<Page>
                              DATED 21 August 2003

                         STOLT COMEX SEAWAY FINANCE B.V.

                                (as Indemnifier)

                                     - and -

                               STOLT OFFSHORE S.A.
                                 (as guarantor)

                                     - and -

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

                                     - and -

                               DEN NORSKE BANK ASA
                       (as facility agent security trustee
                                and issuing bank)

                              USR44,000,000 SECURED
                        BANK GUARANTEE FACILITY AGREEMENT

[Graphic omitted]

STEPHENSON HARWOOD                                    One, St. Paul's Churchyard
                                                                 London EC4M 85H
                                                    Telephone +44(0)20 7329 4422
                                                          Fax +44(0)20 7606 0822
                                                         DX No. 64 Chancery Lane
                                                                 www.shlegal.com
<PAGE>

                                    CONTENTS

                                                                            Page
1   Definitions and Interpretation............................................2
2   The Guarantee Facility...................................................19
3   Conditions Precedent and Subsequent......................................22
4   Representations and Warranties...........................................32
5   Currency and Counter Indemnity...........................................35
6   Authority to pay.........................................................36
7   Interest.................................................................38
8   Guarantee and Indemnity..................................................38
9   Fees.....................................................................43
10  Security Documents.......................................................43
11  Agency and Trust.........................................................44
12  Covenants................................................................54
13  Earnings.................................................................67
14  Events Of Default........................................................67
15  Set-Off and Lien.........................................................72
16  Assignment and Sub-Participation.........................................74
17  Payments, Mandatory Prepayment, Reserve Requirements and Illegality......76
18  Communications...........................................................79
19  General Indemnities......................................................80
20  Miscellaneous............................................................82
21  Law and Jurisdiction.....................................................87
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SCHEDULE 1...................................................................88
     The Banks, the Commitments the Guarantee Commitments and the Proportionate
     Shares................................................................. 88

SCHEDULE 2...................................................................89
     The Shipowning Guarantors and the Vessels...............................89

SCHEDULE 3...................................................................90
     Financial Covenant Calculations.........................................90

SCHEDULE 4...................................................................92
     Form of Transfer Certificate............................................92

APPENDIX A...................................................................96
     Issue Request...........................................................96

APPENDIX B...................................................................97
     List of Encumbrances Notified to the Agent Pursuant to Clause
     12.1.1 of the Agreement.................................................97

APPENDIX C...................................................................98
     PART A..................................................................98
     Subordinated Note.......................................................98
     PART B.................................................................102
     Subordinated Loan Agreement............................................102

APPENDIX D..................................................................106
     Disclosure Letter......................................................106

APPENDIX E..................................................................108
     Liquidity Line.........................................................108

APPENDIX F..................................................................112

     Consolidated Accounts Receivable Ageing and Collection Status
     as [    ] at for Stolt Offshore S.A................................... 112
<PAGE>

GUARANTEE FACILITY AGREEMENT

Dated:                       2003

BETWEEN: -

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

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

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

(4)  DEN NORSKE BANK ASA, acting as facility agent and security trustee through
     its office at 200 Park Avenue, New York, New York 10166-0396, United States
     of America and acting as issuing bank through its office aforesaid and its
     office at Stranden 21, P0 Box 1171, N-0107, Oslo, Norway (in those
     capacities "the Agent").

WHEREAS:-

(A)  Each of the Banks at the request of (inter alios) the Indemnifier and the
     Guarantor has agreed to (i) make available its respective Guarantee
     Commitment of an aggregate amount not exceeding forty four million Dollars
     ($44,000,000) or the Equivalent Amount in a Permitted Currency or Permitted
     Currencies and assume its Proportionate Share of the Bank's Obligations and
     (ii) indemnify the Agent in respect of any Bank Guarantees issued by the
     Agent to support certain performance obligations of members of the SO Group
     in connection with certain contractual arrangements entered into or to be
     entered into by members of the SO Group in the ordinary course of business
     subject to and upon the terms and conditions contained in this Agreement.

IT IS AGREED as follows:-
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1    Definitions and Interpretation

     1.1  Definitions

          In this Agreement:-

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

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

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

          1.1.4     "Amended and Restated Loan" means the loan and guarantee
                    facility made available to the Indemnifier pursuant to the
                    Amended and Restated Loan Agreement.

          1.1.5     "Amended and Restated Loan Agreement" means the amended and
                    restated loan and guarantee facility agreement dated 9 July
                    2002 made between the Indemnifier, the Guarantor, the banks
                    listed in schedule 1 thereto as lenders and Nordea Bank
                    Norge ASA, Grand Cayman Branch as agent and security
                    trustee.

          1.1.6     "the Assignments" means the deeds of assignment of the
                    Insurances, Earnings and Requisition Compensation in respect
                    of each Vessel referred to in Clause 10.2.1 and 10.2.2 (as
                    the case may be) (each an "Assignment").

          1.1.7     "Avenir Vessel" means m.v. "STOLT AVENIR" referred to in
                    Schedule 2.

          1.1.8     "Bank Guarantees" means the bonds, guarantees or letters of
                    credit (including the Dolphin Bank Guarantees and the Dalia
                    Bank Guarantees)

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                    each issued in a Permitted Currency in respect of certain
                    performance obligations of members of the SO Group and,
                    other than in relation to the Dalia Bank Guarantees which
                    shall expire on 31 July 2007 and 31 July 2008 respectively,
                    expiring on the earlier to occur of the Guarantee
                    Termination Date and a date falling thirty nine (39) months
                    after its Issue Date, in a form acceptable to and approved
                    by the Agent in its absolute discretion (each a "Bank
                    Guarantee").

          1.1.9     "Bank Guarantee Outstandings" means at any time the total
                    amount actually or contingently payable by the Agent under
                    or pursuant to the Bank Guarantees issued by the Agent.

          1.1.10    "Bank's Obligations" means all liabilities and obligations
                    of the Agent under or pursuant to the Bank Guarantees or
                    under or pursuant to any renewal, extension or variation of
                    any Bank Guarantee, and all liabilities and obligations
                    undertaken by the Agent to any of its subsidiaries,
                    affiliates or correspondents in respect of the Bank
                    Guarantees or any renewal, extension or variation of the
                    Bank Guarantees or any of them.

          1.1.11    "Barge Vessels" means those Vessels listed in Schedule 2
                    owned by Stolt-Nielsen Inland Tanker Service Bv.

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

          1.1.13    "Cash Collateral" means the sum of twenty three million four
                    hundred and ninety five thousand five hundred and sixty
                    three Dollars and sixty five cents ($23,495,563.65)
                    deposited by the Indemnifier with the Agent pursuant to a
                    guarantee facility letter in relation to the Dalia Bonds and
                    the Dolphin Bonds dated 1 July 2003.

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

          1.1.15    "Change of Control" means that SNSA shall cease, for any
                    reason whatsoever, to own or control directly or indirectly,
                    shares of the Guarantor representing at least 51% of all
                    votes capable of being represented in any shareholders'
                    meeting of the Guarantor or if any shareholder or group of
                    shareholders acting in concert outside SNSA at any time own
                    or control, directly or indirectly, more of the issued
                    voting shares determined, on a per vote basis, of the
                    Guarantor than those owned by SNSA.

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

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

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

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

                                        4
<PAGE>

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

          1.1.21    "converted" means actually or notionally (as the case may
                    require) converted by the Agent, at the rate at which the
                    Agent, in accordance with its usual practice, is able in the
                    London Interbank market to purchase the Permitted Currency
                    in which the Facility or part thereof is then denominated
                    with the Permitted Currency in which the Facility or part
                    thereof is to be denominated, on the second Business Day
                    before the value date for that conversion pursuant to Clause
                    5, and the words "convert" and "conversion" shall be
                    interpreted accordingly.

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

          1.1.23    "Dalia Bank Guarantees" means the Bank Guarantees issued by
                    the Agent on 11 July 2003 in relation to the Dalia Project
                    and expiring on 31 July 2007 and 31 July 2008 respectively.

          1.1.24    "Dalia Guarantee Amount" means the total aggregate amount
                    for which the Agent is liable under the Dalia Bank
                    Guarantees.

          1.1.25    "Dalia Project" means the various joint venture projects
                    entered into by (inter alios) the Guarantor relating to the
                    engineering, procurement, supply, construction and
                    commissioning of FPSO Topsides for the tapping of Dalia oil
                    Block 17 in Angola.

          1.1.26    "D/EBITDA" means the ratio of Consolidated Debt to EBITDA.

          1.1.27    "Default Rate" means the rate of four point two five per
                    centum (4.25%) per annum above three month LIBOR.

                                       5

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

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

          1.1.30    "Dolphin Bank Guarantees" means two bid bonds each dated 28
                    May 2003 issued by the Agent in favour of Dolphin Energy
                    Limited for a total aggregate amount of one million five
                    hundred thousand Dollars ($1,500,000).

          1.1.31    "Dolphin Guarantee Amount" means the total aggregate amount
                    for which the Agent is liable under Dolphin Bank Guarantees.

          1.1.32    "Earnings" means all hires, freights, pool income and other
                    sums payable to or for the account of the Shipowning
                    Guarantors and any Qualifying Guarantor(s) in respect of the
                    Vessels including (without limitation) all remuneration for
                    salvage and towage services, demurrage and detention moneys,
                    contributions in general average, compensation in respect of
                    any requisition for hire and damages and other payments
                    (whether awarded by any court or arbitral tribunal or by
                    agreement or otherwise) for breach, termination or variation
                    of any contract for the operation, employment or use of the
                    Vessels.

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

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

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

                                       6

<PAGE>

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

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

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

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

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

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

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

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

          1.1.44    "Guarantee Commission" means the guarantee commission to be
                    paid by the Indemnifier to the Agent pursuant to Clause
                    9.1.

          1.1.45    "Guarantee Commitment" means, in relation to each Bank, the
                    amount of the Guarantee Facility which that Bank agrees to
                    reimburse to the Agent as its several liability as indicated
                    against the name of that Bank in Schedule 1, as reduced from
                    time to time in accordance with Clause 2.5, Clause 2.6,
                    Clause 2.7 and/or Clause 2.9 (as the case may be).

                                        7
<PAGE>

          1.1.46    "Guarantee Facility" means the bank guarantee issuance
                    facility made available by the Agent and the Banks to the
                    Indemnifier pursuant to this Agreement.

