EX-10.2 11 file010.txt FACILITY AGREEMENT DATED SEPTEMBER 25, 2001 Exhibit 10.2 Execution Copy FACILITY AGREEMENT for a U.S.$275,000,000 Facility to STENA INTERNATIONAL B.V. provided by THE CHASE MANHATTAN BANK (OR A SUCCESSOR OR NOMINATED AFFILIATE THEREOF) NORDBANKEN AB (PUBL) SVENSKA HANDELSBANKEN AB (PUBL) HSBC BANK PLC LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND DEN NORSKE BANK ASA SCOTIABANK EUROPE PLC SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) ABN AMRO BANK N.V. NEDSHIP BANK (NORDIC) arranged by J. P. MORGAN PLC NORDBANKEN AB (PUBL) SVENSKA HANDELSBANKEN AB (PUBL) Agent SVENSKA HANDELSBANKEN AB (PUBL) Security Agent SVENSKA HANDELSBANKEN AB (PUBL) Documentation Agents NORDBANKEN AB (PUBL) SVENSKA HANDELSBANKEN AB (PUBL) guaranteed by STENA AB Sinclair Roche & Temperley London Ref: JEF/90034685 CONTENTS
CLAUSE CONTENTS PAGE 1. PURPOSE AND DEFINITIONS....................................................................1 2. THE COMMITMENTS...........................................................................45 3. ADVANCES..................................................................................46 4. INTEREST ON ADVANCES......................................................................47 5. REPAYMENT, REDUCTION AND CANCELLATION.....................................................50 6. FEES, COMMISSION, MARGIN AND EXPENSES.....................................................61 7. PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS.............................................64 8. GUARANTEE AND INDEMNITY...................................................................68 9. REPRESENTATIONS AND WARRANTIES............................................................71 10. UNDERTAKINGS..............................................................................76 11. SHIP AND LINKSPAN COVENANTS : INSURANCE...................................................98 12. SHIP AND LINKSPAN COVENANTS : OPERATION AND MAINTENANCE..................................105 13. COVENANTS IN RESPECT OF THE PORTS........................................................110 14. CONDITIONS...............................................................................115 15. DEFAULT..................................................................................116 16. INDEMNITIES..............................................................................119 17. UNLAWFULNESS AND INCREASED COSTS.........................................................121 18. SET-OFF AND PRO-RATA PAYMENTS............................................................123 19. SECURITY.................................................................................125 20. ASSIGNMENT, TRANSFER AND LENDING OFFICE..................................................131 21. REFERENCE BANKS, CO-ARRANGERS, AGENT AND SECURITY AGENT..................................135 22. NOTICES AND OTHER MATTERS................................................................147 23. GOVERNING LAW AND JURISDICTION...........................................................149
SCHEDULES SCHEDULE 1 THE BANKS AND THEIR COMMITMENTS SCHEDULE 2 THE SHIPS SCHEDULE 3 COMMERCIAL DOCUMENTS SCHEDULE 4 FORM OF DRAWDOWN NOTICE SCHEDULE 5 CONDITIONS PRECEDENT SCHEDULE 6 FORM OF TRANSFER CERTIFICATE SCHEDULE 7.1 FORM OF SHIPOWNER'S GUARANTEE SCHEDULE 7.2 FORM OF PORT OWNER'S GUARANTEE SCHEDULE 8 FORM OF SWEDISH MORTGAGES SCHEDULE 9 FORM OF INSURANCE ASSIGNMENT SCHEDULE 10 FORM OF STATUTORY MORTGAGE NARRATIVE SCHEDULE 11.1 FORM OF DEED OF COVENANT SCHEDULE 11.2 FORM OF DEED OF COVENANT (M.V. "STENA CARISMA" AND HER RELATED LINKSPANS) SCHEDULE 12 FORM OF CHARTERER'S INSURANCE ASSIGNMENT SCHEDULE 13 FORM OF CHARTERER'S SUBORDINATION UNDERTAKING SCHEDULE 14 FORM OF HOLYHEAD CHARGE SCHEDULE 15 FORM OF STRANRAER CHARGE SCHEDULE 16 FORM OF RECEIVABLES ASSIGNMENT (CREDIT SALE) SCHEDULE 17 FORM OF RECEIVABLES ASSIGNMENT (HIRE PURCHASE) SCHEDULE 18 FORM OF MANAGER'S SUBORDINATION UNDERTAKING SCHEDULE 19 FORM OF STENA GERMANICA ASSIGNMENT SCHEDULE 20 SPECIMEN CHARTER COVENANTS AND LOSS PAYABLE CLAUSES SCHEDULE 21 FORM OF ASSET COVERAGE COMPLIANCE CERTIFICATE THIS AGREEMENT is dated 2001 and is made BETWEEN:- (1) STENA INTERNATIONAL B.V. as Borrower; (2) J. P. MORGAN PLC, NORDBANKEN AB (PUBL) AND SVENSKA HANDELSBANKEN AB (PUBL) as Co-Arrangers (for whom Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) act as Documentation Agents); (3) the banks and financial institutions whose names and addresses are set out in Schedule 1 as Banks; (4) SVENSKA HANDELSBANKEN AB (PUBL) as Agent; (5) SVENSKA HANDELSBANKEN AB (PUBL) as Security Agent; and (6) STENA AB as guarantor. IT IS AGREED as follows:- 1. PURPOSE AND DEFINITIONS 1.1 Purpose This Agreement sets out the terms and conditions upon and subject to which the Banks agree, according to their several obligations, to make available to the Borrower a multipurpose corporate facility of up to $275,000,000 to be used for the purpose of enabling the Borrower partly to refinance the Stena Line Revolving Credit Facility. 