action to
               authorise execution of this Transfer Certificate and to obtain
               all necessary approvals and consents to the assumption of its
               obligations under the Facility Agreement and the Security
               Documents; and

         (E)   if not already a Bank, appoints the Agent to act as its agent and
               the Security Agent to act as its trustee as provided in the
               Facility Agreement and the Security Documents and agrees to be
               bound by the terms of the Facility Agreement.

6.       The Transferor:-

         (A)   warrants to the Transferee that it has full power to enter into
               this Transfer Certificate and has taken all corporate action
               necessary to authorise it to do so;

         (B)   warrants to the Transferee that this Transfer Certificate is
               binding on the Transferor under the laws of England, the country
               in which the Transferor is incorporated and the country in which
               its lending office is located; and

         (C)   agrees that it will, at its own expense, execute any documents
               which the Transferee reasonably requests for perfecting in any
               relevant jurisdiction the Transferee's title under this Transfer
               Certificate or for a similar purpose.

7.       The Transferee hereby undertakes with the Transferor and each of the
         other parties to the Facility Agreement and the other Security
         Documents that it will perform in accordance with its terms all those
         obligations which by the terms of the Facility Agreement and the other
         Security Documents will be assumed by it after delivery of the executed
         copies of this Transfer Certificate to the Agent and satisfaction of
         the conditions (if any) subject to which this Transfer Certificate is
         expressed to take effect.

8.       By  execution  of this  Transfer  Certificate  on their  behalf by the
         Agent and in reliance upon the representations and warranties of the
         Transferee, the Borrower, Stena AB, the Agent, the Security Agent, the
         Co-Arrangers and the Banks accept the Transferee as a party to the
         Facility Agreement and the Security Documents with respect to all
         those rights and/or obligations which by the terms of the Facility
         Agreement and the Security Documents will be assumed by the Transferee
         (including those about pro-rata sharing and the exclusion of liability
         on the part of, and the indemnification of, the Agent, the
         Co-Arrangers, the Security Agent and the Banks as provided by the
         Agreement) after delivery of the executed copies of this Transfer
         Certificate to the Agent and satisfaction of the conditions (if any)
         subject to which this Transfer Certificate is expressed to take
         effect.


<PAGE>



                                -165-


9.       None of the Transferor, the Agent, the Security Agent, the Co-Arrangers
         or the Banks:-

         (A)   makes any representation or warranty nor assumes any
               responsibility with respect to the legality, validity,
               effectiveness, adequacy or enforceability of the Facility
               Agreement or any of the Security Documents or any document
               relating thereto;

         (B)   assumes any responsibility for the financial condition of the
               Borrower or any other Security Party or any party to any such
               other document or for the performance and observance by the
               Borrower or any other Security Party or any party to any such
               other document (save as otherwise expressly provided therein) and
               any and all such conditions and warranties, whether express or
               implied by law or otherwise, are hereby excluded (except as
               aforesaid).

10.      The Transferor and the Transferee each undertake that they will on
         demand fully indemnify the Agent and the Security Agent in respect of
         any claim, proceeding, liability or expense which relates to or results
         from this Transfer Certificate or any matter concerned with or arising
         out of it unless caused by the Agent's or Security Agent's gross
         negligence or wilful misconduct, as the case may be.

11.      The agreements and undertakings of the Transferee in this Transfer
         Certificate are given to and for the benefit of and made with each of
         the other parties to the Facility Agreement and the Security Documents.

12.      This Transfer Certificate shall be governed by, and construed in
         accordance with, English law.

              Transferor                         Transferee
              [INSERT TRANSFEROR'S NAME]         [INSERT TRANSFEREE'S NAME]

              By:                                By:

              Dated:                             Dated:




              Agent

              Agreed for and on behalf of itself as Agent,
              the Co-Arrangers, the Security Agent,
              the Banks, the Borrower, Stena AB and
              each other Security Party.


              SVENSKA HANDELSBANKEN AB (PUBL)

              By:

              Dated:



<PAGE>


                                     -166-


NOTE:    The execution of this Transfer Certificate alone may not transfer
         a proportionate share of the Transferor's interest in the security
         constituted by the Security Documents in the Transferor's or
         Transferee's jurisdiction. It is the responsibility of each
         individual Bank to ascertain whether any other documents are
         required to perfect a transfer of such a share in the Transferor's
         interest in such security in any such jurisdiction and, if so, to
         seek appropriate advice and arrange for execution of the same.
















<PAGE>


                                     -167-


                                  THE SCHEDULE
                                  ------------



Outstanding Contributions of Transferor : $[          ]
---------------------------------------

Available Commitment of Transferor : $[            ]
----------------------------------

Portion Transferred : [                      ]%
-------------------


                      ADMINISTRATIVE DETAILS OF TRANSFEREE
                      ------------------------------------

Name of Transferee:

Lending Office:

Contact person
(Loan Administration Department):

Telephone:
Fax:

Contact person
(Credit Administration Department):

Telephone:
Fax:

Account for payments:












<PAGE>


                                     -168-


                                  SCHEDULE 7.1
                                  ------------
                          Form of Shipowner's Guarantee
                          -----------------------------






























<PAGE>


                                     -169-


                                  SCHEDULE 7.2
                                  ------------
                         Form of Port Owner's Guarantee
                         ------------------------------



























<PAGE>


                                     -170-


                                   SCHEDULE 8
                                   ----------
                            Form of Swedish Mortgage
                            ------------------------



















<PAGE>


                                      -171


                                   SCHEDULE 9
                                   ----------
                          Form of Insurance Assignment
                          ----------------------------



































<PAGE>


                                     -172-


                                   SCHEDULE 10
                                   -----------
                      Form of Statutory Mortgage Narrative
                      ------------------------------------

