          1.1.47    "Guarantee Facility Amount" means the amount of the
                    aggregate Guarantee Commitments (stated in Dollars) subject
                    to any reductions effected in accordance with Clauses 2.5,
                    2.6, 2.7 and/or 2.9.

          1.1.48    "Guarantee Availability Termination Date" means 30 November
                    2003 or such later date as may be agreed by all Banks.

          1.1.49    "Guarantee Termination Date" means 30 September 2006 in
                    relation to all Bank Guarantees other than the Dalia Bank
                    Guarantees, unless otherwise agreed by all Banks.

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

          1.1.51    "the Indebtedness" means the Bank Guarantee Outstandings;
                    all other sums of any nature including costs (together with
                    all interest on any of those sums) which from time to time
                    may be payable by the Indemnifier to the Finance Parties or
                    any of them pursuant to the Security Documents whether
                    actually or contingently, present or future; any damages
                    payable as a result of any breach by the Indemnifier of any
                    of the Security Documents; and any damages or other sums
                    payable as a result of any of the obligations of the
                    Indemnifier under or pursuant to any of the Security
                    Documents being disclaimed by a liquidator or any other
                    person, or, where the context permits, the amount thereof
                    for the time being outstanding.

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

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<PAGE>

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

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

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

          1.1.56    "Interest" means interest at the Default Rate.

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

          1.1.58    "the Issue Date", in relation to any Bank Guarantee, means
                    the date on which that Bank Guarantee is issued by the Agent
                    pursuant to Clause 2.

          1.1.59    "Issue Request" means a notice complying with Clause 2.2.

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

          1.1.61    "LIBOR" means the rate, rounded to the nearest four decimal
                    places downwards (if the digit displayed in the fifth
                    decimal place is 1, 2, 3 or 4) or upwards (if the digit
                    displaced in the fifth decimal place is 5, 6, 7, 8 or 9)
                    displayed on the telerate page 3750 or, as the case may be,
                    3740 (or such other page or pages which replace(s) either
                    such page for the

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                    purposes of display of offered rates of leading banks, for
                    deposits in the Currency of Account of amounts equal to the
                    amount of the relevant Bank Guarantee Outstandings for a
                    three (3) month period or if there is no such display rate
                    then available for the Permitted Currency for an amount
                    comparable to the relevant Bank Guarantee Outstandings, the
                    arithmetic mean (rounded upwards, if necessary, to the
                    nearest whole multiple of one-sixteenth per centum (1/16%))
                    offered to the Agent and for a three month period by prime
                    banks in the London Interbank Market.

          1.1.62    "the Managers" means any member of the SNSA Group; and/or
                    such other commercial and/or technical managers of the
                    Vessels nominated by the Shipowning Guarantors or any
                    Qualifying Guarantor(s) (as the case may be) as the Agent
                    may in its discretion approve.

          1.1.63    "Management Agreement" means, in relation to any Vessel
                    which is leased to a party outside the SNSA Group, the
                    Management Agreement made between the Managers and the
                    relevant Shipowning Guarantor or any Qualifying Guarantor(s)
                    (as the case may be).

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

          1.1.65    "the Mortgages" means the first priority and/or first
                    preferred mortgages referred to in Clause 10.1.1 and 10.2.1
                    (as the case may be) (each a "Mortgage").

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

          1.1.67    "Original Dollar Amount" means, at any relevant time, the
                    amount of the Guarantee Facility which would then have been
                    outstanding had the Guarantee Facility at all times been
                    denominated, and issued (as the case may be) wholly in
                    Dollars in accordance with Clause 6, or (in the case of any
                    part of the Bank's Obligations) the amount of that part of
                    the Bank's

                                       10
<PAGE>

                    Obligations notionally converted by the Agent from the
                    Relevant Currency into Dollars at the Issue Date of the Bank
                    Guarantee in question.

          1.1.68    "Permitted Currency" means Dollars, the euro, each of the
                    lawful currencies of Norway (namely Norwegian Kroner), the
                    United Kingdom (namely Pounds Sterling) and any other
                    eurocurrency provided that each such currency selected by
                    the Indemnifier is acceptable to the Banks and is freely
                    convertible, transferable and available to the Banks in the
                    London Interbank market.

          1.1.69    "Permitted Indebtedness" means the Existing Loan, the
                    Amended and Restated Loan, Short Term Permitted
                    Indebtedness, Subordinated Debt up to one hundred and fifty
                    million Dollars ($150,000,000), SNSA's Liquidity Line and
                    Additional Permitted Indebtedness.

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

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

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

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

                                       11
<PAGE>

                    more than ten per cent (10%) of the consolidated turnover of
                    the SO Group.

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

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

          1.1.76    "Pro Rata Insurance Proceeds Amount" means, in respect of
                    each Vessel, a figure equal to (x) a fraction in which (i)
                    the numerator is the amount of the insurance proceeds
                    payable in respect of such Vessel in the event of a Total
                    Loss and (ii) the denominator is the aggregate market value
                    of all the Vessels (based on the most recent Valuations)
                    multiplied by (y) the Guarantee Facility Amount.

          1.1.77    "Restructure Date" means the earlier to occur of 30 November
                    2003 and the date on which the financial covenants set forth
                    in clause 12.3 of the Existing Loan Agreement are amended,
                    varied, restated or supplemented.

          1.1.78    "Qualifying Guarantee" means the guarantee and indemnity of
                    the Qualifying Guarantor(s) referred to in Clause 10.2.3.

          1.1.79    "Qualifying Guarantor(s)" means the owner(s) of the
                    Qualifying Vessels acceptable to the Banks.

          1.1.80    "Qualifying Security Documents" means (i) the Mortgages
                    together, where applicable, with collateral deeds of
                    covenant over Qualifying Vessels (ii) Assignments in respect
                    of Qualifying Vessels, (iii) the Qualifying Guarantee and
                    (iv) any other agreement or document as may be acceptable to
                    and approved in writing by the Agent acting on behalf of the
                    Banks, with (i) to (iv) above in each case being duly
                    executed and in form and substance satisfactoiy to the Agent
                    in its absolute discretion.

          1.1.81    "Qualifying Vessels" means vessels which the Banks in their
                    absolute discretion deem to be acceptable security.

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<PAGE>

          1.1.82    "Relevant Currency" means, in respect of all or any part of
                    the Bank's Obligations, the currency in which the Agent is
                    liable to make payment of that part of the Bank's
                    Obligations.

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

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

          1.1.85    "Security Parties" means the Indemnifier, the Guarantor, the
                    Shipowning Guarantors, SNSA, SNTG, the Qualifying
                    Guarantor(s) and any other member of the SO Group who may at
                    any time during the Facility Period be liable for, or
                    provide security for, all or any part of the Indebtedness,
                    and "Security Party" means any one of them.

          1.1.86    "the Shipowners' Guarantee" means guarantee and indemnity of
                    the Shipowning Guarantors referred to in Clause 10.1.3.

          1.1.87    "the Shipowning Guarantors" means the companies listed in
                    Schedule 2 each being incorporated according to the law of
                    the country indicated against its name in Schedule 2 (each
                    "a Shipowning Guarantor").

          1.1.88    "Short Term Permitted Indebtedness" means any indebtedness
                    of the SO Group (other than the Existing Loan, the Amended
                    and Restated Loan and intercompany indebtedness of the SO
                    Group and/or the SNSA Group) incurred for working capital
                    and short term liquidity in an amount of up to seventy five
                    million Dollars ($75,000,000).

                                       13
<PAGE>

          1.1.89    "SMC" means a valid safety management certificate issued for
                    the Avenir Vessel by or on behalf of the Administration
                    pursuant to paragraph 13.4 of the ISM Code.

          1.1.90    "SMS" means a safety management system for the Avenir Vessel
                    developed and implemented in accordance with the ISM Code
                    and including the functional requirements, duties and
                    obligations required by the ISM Code.

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

          1.1.92    "SNSA Guarantee" means the joint and several guarantee and
                    indemnity of SNSA and SNTG referred to in Clause 10.1.4.

          1.1.93    "SNSA Group" means SNSA and its Subsidiaries.

          1.1.94    "SNSA's Liquidity Line" means the committed line of credit
                    in the amount of fifty million Dollars ($50,000,000)
                    extended by SNTG to members of the SO Group for working
                    capital and other corporate purposes for a period ending on
                    or after 30 November 2004, the availability of such
                    committed line of credit to be guaranteed by SNSA.

          1.1.95    "SNTG" means Stolt-Nielsen Transportation Group Ltd being a
                    corporation incorporated and existing accoTding to the laws
                    of Liberia whose registered office is at 80 Broad Street,
                    Monrovia, Liberia.

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

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

          1.1.98    "Subordinated Note" means a note substantially in the form
                    of Appendix C, Part A in respect of Subordinated Debt of up
                    to one hundred million Dollars ($100,000,000) and Part B in
                    respect of Subordinated Debt of fifty million Dollars
                    ($50,000,000).

                                       14
<PAGE>

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

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

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

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

          1.1.103   "Total Loss", in relation to any Vessel means:-

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

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

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

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

                                       15
<PAGE>

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

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

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

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

          1.1.107   "the Trust Property" means:-

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

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

          1.1.108   "US GAAP" means the generally accepted accounting principles
                    in the United States of America, from time to time in
                    effect, subject to any changes in the rules of US GAAP,
                    consistently applied always provided that if the Guarantor
                    wishes to change accounting principles within the applicable
                    rules of US GAAP, the Indemnifier shall notify the Agent of
                    the intention together with an explanation of the effects on
                    the financial covenants contained in this Agreement. Should
                    the Banks, and/or the Guarantor, find that such change will
                    impact upon the result of the calculation of the financial
                    covenants contained in this Agreement, the Banks will,
                    following consultation with the Guarantor, stipulate
                    amendments to the financial covenants so that the ratio of
                    SO Group's performance in respect of the covenants reflects
                    the position which

                                       16
<PAGE>

                    would have been the case had no changes to the Guarantor's
                    accounting principles taken place.

          1.1.109   "Valuation" means in relation to a Vessel, the arithmetic
                    mean of the written valuations of that Vessel expressed in
                    Dollars prepared by two firms of reputable independent
                    shipbrokers, appointed by the Indemnifier and approved by
                    the Agent, unless either the Agent or the Indemnifier
                    disagrees with such arithmetic average, in which event the
                    two shipbrokcrs shall appoint a third firm of reputable
                    independent shipbrokers and the valuation of the Vessel
                    shall be the arithmetic mean of all three such valuations.
                    Such valuations shall be prepared at the Indemnifier's
                    expense, without a physical inspection, on the basis of a
                    sale for prompt delivery for cash at arm's length between a
                    willing buyer and a willing seller without the benefit of
                    any charterparty or other engagement.