1.2 Definitions In this Agreement, unless the context otherwise requires:- "ABN STANDBY FACILITY AGREEMENT" means the facility agreement dated 2001 made between Stena Line Scandinavia as borrower and ABN AMRO Bank N.V. as lender pursuant to which ABN AMRO Bank N.V. has agreed to make available to Stena Line Scandinavia an unsecured standby and overdraft facility in the amount of $10,000,000 to be applied partly towards refinancing the existing indebtedness of Stena Line in respect of certain standby facilities provided to it under the Stena Line Revolving Credit Facility; "ADVANCE" means each borrowing of a proportion of the Commitments by the Borrower under Clause 3 or (as the context may require) the principal amount of such borrowing for the time being outstanding; "AFFILIATE" of any specified person means any other person directly or indirectly controlling or controlled by or under direct or indirect common control with any specified person and "AFFILIATES" of Stena AB or any of its Subsidiaries includes, without limitation, any Subsidiary of Stena AB (other than a Wholly Owned Subsidiary of Stena AB) and any Unrestricted Subsidiary so that neither Stena AB nor any Wholly Owned - 2 - Subsidiary of Stena AB shall be deemed an "AFFILIATE" of Stena AB or any Wholly Owned Subsidiary of Stena AB; "AGENT" means Svenska Handelsbanken AB (publ) or such other person as may be appointed agent for the Banks, the Co-Arrangers and the Security Agent pursuant to this Agreement; "APPROVED BROKERS" means, in relation to a Ship or Linkspan, such firm of insurance brokers (if any), appointed by the relevant Shipowner as may from time to time be approved in writing by the Agent for the purposes of this Agreement (such approval not to be unreasonably withheld or delayed); "APPROVED FLAG STATE" has the meaning attributed thereto in Clause 19.5(I); "APPROVED MANAGER" means, in relation to a Ship or Linkspan, Northern Marine Management Limited and/or any other member of the Stena AB Group or such other manager as may be approved by the Agent (such approval not to be unreasonably withheld or delayed) and includes any manager or sub-manager to whom Northern Marine Management Limited or other applicable member of the Stena AB Group or other manager so approved may delegate all or part of its management functions on terms, inter alia, that the manager so delegating such functions remains wholly responsible as principal to the relevant Shipowner or demise charterer in respect of the Ship or Linkspan for the purposes of the relevant management functions; "ASSET COVERAGE COMPLIANCE CERTIFICATE" means the Officer's Certificate to be delivered by Stena AB pursuant to Clause 10.2(F); "ASSET DISPOSITION" by any person means any transfer, conveyance, sale (including any instalment sale or similar arrangement but excluding any sale pursuant to a Sale and Leaseback Transaction), lease (other than pursuant to a charter or operating lease of a Vessel in the ordinary course of business) or other disposition by such person or any of its Subsidiaries (including a consolidation or merger or other sale of any such Subsidiary with, into or to another person in a transaction in which such Subsidiary ceases to be a Subsidiary, but excluding a disposition by a Subsidiary of such person to such person or a Subsidiary of such person or by such person to a Subsidiary of such person) (collectively, a "TRANSFER") of:- (A) shares of Capital Stock (other than directors' qualifying shares and other than pledges permitted under Clause 10.6) or other ownership interests of a Subsidiary of such person; (B) all or substantially all of the assets representing a division or line of business of such person or any of its Subsidiaries; - 3 - (C) a Vessel; or (D) other assets or rights of such person or any of its Subsidiaries outside of the ordinary course of business but solely for the purposes of Clause 10.7, the term "ASSET DISPOSITION" shall not include:- (i) any transfers of properties or assets which in the aggregate do not exceed $5,000,000 in any fiscal year of Stena AB; (ii) any transfer of any properties or assets to an Unrestricted Subsidiary permitted to be made under Clause 10.6 and Section 10.22 (LIMITATION ON UNRESTRICTED SUBSIDIARIES) of each of the Indentures or any corresponding provision in documentation evidencing the terms of any Successor Financing; (iii) the exchange of Capital Stock of a person for Capital Stock of a different class of such person ranking at least pari passu with the Capital Stock being so exchanged as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such person, provided that the Fair Market Value of the shares received in such exchange is not less than that of the Capital Stock to be surrendered in such exchange; and (iv) any sale or transfer pursuant to an arrangement with any lessor, lender, obligee or investor