<PAGE>


                                     -173-


                                  SCHEDULE 11.1
                                  -------------
                            Form of Deed of Covenant
                            ------------------------
































<PAGE>


                                     -174-


                                  SCHEDULE 11.2
                                  -------------
    Form of Deed of Covenant (m.v. "STENA CARISMA" AND HER RELATED LINKSPANS)
    -------------------------------------------------------------------------






























<PAGE>


                                     -175-


                                   SCHEDULE 12
                                   -----------
                    Form of Charterer's Insurance Assignment
                    ----------------------------------------































<PAGE>


                                     -176-


                                   SCHEDULE 13
                                   -----------
                  Form of Charterer's Subordination Undertaking
                  ---------------------------------------------




























<PAGE>


                                     -177-


                                   SCHEDULE 14
                                   -----------
                             Form of Holyhead Charge
                             -----------------------































<PAGE>


                                     -178-


                                   SCHEDULE 15
                                   -----------
                            Form of Stranraer Charge
                            ------------------------



































<PAGE>


                                     -179-


                                   SCHEDULE 16
                                   -----------
                  Form of Receivables Assignment (Credit Sale)
                  --------------------------------------------

































<PAGE>


                                     -180-


                                   SCHEDULE 17
                                   -----------
                 Form of Receivables Assignment (Hire Purchase)
                 ----------------------------------------------

























<PAGE>


                                     -181-


                                   SCHEDULE 18
                                   -----------
                   Form of Manager's Subordination Undertaking
                   -------------------------------------------




























<PAGE>


                                     -182-


                                   SCHEDULE 19
                                   -----------
                       Form of Stena Germanica Assignment
                       ----------------------------------

































<PAGE>


                                     -183-

                                   SCHEDULE 20
                                   -----------
               Specimen Charter Covenants and Loss Payable Clauses
               ---------------------------------------------------





































<PAGE>


                                     -184-


                                   SCHEDULE 21
                                   -----------
                  Form of Asset Coverage Compliance Certificate
                  ---------------------------------------------

                   OFFICER'S CERTIFICATE ISSUED PURSUANT TO A
    $275,000,000 FACILITY AGREEMENT DATED [O] 2001 (THE "FACILITY AGREEMENT")


I, [o], the [Chief Financial Officer/DESCRIBE OFFICE] of Stena AB, hereby
certify that:-

1.       Attached hereto is a statement of the respective amounts of:-

         o     Appraised Value of Restricted Group Assets

         o     Secured Debt

         o     Strategic Investments

         o     Cash and Marketable Securities

         o     Net Market Value of the Unrestricted Group

         o     Other Assets and Working Capital

         o     Available Asset Value

         o     Unsecured Debt

         as at [30 June/31 December/OTHER [YEAR]] (the "REFERENCE DATE"),
         determined in accordance with Clause 10.21 of the Facility Agreement.

2.       As at the Reference Date, the ratio of Available Asset Value to
         Unsecured Debt was [INSERT]:1.

3.       Attached hereto is a statement of the amounts of the values of the
         assets of the Stena AB Group determined in accordance with Clause 10.21
         of the Facility Agreement for the purpose of calculating the Available
         Asset Value as at the Reference Date.

Terms used herein and not otherwise defined herein shall have the meanings set
forth in the Facility Agreement. This certificate is rendered pursuant to Clause
10.2(F) of the Facility Agreement.

IN WITNESS WHEREOF, the undersigned has set his hand this o day of o 20o.

STENA AB


By: ............................
                                     [Chief Financial Officer/INSERT OFFICE]





<PAGE>


                                     -185-


The Borrower
------------


SIGNED AND DELIVERED AS A DEED by
/s/ John Shelton
attorney-in-fact for and on behalf of
STENA INTERNATIONAL B.V.
in the presence of:
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


The Agent and Security Agent
----------------------------
SIGNED AND DELIVERED AS A DEED by
/s/ Sten - Olof Hagman
attorney-in-fact for and on behalf of
SVENSKA HANDELSBANKEN AB (PUBL)
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


The Banks and Co-Arrangers
--------------------------
SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
for and on behalf of
THE CHASE MANHATTAN BANK
(or successor or nominated affiliate thereof)
by its authorised signatory
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
NORDBANKEN AB (PUBL)
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Sten - Olof Hagman
attorney-in-fact for and on behalf of
SVENSKA HANDELSBANKEN AB (PUBL)
in the presence of:-
/s/ Jiang Lin



<PAGE>


                                     -186-


Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
for and on behalf of
J.P. MORGAN PLC
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Adam Byrne
for and on behalf of
HSBC BANK PLC
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by                         )
/s/ Ruth Allcoat                                          )
attorney-in-fact for and on behalf of                     )
LANDESBANK SCHLESWIG-HOLSTEIN                             )
GIROZENTRALE                                              )
in the presence of:-                                      )
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE

SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
DEN NORSKE BANK ASA
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


<PAGE>


                                     -187-


SIGNED AND DELIVERED AS A DEED by
/s/ David Sparkes
for and on behalf of
SCOTIABANK EUROPE PLC
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
SKANDINAVISKA ENSKILDA BANKEN AB (PUBL)
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
ABN AMRO BANK N.V.
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE


SIGNED AND DELIVERED AS A DEED by
/s/ Ruth Allcoat
attorney-in-fact for and on behalf of
NEDSHIP BANK (NORDIC)
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE

Stena AB
--------

SIGNED AND DELIVERED AS A DEED by
/s/ Rolf Mahlkvist
attorney-in-fact for and on behalf of
STENA AB
in the presence of:-
/s/ Jiang Lin
Trainee Solicitor
London EC2V 7LE