          1.1.110   "the Vessels" means (i) the vessels listed in Schedule 2 and
                    (ii) any Qualifying Vessels and in each case everything now
                    or in the future belonging to them on board and ashore (each
                    a "Vessel").

     1.2  Interpretation

          In this Agreement:-

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

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

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

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

                                       17
<PAGE>

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

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

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

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

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

     1.3  Joint and several liability

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

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

          1.3.3     Each of the Indemnifier and the Guarantor agrees that it
                    will not at any time during the Facility Period claim any
                    set-off or counterclaim against

                                       18
<PAGE>

                    the other or against any Surety in respect of any liability
                    owed to it by the other or by any Surety under or in
                    connection with the Security Documents, nor prove in
                    competition with any Finance Party in any liquidation of (or
                    analogous proceeding in respect of) the other or of any
                    Surety in respect of any payment made under the Security
                    Documents or in respect of any sum which includes the
                    proceeds of realisation of any security held by any of the
                    Finance Parties for the repayment of the Indebtedness.

2    The Guarantee Facility

     2.1  Agreement to issue/release Cash Collateral Subject to the terms and
          conditions of this Agreement, and in reliance on each of the
          representations and warranties made or to be made in or in accordance
          with each of the Security Documents, the Agent agrees to (i) issue the
          Bank Guarantees and (ii) release the Cash Collateral to the
          Indemnifier.

     2.2  Mechanics Subject to satisfaction by the Indemnifier of the conditions
          set out in Clause 3.3, the Indemnifier (on behalf of itself or another
          member of the SO Group) may request that the Agent issue a Bank
          Guarantee on a Business Day subject to the Indemnifier having given to
          the Agent not less than seven Business Days' notice in writing
          materially in the form set out in Appendix A of the required Issue
          Date attaching the form of Bank Guarantee to be issued. Upon receipt
          of the form of Bank Guarantee required to be issued together with the
          Issue Request, the Agent, save in relation to the Dalia Bank
          Guarantees and the Dolphin Guarantees (which have already been issued)
          shall decide in its absolute discretion within five Business Days of
          receipt of the Issue Request whether or not to issue that Bank
          Guarantee. The Agent shall not be liable for any loss, cost, claim or
          expense suffered or incurred by any member of the SO Group as a
          consequence of the Agent not issuing any Bank Guarantee so requested.
          Once a Bank Guarantee has been approved by the Agent the Issue Request
          in relation to such Bank Guarantee shall be irrevocable and shall
          constitute a warranty by the Indemnifier that:

          2.2.1     all conditions precedent to the issue of that Bank Guarantee
                    will have been satisfied on or before the Issue Date
                    requested;

                                       19
<PAGE>

          2.2.2     no Event of Default or Potential Event of Default will then
                    have occurred;

          2.2.3     no Event of Default or Potential Event of Default will
                    result from the issue of the Bank Guarantee in question; and

          2.2.4     there has been no material adverse change in the business,
                    affairs or financial condition of any of the Security
                    Parties from that pertaining at the end of the last fiscal
                    quarter for which quarterly reports have been filed by SNSA
                    with the United States Securities and Exchange Commission;
                    provided that if this warranty is made by the Guarantor at
                    any time during the period commencing on the date of this
                    Agreement and ending on the date of the filing of the
                    Guarantor's next quarterly report it shall relate only to
                    material adverse changes occurring when compared with the
                    circumstances disclosed by the Guarantor to (inter alios)
                    the Agent at a Syndicate Bank Briefing held in London and
                    New York on 7 August 2003 in relation to the Guarantor's
                    "Position Update and Blueprint Stage II".

     2.3  Guarantee Availability Termination Date The Agent shall be under no
          obligation to issue any Bank Guarantee after the Guarantee
          Availability Termination Date.

     2.4  Issue of Bank Guarantees Upon (i) receipt of an Issue Request and (ii)
          the issue of each Bank Guarantee the Agent shall promptly notify each
          Bank. From the date of issue of each Bank Guarantee each Bank shall
          assume liability for its Proportionate Share of the Bank's Obligations
          and from the date of issue each Bank Guarantee shall be deemed
          irrevocably and unconditionally to have purchased and received from
          the Agent, without recourse or warranty, an undivided interest and
          participation, to the extent of its Proportionate Share, in each Bank
          Guarantee issued by the Agent. In addition each Bank (in the amount of
          its Proportionate Share) will upon the Agent's first demand, from time
          to time, reimburse the Agent for any sums paid out by the Agent under
          any Bank Guarantee in accordance with Clause 6.

     2.5  Voluntary Reductions The Indemnifier may voluntarily reduce the
          Guarantee Facility Amount in whole or in part in multiples of two
          million Dollars

                                       20
<PAGE>

        ($2,000,000), where applicable provided that it has first given to the
        Agent not fewer than three (3) Business Days' prior written notice
        expiring on a Business Day of its desire to reduce the Guarantee
        Facility Amount. Any such reduction in the Guarantee Facility Amount
        shall not be reversed.

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

     2.7  Total Loss In the event that any Vessel becomes a Total Loss, on the
          date of such Total Loss occurring, the Guarantee Facility Amount shall
          reduce by the Pro Rata Insurance Proceeds Amount in respect of such
          Vessel. Any such reductions in the Guarantee Facility Amount shall not
          be reversed. If, as a result of any reduction in the Guarantee
          Facility Amount pursuant to this Clause the Original Dollar Amount
          exceeds the Guarantee Facility Amount, the Indemnifier shall, on the
          earlier to occur of (a) the one hundred and eightieth day after the
          date of such Total Loss occurring and (b) the date on which the
          relevant Shipowning Guarantor receives the proceeds of such Total
          Loss, prepay such amount of the Original Dollar Amount as will ensure
          that the Original Dollar Amount is not greater than the Guarantee
          Facility Amount. Such amount shall be held by the Agent on account as
          security for the Indebtedness.

     2.8  Guarantee Commitment Simultaneously with any reduction of the
          Guarantee Facility Amount in accordance with Clause 2.5, Clause 2.6,
          Clause 2.7 and/or Clause 2.9 (as the case may be) the Guarantee
          Commitment of each Bank will reduce so that the Guarantee Commitments
          of the Banks in respect of the reduced Guarantee Facility Amount
          remain in accordance with their respective proportionate Shares.

     2.9  Guarantee Facility Amount If at any time during the Facility Period
          the aggregate amount of the Bank Guarantee Outstandings exceeds the
          Guarantee Facility Amount, the Indemnifier shall immediately pay or
          cause to be paid to the Agent a cash amount equal to the difference
          between the Bank Guarantee Outstandings and the Guarantee Facility
          Amount. Such amount shall be held by

                                       21
<PAGE>

          the Agent on account as security for the Indebtedness. The Guarantee
          Facility Amount shall be reduced from time to time by the aggregate of
          Bank Guarantee Outstandings (which for the avoidance of doubt includes
          without limitation the Dalia Guarantee Amount and the Dolphin
          Guarantee Amount). The Guarantee Facility Amount shall be permanently
          reduced by the amount of the Bank's Obligations under each Bank
          Guarantee issued.

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

3    Conditions Precedent and Subsequent

     3.1  Conditions Precedent -- release of Cash Collateral Before the Agent
          shall have any obligation to release the Cash Collateral to the
          Indemnifier, the Indemnifier shall pay to the Agent any relevant fees
          referred to in Clause 9 and deliver or cause to be delivered to or to
          the order of the Agent the following documents and evidence:-

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

          3.1.2     Corporate authorities A copy, certified by a director or the
                    secretary of the Security Party in question as true,
                    complete, accurate and neither amended nor revoked, of a
                    resolution of the directors and (other than the Guarantor) a
                    resolution of the shareholders of each Security Party
                    (together, where appropriate, with signed waivers of notice
                    of any directors' or shareholders' meetings) approving, and
                    authorising or

                                       22
<PAGE>

                    ratifying the execution of, those of the Security Documents
                    (other than the Qualifying Security Documents) to which that
                    Security Party is or is intended to be a party and all
                    mafters incidental thereto.

          3.1.3     Officer's certificate A certificate (i) signed by a duly
                    authorised officer of each of the Security Parties setting
                    out the names of the directors, officers and (other than the
                    Guarantor) shareholders of that Security Party and (ii)
                    issued by each Security Party's company registry confirming
                    due incorporation and valid existence and (when such
                    information is maintained by the registry) the names of its
                    directors and shareholders.

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

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

                    (a)  any time charterparty or bareboat charterparty for its
                         Barge Vessel(s) and the Avenir Vessel which will be in
                         force on the date of this Agreement and which exceeds
                         twelve (12) months duration which is entered into with
                         an entity which is not a member of the SNSA Group;

                    (b)  the Management Agreement(s) relating to its Barge
                         Vessel(s) and the Avenir Vessel which are in force at
                         the time of this Agreement; and

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

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

                                       23
<PAGE>

                    (e)  the current SMC for the Avenir Vessel;

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

                    (g)  its Barge Vessel's/s' current and valid Certificate of
                         Approval and Certificate of Inspection issued by ADNR,

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

          3.1.6     Evidence of ownership In respect of each Barge Vessel and
                    the Avenir Vessel, certificate(s) of ownership and
                    encumbrance (or equivalent) issued by the Registrar of Ships
                    (or equivalent official) at each Barge Vessel's and the
                    Avenir Vessel's port of registry confirming that such Barge
                    Vessel or the Avenir Vessel (as the case may be) is owned by
                    the relevant Shipowning Guarantor and free of registered
                    Encumbrances.

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

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

          3.1.9     Valuations A Valuation of each Barge Vessel and the Avenir
                    Vessel addressed to the Agent evidencing that the aggregate
                    market values of such Vessels are at least equal to 120% of
                    the amount of the Cash Collateral.

          3.1.10    The Security Documents The Security Documents (other than
                    the Qualifying Security Documents), together with all
                    notices and other

                                       24
<PAGE>

                    documents required by any of them, duly executed and, in the
                    case of the Mortgages over the Barge Vessels and the Avenir
                    Vessel, registered with first priority through the Registrar
                    of Ships (or equivalent official) at the port of registry of
                    the Barge Vessels and the Stolt Avenir Vessel.