or to which such lessor, lender, obligee or investor is a party providing for the leasing or renting by such person of any property or asset of such person which has been or is being sold or transferred by such person two hundred and seventy (270) days or less after the acquisition thereof, to such lessor, lender, obligee or investor or to any person to whom funds have been or are to be advanced by such lessor, lender, obligee or investor on the security of such property or asset; "AUDITED STENA AB FINANCIAL STATEMENTS" means the consolidated audited annual financial statements of the Stena AB Group and any other entities required to be consolidated in such statements in accordance with any applicable laws; "AUDITED STENA INTERNATIONAL FINANCIAL STATEMENTS" means the consolidated audited annual financial statements of the Stena International Group and any other entities required to be consolidated in such statements in accordance with any applicable laws; "AVAILABILITY DATE" means the first date upon which the conditions referred to in Clauses 14.1 and 14. shall have been fulfilled; "AVAILABILITY PERIOD" means the period from the Availability Date and ending on the Termination Date or the period ending on such earlier date (if any) (i) on which the Borrower cancels all of - 4 - the Commitments under Clause 5.8 or (ii) on which the Commitments of all the Banks are reduced to zero pursuant to Clauses 5.3, 5.6, 5.7,15.2 or 17.1; "AVAILABLE COMMITMENT" means, in relation to a Bank, the amount of its Commitment less the amount of its Contribution; "AVERAGE LIFE" means as of the date of determination with respect to any Debt or other securities or like instruments, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal payment of each such Debt, securities or instruments multiplied by the amount of such principal payment by (ii) the sum of all such principal payments; "BANKING DAY" means a day on which dealings in deposits in Dollars are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) on which banks are open for business in London, Gothenburg and New York City (or any other relevant place of payment under Clause 7); "BANKS" means the banks and financial institutions listed in Schedule 1 and includes their successors in title and assignees and transferees; "BOARD OF DIRECTORS" means either the board of directors of Stena AB (or its relevant Subsidiary) or any duly authorised committee of that board; "BOARD RESOLUTION" means a copy of a resolution certified by Stena AB (or its relevant Subsidiary) to have been duly adopted by its Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Agent; "BORROWER" means Stena International B.V. a company incorporated under the laws of The Netherlands acting through its branch office at Aegeristrasse 52, CH-6300 Zug, Switzerland; "CAPITALISED LEASE OBLIGATION" of any person means:- (A) the obligation to pay rent or other payment amounts under a lease of (or other Debt arrangements conveying the right to use) real or personal property of such person which is, or is required to be, classified and accounted for as a capitalised lease or a liability on the face of a balance sheet of such person in accordance with Swedish GAAP; or (B) the obligation to pay interest, principal, rent or other payment amounts under a financing arrangement pursuant to a Sale and Leaseback Transaction of real or - 5 - personal property of such person which is, or is required to be, classified and accounted for as a "financing" or "financing obligation - sale leaseback" or other liability on the face of a balance sheet of such person in accordance with Swedish GAAP and the Stated Maturity of any such obligation or arrangement shall be the date of the last scheduled payment of rent or any other amount due under such lease or financing arrangement prior to the first date upon which such lease or financing arrangement may be terminated by the lessee or obligor without payment of a penalty; "CAPITAL STOCK" of any person means any and all shares, interests, participations or other equivalents (however designated) or corporate stock of such person; "CASH ASSETS" means cash and/or Cash Equivalents, except to the extent that such cash or Cash Equivalents are used to cash collateralise or otherwise secure any Capitalised Lease Obligation; "CASH EQUIVALENTS" means:- (A) any security issued directly or fully guaranteed or insured by the United States, the Kingdom of Sweden or any OECD government whose securities are readily marketable in London, Frankfurt, Paris or New York City, or any agency or instrumentality thereof; (B) other readily marketable securities having a rating of at least A from Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (C) any Eurodollar time deposit, overnight deposit, certificate of deposit or bankers' acceptance, issued by, or time deposit of, a commercial banking institution which has, on a combined basis, capital, surplus and undivided profits of not less than $250,000,000 