          3.1.11    Process agent A letter from Stolt Offshore M.S. Limited
                    accepting their appointment by each of the Security Parties
                    as agent for service of Proceedings pursuant to the Security
                    Documents (other than the Qualifying Security Documents).

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

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

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

          3.1.15    Material Adverse Change Evidence that no material adverse
                    change has occurred in the business, assets, operations,
                    conditions (financial or otherwise) or prospects of the
                    Guarantor or its Subsidiaries from that advised by the
                    Guarantor to (inter alios) the Agent at a Syndicate Bank
                    Briefing held in London and New York on 7 August 2003 in
                    relation to the Guarantor's "Position Update and Blueprint
                    Stage II".

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

                                       25
<PAGE>

     3.2  Conditions Subsequent The Indemnifier undertakes to deliver or to
          cause to be delivered to the Agent on, or as soon as practicable
          after, the date on which the Cash Collateral is released to the
          Indemnifier, the following additional documents and evidence:-

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

          3.2.2     Letters of undertaking Letters of undertaking as required by
                    the relevant Security Documents (other than the Qualifying
                    Security Documents) in form and substance acceptable to the
                    Agent.

          3.2.3     Legal opinions Such legal opinions as the Agent on behalf of
                    the Banks shall require pursuant to Clause 3.1.13.

          3.2.4     Companies Act registrations Evidence that the prescribed
                    particulars of the Security Documents (other than the
                    Qualifying Security Documents) have been delivered to (i)
                    the Registrar of Companies of England and Wales (ii) and any
                    other applicable registry, agency or body within the
                    statutory time limit.

          3.2.5     Master's receipts The master's receipt for the Mortgage over
                    the Avenir Vessel.

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

     3.3  Conditions Precedent - first Bank Guarantee Before The Agent shall
          have any obligation to issue the first Bank Guarantee under the
          Guarantee Facility, the Indemnifier shall pay to the Agent the
          relevant fees referred to in Clause 9 and deliver or cause to be
          delivered to or to the order of the Agent the following documents and
          evidence:-

                                       26
<PAGE>

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

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

          3.3.3     Officer's certificate A certificate (i) signed by a duly
                    authorised officer of each of the Security Parties setting
                    out the names of the directors, officers and (other than the
                    Guarantor) shareholders of that Security Party and (ii)
                    issued by each Security Party's company registry confirming
                    due incorporation and valid existence and (when such
                    information is maintained by the registry) the names of its
                    directors and shareholders.

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

          3.3.5     Qualifying Vessel documents Photocopies, certified as true,
                    accurate and complete by a director or the secretary of the
                    Qualifying Guarantor(s) of: -

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<PAGE>

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

                    (b)  the Management Agreement(s) relating to its Qualifying
                         Vessel(s) which is in force at the first Issue Date;
                         and

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

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

                    (e)  where applicable, the current SMC for each Qualifying
                         Vessel;

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

                    (g)  where applicable, its Qualifying Vessel's/s' current
                         and valid Certificate of Approval and Certificate of
                         Inspection issued by ADNR,

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

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

          3.3.7     Evidence of insurance Evidence that each Qualifying Vessel
                    is insured in the manner required by the relevant Qualifying
                    Security Documents and that letters of undertaking will be
                    issued in the manner required by the relevant Qualifying
                    Security Documents, together with (if required by the

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<PAGE>

                    Agent) the written approval of the Insurances by an
                    insurance adviser appointed by the Agent.

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

          3.3.9     Valuations A Valuation of each Qualifying Vessel addressed
                    to the Agent.

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

          3.3.11    Issue Request An Issue Request.

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

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

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

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<PAGE>

          3.3.15    Material Adverse Change Evidence that no material adverse
                    change has occurred in the business, assets, operations,
                    conditions (financial or otherwise) or prospects of the
                    Guarantor or its Subsidiaries from that disclosed by the
                    Guarantor to (inter alios) the Agent at a Syndicate Bank
                    Briefing held in London and New York on 7 August 2003 in
                    relation to the Guarantor's "Position Update and Blueprint
                    Stage II".

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

          3.3.17    Further Assurance Such other documents and evidence as the
                    Agent may require in relation to authorisation, execution,
                    delivery, registration and perfection of the Qualifying
                    Security Documents.

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

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

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

          3.4.3     Legal opinions Such legal opinions as the Agent on behalf of
                    the Banks shall require pursuant to Clause 3.3.14.

          3.4.4     Companies Act registrations Evidence that the prescribed
                    particulars of the Qualifying Security Documents have been
                    delivered to (i) the Registrar of Companies of England and
                    Wales (ii) and any other applicable registry, agency or body
                    within the statutory time limit.

          3.4.5     Management Agreements Within three months of the Execution
                    Date (or such later date as the Agent in its discretion may
                    agree) Management

                                       30
<PAGE>

                    Agreements in relation to all the Qualifying Vessels where
                    such agreements were not delivered to the Agent pursuant to
                    Clause 3.3.5(b).

     3.5  Conditions Precedent -- Subsequent Bank Guarantees Before the Agent
          shall have any obligation to issue any subsequent Bank Guarantee under
          the Guarantee Facility, the Indemnifier shall deliver or cause to be
          delivered to the order of the Agent: -

          3.5.1     an Issue Request, in addition to the documents and evidence
                    referred to in Clauses 3.1 and 3.3 where such documents and
                    evidence have not already been delivered to and received by
                    the Agent; and

          3.5.2     a Valuation of each Vessel addressed to the Agent evidencing
                    compliance with Clause 12.2.2.

     3.6  No waiver If the Agent in its sole discretion agrees to issue any Bank
          Guarantee on behalf of the Indemnifier before all of the documents and
          evidence required by Clause 3.1, Clause 3.3 or Clause 3.5 (as the case
          may be) have been delivered to or to the order of the Agent, the
          Indemnifier undertakes to deliver all outstanding documents and
          evidence to or to the order of the Agent no later than the date
          specified by the Agent, and the issue of any Bank Guarantee shall not
          be taken as a waiver of the Agent's right to require production of all
          the documents and evidence required by Clause 3.1, Clause 3.3 or
          Clause 3.5 (as the case may be).

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

          3.7.1     be in form and substance acceptable to the Agent;

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

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

     3.8  Event of Default The Agent shall not be under any obligation to issue
          any Bank Guarantee nor to act on any Issue Request if, at the date of
          the Issue Request or at the date on which the issue of a Bank
          Guarantee is requested in an Issue Request, an Event of Default or
          Potential Event of Default shall have occurred, or if an

                                       31
<PAGE>

          Event of Default or Potential Event of Default would result from the
          issue of the Bank Guarantee in question.

4    Representations and Warranties

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

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

     4.2  Solvency None of the Security Parties is insolvent or in liquidation
          or administration or subject to any other insolvency procedure, and no
          receiver, administrative receiver, administrator, liquidator, trustee
          or analogous officer has been appointed in respect of any of the
          Security Parties or all or any part of their assets except if such
          insolvency should arise in relation to a Shipowning Guarantor or any
          Qualifying Guarantor(s) (as the case may be) in the circumstances
          where a demand has been made under the Shipowners' Guarantee or the
          Qualifying Guarantee (as the case may be). For this purpose a Security
          Party will be deemed insolvent if it is unable to pay its debts within
          the meaning of S.l23 of the Insolvency Act 1986 save in relation to
          the exception referred to in the previous sentence.

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

                                       32
<PAGE>

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

     4.5  Registrations and consents With the exception only of the
          registrations referred to in Clause 3.2 and in Clause 3.4 (as the case
          may be), all (if any) consents, licences, approvals and authorisations
          of, or registrations with or declarations to, any governmental
          authority, bureau or agency which may be required in connection with
          the execution, deliveiy, performance, validity or enforceability of
          the Security Documents have been obtained or made and remain in full
          force and effect and neither the Indemnifier nor the Guarantor is
          aware of any event or circumstance which could reasonably be expected
          adversely to affect the right of any of the Security Parties (as the
          case may be) to hold and/or obtain renewal of any such consents,
          licences, approvals or authorisations.

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

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

     4.8  No breach of law or contract The execution, delivery and performance
          of the Security Documents will not contravene any contractual
          restriction or any law binding on any of the Security Parties or on
          any shareholder (whether legal or beneficial) of any of the Security
          Parties (other than the Guarantor or SNSA), or the constitutional
          documents of any of the Security Parties, nor result in the

33
<PAGE>

          creation of, nor oblige any of the Security Parties to create, any
          Encumbrance over all or any of its assets, with the exception of the
          Encumbrances created by or pursuant to the Security Documents.

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

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

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

     4.12 Subsidiaries Save as a result of any merger or amalgamation effected
          pursuant to Clause 12.1.4, the Shipowning Guarantors and any
          Qualifying Guarantor(s) are and will remain throughout the Facility
          Period directly or indirectly wholly owned subsidiaries of SNSA.

     4.13 Material Adverse Change There has been no material adverse change in
          the financial condition of the Indemnifier or the Guarantor from that
          disclosed by the Guarantor to (inter alios) the Agent at a Syndicate
          Bank Briefing held in London and New York on 7 August 2003 in relation
          to the Guarantor's "Position Update and Blueprint Stage II".

     4.14 Finance company Status (i) The Indemnifier complies with and shall
          throughout the Facility Period continue to comply (to the extent
          applicable), with the regulations of the Netherlands Ministry of
          Finance dated 1 July 2001 (Vrijsteltrngsregeliflg Wet Toezicht
          Kredietwezen 1992) with respect to finance companies and that the
          application of the Guarantee Facility is and will throughout the
          Facility Period continue to be in accordance with such regulations and
          (ii) all notice requirements to the Dutch central bank pursuant to the
          Foreign Financial Relations Act ("Wet Financiele Betrekkingen
          Buitenland") 1994 (as the

                                       34
<PAGE>

          same may be amended from time to time) have been complied with and
          shall throughout the Facility Period continue to be complied with.

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

     4.16 SNSA's company status That SNSA operates as a milliardaire holding
          company and finance holding company under Luxembourg law pursuant to
          the terms of a letter of "Administration de L'Enregistrement et des
          Domaines" dated 14 September 1984.

5    Currency and Counter Indemnity

     5.1  Currency Fluctuations If on a Commission Payment Date (as defined in
          Clause 9.1) the Agent shall determine that the Equivalent Amount of
          any part of the Bank's Obligations is greater than 100% of the
          Original Dollar Amount of that part of the Bank's Obligations, the
          Indemnifier shall immediately pay or cause to be paid to the Agent on
          behalf of the Banks an amount in the relevant Permitted Currency equal
          to the excess of such Equivalent Amount over such Original Dollar
          Amount, which, in the case of any such payment in respect of the
          Bank's Obligations, shall be held by the Agent as additional security
          in respect of that part of the Bank's Obligations in question and
          released to or to the order of the Indemnifier when the relevant Bank
          Guarantee is cancelled and/or expires without any demand having been
          made.

     5.2  Counter-Indemnity In consideration of the Agent agreeing to issue each
          Bank Guarantee, the Indemnifier unconditionally and irrevocably
          agrees:

          5.2.1     Indemnity at all times as a continuing security to keep the
                    Agent indemnified in the Relevant Currency against all
                    demands, claims, payments, costs, liabilities, damages,
                    losses, proceedings and expenses incurred or suffered by the
                    Agent directly or indirectly by reason of or in connection
                    with the Bank's Obligations;

          5.2.2     Evidence of termination/reduction to supply the Agent
                    promptly with such evidence as the Agent may reasonably
                    require of the termination or reduction of the Agent's
                    liability under the Bank's Obligations; and

                                       35
<PAGE>

          5.2.3     Payments and Interest to pay to the Agent on demand from
                    time to time all amounts payable by the Indemnifier under
                    Clause 5.2.1 with Interest on each of those amounts from the
                    date of the Agent's payment until the date of the
                    Indemnifier's payment to the Agent, before or after any
                    relevant judgment.

     5.3  Counter Indemnity Notification The Agent shall notify the Indemnifier
          each time it receives a demand under a Bank Guarantee specifying the
          amount the Agent is required to pay under such Bank Guarantee. Upon
          receipt of such notification the Indemnifier shall indemnify the Agent
          for the amount specified in accordance with Clause 5.2.

6    Authority to pay

     6.1  Direction to pay The Indemnifier irrevocably directs the Agent to make
          such payments and comply with such demands or claims made on the Agent
          in respect of or purporting to be in respect of the Bank's Obligations
          as the Agent in its absolute discretion (but acting always in good
          faith) thinks fit without any reference to or further authority or
          direction from the Indemnifier, or any necessity to obtain the
          Indemnifier's confirmation or verification, and notwithstanding that
          the Indemnifier may have disputed the Agent's liability to pay or
          comply or that all or any part of the Bank's Obligations may not
          legally exist or be legally binding on the Agent. The Indemnifier
          agrees that the Agent may treat the Bank's Obligations as payable on
          first demand and that any such payment or compliance or purported
          compliance by the Agent shall as between the Agent and the Indemnifier
          be conclusive evidence that the Agent was liable to make the payment
          or comply with the demand or claim.

     6.2  Underlying transaction The Indemnifier agrees that the Agent shall be
          concerned only with the demand or claim made on it and, where a demand
          or claim must be accompanied by any other document, with any such
          document, in each case as presented to the Agent, and not with any
          transaction to which the demand, claim or document relates, or as to
          whether the payment demanded or the claim made was in fact due.

     6.3  Propriety of demand The Agent shall be entitled to rely without
          further enquiry on any demand, claim, document or communication
          believed by it to be genuine and correct and to have been signed or
          otherwise executed or made by the proper

                                       36
<PAGE>

          person. In particular, but without limitation, the Agent shall not be
          obliged to investigate the propriety of any such demand, claim,
          document or communication or the authority or identity of the person
          producing, claiming, signing or making such demand, claim, document or
          communication.

     6.4  Funding and cash cover The Indemnifier undertakes at any time (i)
          after the occurrence and during the continuation of an Event of
          Default and/or (ii) a Change of Control occurs, to pay to the Agent or
          to its order on demand the amount specified in that demand (in the
          currency so specified):-

          (a)  to give the Agent cash cover for all or (if the Agent so
               specifies) part of the amount of the Bank's Obligations; and/or

          (b)  to put the Agent in funds to make a payment which the Agent is
               authorised by this Agreement to make in connection with the
               Bank's Obligations,

          provided that any monies received by the Agent pursuant to this Clause
          or Clause 14.1 in excess of the amount of the Bank's Obligations due
          and owing at that time (the "Excess Amount") shall be held by the
          Agent by way of retention on account of the Indebtedness in accordance
          with Clause 15.4. The Agent may in its sole discretion release the
          Excess Amount to the Indemnifier if the relevant Event of Default has
          been remedied and no other Event of Default or Potential Event of
          Default has occurred or is in existence at such time.

     6.5  Security over funding/cash cover The Indemnifier undertakes, at its
          own expense, to execute such documents as the Agent may require in
          order to create or perfect in the Agent's favour a restriction on
          withdrawal or repayment of any amount paid by the Indemnifier under
          Clause 6.4 and/or a security in or over such amount, in each case to
          secure or support the Indemnifier's liabilities to the Agent under
          this Agreement.

     6.6  Currency The Agent may, if called on to make a payment or to comply
          with a demand or claim in connection with the Bank's Obligations,
          purchase in accordance with its usual practice the amount of the
          Relevant Currency necessary to make that payment or to comply with
          that demand or claim (unless the Agent has already been put in funds
          by the Indemnifier pursuant to Clause 6.4).

                                       37
<PAGE>

7    Interest

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

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

8    Guarantee and Indemnity

     8.1  The Indemnifier's Obligations

          In consideration of the agreement of the Agent and the Banks to make
          the Guarantee Facility available to the Indemnifier, the Guarantor:-

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

          8.1.2     agrees, as a separate and independent obligation, that, if
                    any of the Indemnifier's Obligations are not recoverable
                    from the Guarantor under Clause 8.1.1 for any reason, the
                    Guarantor will be liable to the Finance Parties as a
                    principal debtor by way of indemnity for the same amount as
                    that for which the Guarantor would have been liable had
                    those Indemnifier's Obligations been recoverable and agrees
                    to discharge its liability under this Clause 8.1.2 on demand
                    together with Interest from the date of demand until the
                    date of payment, both before and after judgement.

     8.2  Continuing Security

          The Guarantee is a continuing security for the full amount of the
          Indemnifier's Obligations from time to time and shall remain in force
          notwithstanding the liquidation of the Indemnifier or any change in
          the constitution of the Indemnifier

                                       38
<PAGE>

         or of any Finance Party or the absorption of or amalgamation by any
         Finance Party in or with any other entity or the acquisition of all or
         any part of the assets or undertaking of any Finance Party by any other
         entity.

     8.3  Preservation of Guarantor's Liability

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

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

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

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

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

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

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

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

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

                                       39
<PAGE>

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

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

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

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

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

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

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

     8.4  Preservation of Banks' Rights

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

40
<PAGE>

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

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

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

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

                    (b)  the Guarantor shall not stand in the place of, or be
                         subrogated for, any of the Finance Parties in respect
                         of any security nor take any step to enforce any claim
                         against the Indemnifier or any Surety (or the estate or
                         effects of any such person) nor claim or exercise any
                         right of set off or counterclaim against the
                         Indemnifier or any Surety nor make any claim in the
                         bankruptcy or liquidation of the Indemnifier or any
                         Surety in respect of any sums paid by the Guarantor to
                         the Finance Parties or any of them or in respect of any
                         sum which includes the proceeds of realisation of any
                         security at any time held by the Finance Parties or any
                         of them in respect of all or any part of the
                         Guarantor's Liabilities; and

                                       41
<PAGE>

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

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

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

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

     8.5  Other Security

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

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9    Fees

     9.1  Guarantee Commission The Indemnifier shall pay to the Agent a
          guarantee commission calculated at the rate of (i) one point six two
          five per centum (1.625%) per annum in respect of any Bank Guarantee
          expiring on a date falling on or less than thirty nine (39) months
          after its Issue Date or (ii) two point five per centum (2.5%) per
          annum in respect of any Bank Guarantee expiring on a date falling more
          than thirty nine (39) months after its Issue Date (the "Guarantee
          Commission") on the maximum amount for which each Bank Guarantee is
          issued. The Guarantee Commission will accrue from day to day on the
          basis of a 360 day year and the actual number of days elapsed and
          shall be paid quarterly in arrears with a first payment due on the
          date which is three months after the date of the issue of the first
          Bank Guarantee and a final pro rata payment on the last day of the
          Facility Period (each a "Commission Payment Date").

     9.2  Guarantee Commitment Commission The Indemnifier shall pay to the Agent
          a guarantee commitment commission equal to nought point seven three
          one two five (0.73125%) payable on the daily unissued portion of the
          Guarantee Facility available for issuance from the date of this
          Agreement. Such guarantee commitment commission will accrue from day
          to day on the basis of a 360 day year and the actual number of days
          elapsed and shall be paid quarterly in arrears. The first payment
          shall be due on 1 November 2003 and a final pro rata payment shall be
          due on the last day of the Facility Period.

     9.3  Bank Guarantee Issue Fee The Indemnifier shall pay to the Agent on the
          date of issue of each Bank Guarantee an issue fee equal to nought
          point three five per cent (0.35%) of the amount for which each Bank
          Guarantee is issued. Nought point one per cent (0.10%) of each such
          issue fee shall be for the sole account of the Agent.

10   Security Documents

     10.1 As security for the repayment of the Indebtedness, the Indemnifier
          shall execute and deliver to the Agent or cause to be executed and
          delivered to the Agent, on or before the date on which the Cash
          Collateral is released to the Indemnifier the following Security
          Documents in such forms and containing such terms and conditions as
          the Agent shall require:-

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<PAGE>

          10.1.1    the Mortgages a first priority or first preferred mortgage
                    over each Barge Vessel and the Avenir Vessel;

          10.1.2    the Assignments a deed of assignment of the Insurances,
                    Earnings and Requisition Compensation of each Barge Vessel
                    and the Avenir Vessel;

          10.1.3    the Shipowners' Guarantee the guarantee and indemnity of the
                    Shipowning Guarantors; and

          10.1.4    the SNSA Guarantee the joint and several guarantee and
                    indemnity of SNSA and SNTG.

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

          10.2.1    the Mortgages a first priority or first preferred mortgage
                    over each Qualifying Vessel;

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

          10.2.3    the Qualifying Guarantee the guarantee and indemnity of the
                    Qualifying Guarantor(s); and

          with such other Security Documents as the Agent may require in its
          absolute discretion.