and has a Moody's Bank Credit Service rating for short-term bank deposits of at least P-2 (or such similar equivalent rating by a nationally recognised statistical rating organisation as defined in Rule 436 under the Securities Act); (D) repurchase obligations with a term of not more than ninety (90) days for underlying securities of the types described in paragraph (A) above entered into with any commercial banking institution meeting the qualifications specified in paragraph (C) above; (E) short-term commercial paper issued by any person, having one of the top two investment ratings from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (F) investments in money market funds substantially all of whose assets are comprised of securities of the types described in paragraph (A) through (E) above; and - 6 - (G) deposits which are unrestricted as to withdrawal with commercial banking institutions meeting the criteria set forth in paragraph (C) above; "CASUALTY AMOUNT" means $5,000,000 (or the equivalent in any other currency) unless the Agent on the direction of the Majority Banks shall have given notice to the Borrower that a Default shall have occurred and be continuing or that in its opinion there shall have been a material adverse change in the financial condition of the Stena AB Group which may impair the ability of the Borrower or any Security Party to comply with their obligations under any Security Document in which case the Casualty Amount shall be such amount, not however less than $2,000,000, as the Agent shall signify in its notice to the Borrower; "CHARTERER'S INSURANCE ASSIGNMENT" means, in relation to a Mortgaged Ship or Mortgaged Linkspan, any assignment by a Stena Charterer which charters the relevant Ship or Linkspan under a demise or bareboat charter executed or (as the context may require) to be executed by such Stena Charterer pursuant to Clause 11.1 in substantially the form set out in Schedule 12 in favour of the Security Agent or, in relation to m.v. "STENA GERMANICA" (as long as she remains owned by Scandlines subject to the Stena Germanica Mortgage), in favour of the Borrower who, in accordance with the terms of the Stena Germanica Assignment, will forthwith on-assign it to the Security Agent as security for the Outstanding Indebtedness; "CHARTERER'S SUBORDINATION UNDERTAKING" means, in relation to each Mortgaged Ship or Mortgaged Linkspan, an undertaking by a Stena Charterer which charters the relevant Ship or Linkspan under a time charter or a demise or bareboat charter executed or (as the context may require) to be executed by such Stena Charterer pursuant to Clause 11.1 in substantially the form set out in Schedule 13 in favour of the Security Agent or, in relation to m.v. "STENA GERMANICA" (as long as she remains owned by Scandlines subject to the Stena Germanica Mortgage), in favour of the Borrower who, in accordance with the terms of the Stena Germanica Assignment, will forthwith on-assign it to the Security Agent as security for the Outstanding Indebtedness; "CLASSIFICATION" means, in relation to each Ship, the classification set forth against the name of such Ship in Schedule 2 with its Classification Society or other highest classification available for Vessels of the same age and type as the Ship with its Classification Society or such other classification as the Agent shall, at the request of the Borrower, have agreed in writing shall be treated as the Classification of such Ship for the purposes of this Agreement (such agreement not to be unreasonably withheld or delayed); "CLASSIFICATION SOCIETY" means, in relation to any Ship, the classification society set forth against the name of such Ship in Schedule 2 or Lloyds Register of Shipping or Det norske Veritas or Germanischer Lloyd or Bureau Veritas or American Bureau of Shipping or such other classification society which the Agent shall, at the request of the Borrower, have - 7 - agreed in writing shall be treated as its Classification Society for the purposes of this Agreement (such agreement not to be unreasonably withheld or delayed); "CO-ARRANGERS" means J. P. Morgan plc, Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) and includes their respective successors in title and assignees (and all references to the Co-Arrangers shall include Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) in their capacities as Documentation Agents); "COMMERCIAL DOCUMENTS" means the documents listed in Schedule 3 and includes each bareboat charter and management agreement to which a member of the Stena AB Group is a party entered into hereafter in relation to a Mortgaged Ship and the documents regulating each sale hereafter of a Ship on Credit Terms; "COMMITMENT" means, in relation to a Bank, the amount set out opposite its name in Schedule 1 or, as the case may be, in any relevant Transfer Certificate, as reduced by any relevant term of this Agreement; "COMMON STOCK" of any person means Capital Stock of such