11   Agency and Trust

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

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<PAGE>

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

          11.2.1    to give or withhold any consents or approvals;

          1l.2.2    to exercise, or refrain from exercising, any discretions;
                    and

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

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

     11.3 Trust The Agent agrees and declares, and each of the Banks
          acknowledges, that, subject to the terms and conditions of this
          Clause, the Agent holds the Trust Property on trust for the Banks, in
          accordance with their respective Proportionate Shares, absolutely.
          Each of the Banks agrees that the obligations, rights and benefits
          vested in the Agent in its capacity as security trustee shall be
          performed and exercised in accordance with this Clause. The Agent in
          its capacity as security trustee shall have the benefit of all of the
          provisions of this Agreement benefiting it in its capacity as agent
          for the Banks, and all the powers and discretions conferred on
          trustees by the Trustee Act 1925 (to the extent not inconsistent with
          this Agreement). In addition:

          1l.3.1    the Agent (and any attorney, agent or delegate of the Agent)
                    may indemnify itself or himself out of the Trust Property
                    against all liabilities, costs, fees, damages, charges,
                    losses and expenses sustained or incurred by it or him in
                    relation to the taking or holding of any of the Trust
                    Property or in connection with the exercise or purported
                    exercise of the rights, trusts, powers and discretions
                    vested in the Agent or any other such person by or pursuant
                    to the Security Documents or in respect of anything else
                    done or omitted to be done in any way relating to the
                    Security Documents; and

                                       45
<PAGE>

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

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

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

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

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

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

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

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

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

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

          11.4.8    agree to amend this Clause 11.4; nor

                                       46

<PAGE>

          11.4.9    agree to amend Clauses 9.1, 13.1 or 19.2.3; nor

          11.4.10   11.4.10 save in relation to the Dalia Bank Guarantees agree
                    to issue any Bank Guarantee where its expiry date exceeds
                    thirty nine (39) months from its Issue Date; nor

          11.4.11   waive or delay delivery of any condition precedent required
                    to be delivered to the Agent pursuant to Clause 3.1.

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

     11.6 Acknowledgement Each of the Banks acknowledges that:

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

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

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

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

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

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<PAGE>

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

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

          11.7.2    the financial condition of any of the Security Parties;

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

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

     11.8 The Agent's rights The Agent may:-

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

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

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

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

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

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<PAGE>

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

     11.9 The Agent's duties The Agent shall:-

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

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

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

    11.10 No deemed knowledge The Agent shall not be deemed to have actual
          knowledge of the falsehood or incompleteness of any representation or
          warranty made or deemed repeated by any of the Security Parties or
          actual knowledge of the occurrence of any Event of Default or
          Potential Event of Default unless a Bank or any of the Security
          Parties shall have given written notice thereof to the Agent.

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

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

                                       49
<PAGE>

          11.12.1   all amounts payable by the Indemnifier to the Agent pursuant
                    to Clause 17.6 or Clause 19 to the extent that those amounts
                    are not paid by the Indemnifier;

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

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

    11.14 Distribution of payments The Agent shall pay promptly to the order of
          each of the Banks that Bank's Proportionate Share of every sum of
          money received by the Agent pursuant to the Security Documents or the
          Mortgagees' Insurances (with the exception of any amounts payable
          pursuant to Clause 9.2 and any amounts which, by the terms of the
          Security Documents, are paid to the Agent for the account of the Agent
          alone or specifically for the account of one or more Banks) and until
          so paid such amount shall be held by the Agent on trust absolutely for
          that Bank.

    11.15 Reimbursement The Agent shall have no liability to pay any sum to a
          Bank until it has itself received payment of that sum. If, however,
          the Agent does pay any sum to a Bank on account of any amount
          prospectively due to it pursuant to Clause 11.14 before it has itself
          received payment of that amount, and the Agent does not in fact
          receive payment within five Business Days after the date on

                                       50

<PAGE>

          which that payment was required to be made by the terms of the
          Security Documents or the Mortgagees' Insurances, the recipient will,
          on demand by the Agent, refund to the Agent an amount equal to the
          amount received by it, together with an amount sufficient to reimburse
          the Agent for any amount which the Agent may certify that it has been
          required to pay by way of interest on money borrowed to fund the
          amount in question during the period beginning on the date on which
          that amount was required to be paid by the terms of the Security
          Documents or the Mortgagees' Insurances and ending on the date on
          which the Agent receives reimbursement.

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

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

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

          11.16.3   the Agent shall treat that payment as if it were a payment
                    by the Security Party in question on account of the sum owed
                    to the Banks as aforesaid and shall account to the Banks in
                    respect of the Excess Amount in accordance with the
                    provisions of this Clause.

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

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<PAGE>

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

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

    11.19 Instructions Where the Agent is authorised or directed to act or
          refrain from acting in accordance with the instructions of the Banks
          or of an Instructing Group each of the Banks shall provide the Agent
          with instructions within five Business Days of the Agent's request
          (which request may be made orally or in writing). If a Bank does not
          provide the Agent with instructions within that period, (I) that Bank
          shall be bound by the decision of the Agent, (ii) that Bank shall have
          no vote for the purposes of this Clause and (iii) the combined
          Proportionate Shares of the other Banks who provided such instructions
          shall be deemed to contribute 100%. Nothing in this Clause shall limit
          the right of the Agent to take, or refrain from taking, any action
          without obtaining the instructions of the Banks if the Agent in its
          discretion considers it necessaly or appropriate to take, or refrain
          from taking, such action in order to preserve the rights of the Banks
          under or in connection with the Security Documents. In that event, the
          Agent will notify the Banks of the action taken by it as soon as
          reasonably practicable, and the Banks agree to ratify any action taken
          by the Agent pursuant to this Clause.

    11.20 Communications Any Communication under this Clause shall be given,
          delivered, made or served, in the case of the Agent (in its capacity
          as Agent or as one of the Banks), and in the case of the other Banks,
          at the address indicated in

                                       52
<PAGE>

          Schedule 1 or such other addresses as shall be duly notified in
          writing to the Agent on behalf of the Banks.

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

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

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

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

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

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

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

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<PAGE>

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

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

12   Covenants

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

     12.1 Negative covenants

          Neither the Indemnifier nor the Guarantor, will:-

          12.1.1    no third party rights without the Banks' prior written
                    consent permit any member of the SO Group to create or
                    permit to arise or continue any Encumbrance on or over all
                    or any part of its assets or undertaking (including, without
                    limitation accounts receivable by that member) except (I)
                    any Encumbrance existing on the date of this Agreement and
                    listed in Appendix B or (ii) any Encumbrance relating to
                    assets which become the property of the SO Group after the
                    date of this Agreement (including accounts receivable
                    attributable thereto where such accounts receivables
                    security interest is ancillary to the security interest in
                    the associated fixed costs as part of an asset based
                    financing) and (iii) Permitted Liens; nor

          12.1.2    chartering without the prior written consent of an
                    Instructing Group, (a) charter any Vessel or permit any
                    Vessel to be chartered on any bareboat charter, or otherwise
                    for a period exceeding (or inclusive of any extension
                    options, capable of exceeding) twelve (12) months) provided
                    that committing a Vessel for several periods, each of less
                    than twelve months but for an aggregated period exceeding
                    (12) months or chartering a Vessel to a member of the SNSA
                    Group for a period in

                                       54

<PAGE>

                    excess of twelve (12) months shall not be deemed to be a
                    breach of this Clause (together the "Permitted Charters") or
                    (b) following the occurrence and during the continuation of
                    an Event of Default, let any Vessel on charter (including a
                    Permitted Charter unless the same was entered into prior to
                    the occurrence of any such Event of Default) or renew or
                    extend any charter or other contract of employment of any
                    such Vessel (nor agree to do so); nor

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

          12.1.4    merger or amalgamation without the prior written consent of
                    an Instructing Group, permit any merger or amalgamation
                    unless (i) the Guarantor, the Indemnifier, a Shipowning
                    Guarantor or any Qualifying Guarantor(s), as the case may
                    be, remains the surviving entity following any such merger
                    or amalgamation (or if the merger or amalgamation involves
                    more than one of the Shipowning Guarantors or Qualifying
                    Guarantor(s) as the case may be, then one of the Shipowning
                    Guarantors or the Qualifying Guarantor(s) (as the case may
                    be) remains the surviving entity) and (ii) such surviving
                    entity is not divested of any

                                       55

<PAGE>

                    material part of the assets or operations of such member of
                    the SNSA Group and (iii) in the case of the Guarantor only,
                    such merger or amalgamation has been approved by a duly
                    passed resolution of the Guarantor's shareholders; nor

          12.1.5    no sale of Vessels/Shipowning Guarantors/Qualifying
                    Guarantor(s) without the prior written consent of the Banks
                    sell or cause to be sold or, dispose or caused to be
                    disposed of in whole or in part, any Vessel, Shipowning
                    Guarantor or Qualifying Guarantor(s) nor agree to do so
                    except where (i) the Guarantee Facility Amount is reduced
                    pursuant to Clause 2.6 or (ii) the sale or disposal, in
                    whole or in part, is made to a member of the SNSA Group who
                    will become a Shipowning Guarantor or Qualifying Guarantor
                    upon the acquisition of such Vessel and who will execute and
                    deliver to the Agent a Shipowners'/Qualifying Guarantee, a
                    Mortgage and an Assignment in respect of such Vessel in
                    substantially the same terms as those Security Documents
                    already executed in favour of and delivered to the Agent
                    which shall be accompanied by such corporate documents and
                    legal opinions as the Agent may request (and upon any sale
                    or disposal of a Shipowning Guarantor, a Qualifying
                    Guarantor or its Vessel such Shipowning Guarantor's or
                    Qualifying Guarantor(s)' obligations under the Security
                    Documents to which it is a party will terminate provided
                    that no Event of Default has occurred and the provisions of
                    Clause 12.1.5(i) or (ii), as the case may, be have been
                    fully complied with) or (iii) any such Vessel is replaced by
                    a similar asset acceptable to the Banks in their sole
                    discretion of equal or greater value.

     12.2 Positive covenants

          12.2.1    Registration of Vessels Each of the Indemnifier and the
                    Guarantor undertakes to procure the maintenance of the
                    registration of the Vessels under the flags and ownerships
                    indicated in Schedule 2 for the duration of the Facility
                    Period unless otherwise approved by an Instructing Group in
                    writing.

          12.2.2    Additional security If and so often as the aggregate of any
                    Valuations of the Vessels plus the value of any additional
                    security (other than cash)

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

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

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

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

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

                    The value of any additional security provided pursuant to
                    this Clause shall be determined by the Agent in its
                    discretion. Provided that, where the Indemnifier has
                    provided additional security pursuant to this Clause, the
                    Indemnifier may request that the Agent obtain new Valuations
                    on a date falling not earlier than six months after the date
                    such additional security was provided. Where requested by
                    the Indemnifier to obtain new Valuations pursuant to this
                    Clause the Agent

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<PAGE>

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

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

                    (a)  its annual unaudited financial statements for each
                         financial year of the Indemnifier ending during the
                         Facility Period, containing (amongst other things) the
                         indemnifier's profit and loss account for, and balance
                         sheet at the end of, each such financial year, prepared
                         in accordance with generally accepted accounting
                         principles and practices applicable to companies
                         incorporated in the Netherlands consistently applied,
                         in each case within one hundred and eighty days of the
                         end of the financial year to which they relate and such
                         financial statements shall accurately and fairly
                         represent the financial condition of the Indemnifier;
                         and

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<PAGE>

                    (b)  on a consolidated basis:-

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

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

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

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

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

                    (f)  the Guarantor's monthly unaudited internal management
                         accounting reports comprising the consolidated
                         statement of profit and loss and the consolidated
                         statement of cashflow as soon as practicable but in any
                         event not later than 35 days after the month end to
                         which they relate; and

                    (g)  a monthly update, within 35 days of month end, on (i)
                         the Guarantor's receivables and/or collections
                         substantially in the form of Appendix F and (ii)
                         projects which have incurred downgrades if and when
                         they exist.

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

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                    given the like information and explanations relating to all
                    other Security Parties.

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

          12.2.6    LSM Code compliance The Indemnifier will:-

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

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

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

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

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

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

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

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

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

          12.2.10   Certificate of Compliance The Indemnifier and the Guarantor
                    shall deliver to the Agent a duly executed Certificate of
                    Compliance ninety (90) days after the end of each fiscal
                    quarter occurring during the Facility Period certifying
                    (inter alia) compliance with the covenants contained in
                    Clauses 12.2.18 and 12.3.

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

          12.2.12   Notification of Event of Default Each of the Indemnifier and
                    the Guarantor will immediately notify the Agent in writing
                    of the occurrence of any Event of Default or Potential Event
                    of Default or any

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                    event which will materially adversely affect the
                    Indemnifier's or the Guarantor's ability to perform its
                    obligations under this Agreement or the ability of any of
                    the other Security Parties or any Principal Subsidiary to
                    perform any of their obligations under any of the Security
                    Documents to which they are a party or may become a party
                    to.

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

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

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

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          12.2.16   Admissibility In Evidence Each of the Indemnifiers and the
                    Guarantor shall on the request of the Agent obtain all
                    necessary authorisations, consents, approvals, licences,
                    exemptions, filings, registrations, recordings and
                    notarisations required or advisable in connection with the
                    admissibility in evidence of the Security Documents or any
                    of them in Proceedings in England or any other jurisdiction
                    in which Proceedings have been commenced.

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

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

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

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

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          12.2.21   Sale of Assets Unless otherwise agreed by an Instructing
                    Group, the sale of assets of the SO Group shall not at any
                    time during each fiscal year falling within the Facility
                    Period exceed seventy five million Dollars ($75,000,000) or
                    the equivalent in any other currency in aggregate.
                    Notwithstanding the foregoing, unless otherwise agreed by an
                    Instructing Group, the maximum cumulative aggregate amount
                    for the sale of assets of the SO Group during the Facility
                    Period shall not exceed one hundred and fifty million
                    Dollars ($150,000,000) or the equivalent in any other
                    currency. In this Clause the sale of assets includes
                    contributing assets to joint ventures. For the purposes of
                    (i) this Clause the value of any asset sold or disposed of
                    shall be deemed to be its market value whether or not such
                    asset was sold on "an arms length basis" and sales of assets
                    within the SO Group shall not be counted and (ii) the second
                    sentence of this Clause only the Facility Period shall be
                    deemed to commence on 3 January 2003.

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

     12.3 Guarantor's Financial Covenants

          12.3.1    Unless otherwise agreed by an Instructing Group, from the
                    date of this Agreement until the Restructure Date the
                    Guarantor shall: -

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

                    (b)  ensure that any inter-company debt due from SNSA or any
                         of its Subsidiaries (not including the SO Group) to the
                         SO Group does not at any one time exceed fifty million
                         Dollars ($50,000,000) in aggregate or its equivalent
                         amount in any other currency provided that, the
                         Guarantor shall procure that no inter-company debt
                         whatsoever shall be advanced to SNSA or any of its

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<PAGE>

                         subsidiaries if an Event of Default or Potential Event
                         of Default has occurred and is continuing;

                    (c)  ensure that SNSA's Liquidity Line (i) shall be fully
                         subordinated to the Facility throughout the Facility
                         Period upon terms and conditions acceptable to the
                         Banks in their sole discretion upon the occurrence of
                         an Event of Default; (ii) shall not exceed $50,000,000
                         in aggregate and (iii) shall not be repaid if an Event
                         of Default or Potential Event of Default has occurred
                         and is continuing or an Event of Default or Potential
                         Event of Default would occur as a result of such
                         repayment.

                         For the purposes of this Clause 12.3.1:-

                         (a)  (i) Subordinated Debt in an amount of up to one
                              hundred and fifty million Dollars ($150,000,000)
                              or the equivalent in any other currency and (ii)
                              SNSA's Liquidity Line shall not be included as
                              Consolidated Debt in the calculation of (i)
                              Consolidated Debt to Consolidated Tangible Net
                              Worth and (ii) D/EBITDA, for covenant calculation
                              purposes but shall be included for the purposes of
                              calculating the applicable Margin and the
                              applicable Premium; and

                         (b)  Subordinated Debt in an amount of fifty million
                              Dollars ($50,000,000) only or the equivalent in
                              any other currency shall be included as part of
                              Consolidated Tangible Net Worth for covenant
                              calculation purposes;

                    (d)  Notwithstanding Clause 12.2.19, the Guarantor shall be
                         permitted to incur additional indebtedness ("Additional
                         Permitted Indebtedness") (i) in an amount of up to the
                         difference between four hundred and forty million
                         Dollars ($440,000,000) and the total available
                         commitments of the lenders under the Existing Loan
                         Agreement at such time and (ii) for acquisitions and/or
                         capital expenditure if on a pro forma basis D/EBITDA
                         does not exceed the ratios specified in clause 12.3.1
                         (c) of the

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                         Existing Loan Agreement and no Event of Default has
                         occurred and is continuing.

          12.3.2    Unless otherwise agreed by the Banks from the Restructure
                    Date until the end of the Facility Period the Guarantor
                    shall comply with such revised and/or additional financial
                    covenants as shall be agreed between (inter alios) the Agent
                    and the Guarantor in relation to the Existing Loan
                    Agreement, subject to such changes thereto as the Banks may
                    require. If no such revised and/or amended financial
                    covenants are agreed in relation to the Existing Loan
                    Agreement on or before the Restructure Date the Guarantor
                    shall comply with such financial covenants as the Banks
                    shall require in relation to this Agreement. On or before
                    the Restructure Date each of the Borrower and the Guarantor
                    undertakes to enter into a supplemental agreement to this
                    Agreement in order formally to set out in writing the terms
                    of the revised and/or amended financial covenants so agreed.
                    Such supplemental agreement shall be in form and substance
                    satisfactory to the Banks in their discretion and shall be
                    accompanied by such legal opinions as the Banks may require.

          12.3.3    The Guarantor agrees that for the six month period ending 31
                    August 2003 its cumulative net reported losses shall not
                    exceed seventy five million Dollars ($75,000,000). In
                    calculating such cumulative net losses, write downs taken on
                    non-financial assets, gains or losses on the sale of
                    non-financial assets and the additional costs of (i)
                    implementing changes to the financial covenants contained in
                    Clause 12.3 (ii) implementing changes to the financial
                    covenants contained in clauses 12.3 of each of the Existing
                    Loan Agreement and the Amended and Restated Loan Agreement
                    and the conversion thereunder of part of the facility into a
                    guarantee facility and (iii) the entry into of the this
                    Agreement (including, without limitation, the additional
                    fees, Premium and interest cost on Subordinated Debt) will
                    not be included.

          12.3.4    The Guarantor covenants that the SO Group will not incur
                    discretionary capital expenditures in excess of four million
                    five hundred thousand Dollars ($4,500,000) for the remainder
                    of the fiscal year commencing 1 June 2003. For the purposes
                    of this Clause, discretionary capital

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                    expenditures are those contemplated by the Guarantor as
                    being included within the $19,500,000 unused discretionary
                    capital expenditures in the Guarantor's forecast dated 31
                    March 2003.

          12.3.5    Each of the Indemnifier and the Guarantor agrees that:-

                    (a)  it will not repay any sums due and owing or any other
                         sums howsoever payable by it under or pursuant to
                         SNSA's Liquidity Line if an Event of Default has
                         occurred and is continuing or an Event of Default or
                         Potential Event of Default would occur as a result of
                         such repayment;

                    (b)  immediately upon receiving monies under or pursuant to
                         SNSA's Liquidity Line it will execute a Promissory Note
                         in the form attached at Appendix E (the "Liquidity
                         Note") and deliver a certified copy of the same to the
                         Agent; and

                    (c)  any funds received by it under or pursuant to SNSA's
                         Liquidity Line shall at all times throughout the
                         Facility Period be fully subordinated to the Facility
                         upon the terms set out in the Liquidity Note.

13   Earnings

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

14   Events Of Default

     14.1 The Agent's rights If any of the events set out in Clause 14.2 occurs,
          and such event remains unremedied for fourteen (14) days after notice
          thereof has been given by the Agent to the Indemnifier (except in
          relation to any of the events described in Clauses 14.2.1, 14.2.2,
          14.2.4, 14.2.5, 14.2.6, 14.2.12, 14.2.18 and 14.2.22 where such remedy
          period shall not apply) the Agent may at its discretion by notice to
          the Indemnifier declare the Banks and the Agent to be under no
          further obligation to the Indemnifier under or pursuant to this
          Agreement and may declare all or any part of the Indebtedness
          (including such unpaid interest as shall

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          have accrued) to be immediately payable, whereupon the Indebtedness
          (or the part of the Indebtedness referred to in the Agent's notice)
          shall immediately become due and payable without any further demand or
          notice of any kind.