person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such person, to shares of Capital Stock of any other class of such person; "COMPULSORY ACQUISITION" means requisition for title or other compulsory acquisition, requisition, appropriation, expropriation, deprivation, forfeiture or confiscation for any reason of a Ship or Linkspan by any Government Entity or other competent authority, whether de jure or de facto, but shall exclude requisition for use or hire not involving requisition of title; "CONSOLIDATED CASH FLOW" of any person means for any period:- (A) (i) the Consolidated Operating Income for such period increased by the sum of (without duplication):- (x) dividends or other distributions actually paid in cash or Cash Equivalents to such person by any other person who is not a Subsidiary of such person but only to the extent that such dividends or other distributions are paid in respect of securities classified under "investments in affiliated companies" on the balance sheet of such person; plus (y) consolidated interest income earned by such person during such period; plus (z) to the extent deducted from consolidated revenues in determining Consolidated Operating Income for such period - 8 - and without duplication, consolidated depreciation and amortisation expense included in the income statement of such person for such period and other consolidated non- cash charges included in the income statement of such person for such period minus (ii) the aggregate gain on the disposition of a Vessel or Vessels included in Consolidated Operating Income for such period plus (B) the aggregate gain on the disposition of a Vessel or Vessels included in Consolidated Operating Income for such period, but only to the extent such amount does not exceed twenty five per cent (25%) of the amount calculated pursuant to paragraph (A) of this definition; "CONSOLIDATED INTEREST COVERAGE RATIO" of any person means for any period the ratio of:- (A) Consolidated Cash Flow of such person for such period to (B) the sum of:- (i) Consolidated Interest Expense of such person for such period, plus (ii) the annual interest expense (including the amortisation of debt discount) with respect to any Debt proposed to be Incurred by such person or its Subsidiaries, plus (iii) the annual interest expense (including the amortisation of debt discount) with respect to any other Debt Incurred by such person or its Subsidiaries since the end of such period to the extent not included in paragraph (B)(i) minus (iv) Consolidated Interest Expense of such person to the extent included in paragraph (B)(i) with respect to any Debt that will no longer be outstanding as a result of the Incurrence of the Debt proposed to be Incurred; provided that:- (X) in making such computation, the Consolidated Interest Expense of such person attributable to interest on any Debt bearing a floating interest rate shall be computed on a pro forma basis as if the rate in effect on the date of computation had been the applicable rate for the entire period; and - 9 - (Y) in the event such person or its Subsidiaries has made Asset Dispositions or acquisitions of assets not in the ordinary course of business or of any Vessel (including acquisitions of other persons or Vessels by merger, consolidation or purchase of Capital Stock) during or after such period, such computation shall be made on a pro forma basis as if the Asset Dispositions or acquisitions had taken place on the first day of such period and in the case of the Post-Delivery Financing of a Vessel or Vessels (or the financing of the acquisition of a Single-Purpose Vessel-Owning Subsidiary) by Stena AB or any of its Subsidiaries, the computation of Consolidated Cash Flow for purposes of calculating the Consolidated Interest Coverage Ratio shall be increased by:- (a) the pro forma annual earnings (losses) for such period pursuant to any binding charter, lease or like arrangement which will be applicable to any such Vessel (including a Vessel owned by any such Single-Purpose Vessel-Owning Subsidiary) for at least one year after the date of delivery of such Vessel to Stena AB or any of its Subsidiaries; or (b) with respect to any such Vessel not subject to such an arrangement, the earnings (losses) for such period of the most comparable Vessel of Stena AB or any of its Subsidiaries (as determined in the reasonable judgment of the Board of Directors of Stena AB), or, if Stena AB or any of its Subsidiaries do not have a comparable Vessel, based on industry average earnings for comparable Vessels (as determined in the reasonable judgement of the Board of Directors of Stena AB) during such period; "CONSOLIDATED INTEREST EXPENSE" for any person means for any period the consolidated interest expense included in the consolidated income statement (without deduction of interest income) of such person for such period calculated on a consolidated basis in accordance with Swedish GAAP, including, without limitation or