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

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

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

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

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

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

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

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

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

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

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

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

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

          14.2.8    conditions subsequent if any of the conditions set out in
                    Clauses 3.2 and 3.4 is not satisfied within the time
                    reasonably required by the Agent with respect to the
                    conditions referred to at Clauses 3.2.1 to 3.2.5 and 3.4.1
                    to 3.4.4 inclusive and within twelve (12) months with
                    respect to the conditions referred to at Clauses 3.2.6 and
                    3.4.5, except where such

                                       69
<PAGE>

                    condition has not been satisfied due to an act or omission
                    on the part of a Finance Party; or

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

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

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

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

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

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                    (c)  payment of all insurance proceeds in respect of the
                         Total Loss (as required by Clause 2.7) is made in full
                         to the Agent on behalf of the Banks in accordance with
                         Clause 2.7; or

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

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

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

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

          14.2.16   notice of termination if the Guarantor, either of the
                    Shipowning Guarantors, any Qualifying Guarantor, SNSA or
                    SNTG gives notice to the Agent to determine its obligations
                    under the Guarantee, the Qualifying Guarantee, the
                    Shipowners' Guarantee or the SNSA Guarantee, as appropriate;
                    or

          14.2.17   claim against the Guarantor's, SNSA's or SNTG's assets
                    except for Permitted Liens, if a maritime or other lien,
                    arrest distress or similar charge is levied upon or against
                    any Vessel or any substantial part of the

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                    assets of the Guarantor or SNSA or SNTG (on a consolidated
                    basis) and such is not discharged within fourteen (14)
                    Business Days after any Security Party or Principal
                    Subsidiary (as the case may be) has become aware of the
                    same; or

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

          14.2.19   ownership if(i) the Indemnifier ceases to be 100% directly
                    owned by Stolt Offshore A/S or 100% indirectly owned by the
                    Guarantor and (ii) either of the Shipowning Guarantors or
                    any Qualifying Guarantor ceases to be 100% directly or
                    indirectly owned by SNSA; or

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

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

          14.2.22   cross default if there occurs any Event of Default (as that
                    expression is defined in each of the Existing Loan Agreement
                    and the Amended and Restated Loan Agreement) under the
                    Existing Loan Agreement and/or the Amended and Restated Loan
                    Agreement.

15   Set-Off and Lien

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

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          branch of any of the Finance Parties in or towards satisfaction of the
          Indebtedness and, in the name of that Finance Patty, the Indemnifier
          or the Guarantor (as the case may be), to do all acts (including,
          without limitation, converting or exchanging any currency) and execute
          all documents which may be required to effect such application.

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

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

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

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

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

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

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

16   Assignment and Sub-Participation

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

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

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

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

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          Transfer Certificate and the fifth Business Day after the date of
          delivery of such Transfer Certificate to the Agent:

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

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

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

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

     16.6 Notification The Agent shall promptly notify the other Finance
          Parties, the Transferee and the Indemnifier on the execution by it of
          any Transfer Certificate

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          together with details of the amount transferred, the Transfer Date and
          the parties to such transfer.

17   Payments, Mandatory Prepayment, Reserve Requirements and Illegality

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

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

     17.3 Grossing-up If at any time any law requires (or is interpreted to
          require) the Indemnifier or the Guarantor to make any deduction or
          withholding from any payment, or to change the rate or manner in which
          any required deduction or withholding is made, the Indemnifier or the
          Guarantor (as the case may be) will promptly notify the Agent and,
          simultaneously with making that payment, will pay to the Agent
          whatever additional amount (after taking into account any additional
          Taxes on, or deductions or withholdings from, or restrictions or
          conditions on, that additional amount) is necessary to ensure that,
          after making the

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          deduction or withholding, the Agent and the Banks receive a net sum
          equal to the sum which they would have received had no deduction or
          withholding been made.

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

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

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

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

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

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

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

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

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

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          calculation shall be submitted to the Indemnifier and shall be
          conclusive evidence of such amount save for manifest error or on any
          question of law.

     17.7 Illegality and impracticality Notwithstanding anything contained in
          the Security Documents, the obligations of the Agent to issue any Bank
          Guarantee shall terminate in the event that a change in any law or in
          the interpretation of any law by any authority charged with its
          administration shall make it unlawful for that Bank to maintain its
          Guarantee Commitment. In such event the Bank affected shall notify the
          Agent and the Agent shall, by written notice to the Indemnifier,
          declare the Banks' and/or the Agent's obligations (as the case may he)
          to be immediately terminated.

18   Communications

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

          18.1.1    in the case of any of the Finance Parties to the Agent at
                    its address at the head of this Agreement (fax no: + 1 (212)
                    681-3900 marked for the attention of: Sanjiv Nayar; and

          18.1.2    in the case of the Indemnifier and/or the Guarantor to the
                    Communications Address with a copy to McLaughlin & Stern,
                    LLP, 260 Madison Avenue, New York, NY 10016, (fax no: + 1
                    (212) 448-6260) Attention: John E. Greenwood, provided that
                    the failure to deliver such copy shall not affect the rights
                    of any party under this Agreement;

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

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

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

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

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

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

19   General Indemnities

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

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

          19.2.1    the negotiation, syndication, preparation, execution and
                    registration of the Security Documents (whether or not any
                    of the Security Documents are actually executed or
                    registered and whether or not any Bank Guarantee is issued);

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

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

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

     19.3 Events of Default Each of the Indemnifier and the Guarantor shall
          indemnify the Finance Parties from time to time on demand against all
          losses and costs incurred or sustained by any Finance Party as a
          consequence of any Event of Default, including (without limitation)
          any Break Costs.

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

     19.5 Liabilities of Finance Parties Each of the Indemnifier and the
          Guarantor will from time to time reimburse the Finance Parties on
          demand for all sums which

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<PAGE>

          any Finance Party may pay on account of any of the Security Parties or
          in connection with any Vessel (whether alone or jointly or jointly and
          severally with any other person) including (without limitation) all
          sums which any Finance Party may pay or guarantees which any Finance
          Party may give in respect of the Insurances, any expenses incurred by
          any Finance Party in connection with the maintenance or repair of any
          Vessel or in discharging any lien, bond or other claim relating in any
          way to any Vessel, and any sums which any Finance Party may pay or
          guarantees which they may give to procure the release of any Vessel
          from arrest or detention.

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

20   Miscellaneous

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

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

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

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

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

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

     20.7 Advisers The Indemnifier and the Guarantor irrevocably authorise the
          Agent, at any time and from time to time during the Facility Period,
          to consult insurance advisers on any matters relating to the
          Insurances, including, without limitation, the collection of insurance
          claims, and from time to time to consult or retain advisers or
          consultants to monitor or advise on any other claims relating to the
          Vessels. The Indemnifier and the Guarantor will provide such advisers
          and consultants with all information and documents which they may from
          time to time

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          reasonably require and will reimburse the Agent on demand for all
          reasonable costs and expenses incurred by the Agent in connection with
          the consultation or retention of such advisers or consultants.

     20.8 Delegation The Finance Parties may at any time and from time to time
          delegate to any person any of their rights, powers, discretions and
          remedies pursuant to the Security Documents, other than rights
          relating to actions to be taken by an Instructing Group or the Banks
          as a group on such terms as they may consider appropriate (including
          the power to sub-delegate).

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

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

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

     20.12 Security cumulative The security constituted by the Security
          Documents shall be in addition to any other security now or in the
          future held by the Finance Parties or any of them for or in respect of
          all or any part of the Indebtedness, and

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<PAGE>

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

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

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

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

    20.16 Subsequent Encumbrances If the Agent receives notice of any
          subsequent Encumbrance (other than any Encumbrance permitted by the
          terms of this

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          Agreement) affecting any Vessel, or all or any part of the Insurances,
          Earnings or Requisition Compensation, the Agent may open a new account
          in its books for the Indemnifier. If the Agent does not open a new
          account, then (unless the Encumbrance is permitted by the terms of
          this Agreement or the Agent gives written notice to the contrary to
          the Indemnifier) as from the time of receipt by the Agent of notice of
          such subsequent Encumbrance, all payments made to the Agent shall be
          treated as having been credited to a new account of the Indemnifier
          and not as having been applied in reduction of the Indebtedness.

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

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

    20.19 The Bank's Obligations Neither the Agent nor any agent or employee of
          the Agent shall be liable to the Indemnifier for any loss or damage
          arising from any action taken or omitted in relation to the Bank's
          Obligations, unless caused by its or their gross negligence or wilful
          misconduct. In particular, but without limitation, neither the Agent
          nor any agent or employee of the Agent shall be liable for any loss or
          damage arising from any delay, loss, error, omission, variation or
          mutilation in the transmission, translation, coding or decoding of all
          or any part of the Bank's Obligations or any communication in
          connection with the Bank's Obligations.

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

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<PAGE>

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

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

21   Law and Jurisdiction

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

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

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

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

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

                                       87
<PAGE>

SIGNED by                               )
duly authorised for and on behalf       )
of CITIBANK NA.                         )
(as a Bank)                             )
in the presence of:-                    )




SIGNED by                               )
duly anthorised for and on behalf       )
of DEN NORSKE BANK ASA                  )
(as a Bank)                             )
in the presence of: -                   )

SIGNED by                               )
duly authorised for and on behalf       )
of HSBC BANK PLC                        )
(as a Bank)                             )
in the presence of:                     )

SIGNED by                               )
duly authorised for and on behalf       )
of NORDEA                               )
BANK NORGE ASA, Grand Cayman Branch)    )
(as a Bank)                             )
in the presence of:-                    )

SIGNED by                               )
duly authorised for and on behalf       )
of DEN NORSKE BANK ASA                  )
(as the Agent and Security Trustee)     )
in the presence of:-                    )


<PAGE>

SIGNED by                               )
duly authorised for and on behalf       )
of STOLT COMEX                          )
SEAWAY FINANCE B.V.                     )
in the presence of:-                    )

SIGNED by                               )
duly authoriscd for and on behalf       )
of STOLT OFFSHORE S.A.                  )
in the presence of:-                    )