duplication (or, to the extent not so included, with the addition of):- (A) the amortisation of Debt discounts; (B) any commissions, discounts and other fees and charges with respect to letters of credit, bankers' acceptances, payment guarantees or similar facilities; (C) fees with respect to interest rate swap or similar agreements or foreign currency hedge, exchange or similar agreements; (D) Preferred Stock dividends declared and payable in cash; (E) the interest portion of Capitalised Lease Obligations and other deferred payment obligations; - 10 - (F) interest actually paid in respect of any guarantee of Debt or other obligation of any person (other than a consolidated Subsidiary of such person); and (G) all non-cash interest payments; "CONSOLIDATED NET INCOME" of any person means for any period the consolidated net income (or loss) of such person for such period determined on a consolidated basis in accordance with Swedish GAAP, adjusted to the extent included in such consolidated net income by excluding (without duplication):- (A) the net income (or loss) of any person acquired by such person or a Subsidiary of such person in a pooling-of-interests transaction for any period prior to the date of such transaction; (B) the portion of net income (or loss) of any Consolidated Subsidiary allocable to minority interests; (C) the net income (but not net loss) of any Subsidiary of such person which is subject to restrictions which prevent the payment of dividends or the making of distributions to such person to the extent of such restrictions; (D) the net income (or loss) of any person that is not a Subsidiary of such person except to the extent of the amount of dividends or other distributions actually paid to such person by such other person during such period; (E) gains or losses on Asset Dispositions by such person or its Subsidiaries provided that gains or losses on the disposition of a Vessel or Vessels shall be included:- (i) in the case of a sale for cash, Cash Equivalents and/or the assumption of Debt in accordance with paragraph (ii)(z) of Clause 10.7(A), to the full extent of such gain or loss; and (ii) in the case of a sale pursuant to a deferred payment obligation (whether by way of a promissory note or instalment receivable or otherwise), only to the extent of the portion of such gain or loss allocable to such period (based on the life of such deferred payment obligation) and (with respect to gains only) only to the extent payments in respect of such deferred payment obligation are actually received by such person during such period; (F) the amount by which the aggregate gain on the disposition of a Vessel or Vessels exceeds the amounts calculated pursuant to paragraph (B) of the definition of "Consolidated Cash Flow" for such period; and (G) all extraordinary gains and extraordinary losses; - 11 - "CONSOLIDATED OPERATING INCOME" of any person means for any period the income from operations of such person for such period determined on a consolidated basis in accordance with Swedish GAAP, less gains on the disposition of a Vessel or Vessels pursuant to a deferred payment obligation (whether by way of a promissory note or instalment receivable or otherwise), plus the portion of such gain allocable to such period (based on the life of such deferred payment obligation) to the extent payments in respect of such deferred payment obligation are actually received by such person during such period; "CONSOLIDATED TANGIBLE ASSETS" of any person means the sum of the Tangible Assets of such person after eliminating intercompany items, determined on a consolidated basis in accordance with Swedish GAAP, including appropriate deductions for any minority interest in Tangible Assets of such person's Subsidiaries; "CONSOLIDATION" or "CONSOLIDATION" means, with respect to any person, the consolidation of the accounts of such person and each of its Subsidiaries if and to the extent the accounts of such person and each of its Subsidiaries would normally be consolidated with those of such person, all in accordance with Swedish GAAP (in the case of Stena AB) or Dutch GAAP (in the case of the Borrower) and the terms "CONSOLIDATED" and "CONSOLIDATED" shall be construed accordingly provided that, in the computation of the Consolidated Net Income, Consolidated Interest Coverage Ratio, Consolidated Cash Flow, Consolidated Interest Expense, Consolidated Operating Income, Consolidated Tangible Assets and Tangible Assets of Stena AB or any other person, the accounts of any Unrestricted Subsidiary of Stena AB or such other person shall not be included in any such consolidation even if the inclusion of such accounts would be required by Swedish GAAP as in effect at the date of the 2007 Indenture or at any later date and the accounts of no other person shall be included in such consolidation if not required to be so consolidated by Swedish GAAP as in effect on the date of the 2007 Indenture; "CONSTRUCTION FINANCING" means Debt Incurred by Stena AB or any Subsidiary of Stena AB to finance any progress or other similar payments required prior to the delivery of the subject Vessel or Vessels under any Vessel Construction Contract; "CONTRIBUTION" means, in relation to a Bank, the principal amount of the Advances owing to such Bank at any relevant time; "CONTROL" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" shall be construed accordingly; "CREDIT TERMS" means, in relation to an Asset Disposition, terms whereby the whole or part of the consideration for the Asset Disposition is to be paid or provided after the date on - 12 - which the ownership or possession of the relevant asset is transferred to a person which is not a Subsidiary of Stena AB; "DEBT" means (without duplication), with respect to any person, whether recourse is to all or a portion of the assets of such person and whether or not contingent:- (A) every obligation of such person for money borrowed; (B) every obligation of such person evidenced by bonds, debentures, notes or other similar instruments, including obligations Incurred in connection with the acquisition of property, assets or businesses; (C) every reimbursement obligation of such person with respect to letters of credit, bankers' acceptances, payment guarantees or similar facilities issued for the account of such person, other than bonds, letters of credit, payment guarantees or other similar obligations required by governmental or regulatory agencies in connection with Vessels owned by or businesses conducted by Stena AB or any of its Subsidiaries; (D) every obligation of such person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business which are not overdue or which are not being contested in good faith); (E) the maximum fixed redemption or repurchase price of Redeemable Stock of such persons at the time of determination; (F) every Capitalised Lease Obligation of such person; (G) every net obligation under interest rate swap, foreign currency hedge, exchange or similar agreements of such person; and (H) every obligation of the type referred to in paragraphs (A) to (G) above of another person and all dividends of another person the payment of which, in either case, such person has guaranteed or is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, provided that:- (i) guarantees made by any person shall not be deemed "Debt" to the extent that (a) the Debt so guaranteed would be classified and accounted for as Debt on the consolidated balance sheet of such person or (b) both such person and the person whose obligation is being guaranteed are Subsidiaries of Stena AB; and (ii) payment obligations of a person pursuant to a charter or operating lease which does not constitute a Capitalised Lease Obligation shall not be deemed "Debt"; - 13 - (iii) reimbursement obligations of any person with respect to facilities in respect of letters of credit, bankers' acceptances or payment guarantees issued for the account of such person, or obligations of such person in respect of loan facilities the proceeds of which are used as cash collateral, shall not be deemed "Debt" to the extent that any such facility (or the proceeds thereof) is used to fully and irrevocably secure, guarantee or defease the payment of Debt of such person or any of its Subsidiaries (including, without limitation, Debt under a Capitalised Lease Obligation) which is Incurred in connection with the financing of a Vessel or group of Vessels and which is otherwise permitted to be Incurred under this Agreement; "DEED OF COVENANT" means, in relation to a Designated Ship, the deed of covenant collateral to the Ship Mortgage over that Ship (or, in the case of a Linkspan, the Linkspan Mortgage) and entered or (as the context may require) to be entered into between the relevant Shipowner and the Security Agent in the form set out in Schedule 11.1 or, in relation to m.v. "STENA CARISMA" and her related Linkspans, Schedule 11.2 or, in relation to m.v. "STENA GERMANICA", between Scandlines and the Borrower (being the Stena Germanica Deed of Covenant) who will on-assign it to the Security Agent under the Stena Germanica Assignment as security for the Outstanding Indebtedness and "DEEDS OF COVENANT" means all of such deeds of covenant; "DEFAULT" means any Event of Default or any event or circumstance which with the giving of notice or lapse of time or both would constitute an Event of Default; "DESIGNATED SHIP" means each Mortgaged Ship or Mortgaged Linkspan as may from time to time be registered under British or Swedish or Bahamas flag or any flag of any other jurisdiction which requires the registration of a ship mortgage by means of a statutory form and where the Agent determines that a separate Deed of Covenant is required to protect the interest in the Mortgaged Ship or Mortgaged Linkspan (as the case may be) of the Security Agent; "DISPOSAL REDUCTION AMOUNT" has the meaning ascribed thereto in Clause 5.3; "DISPOSAL REDUCTION DATE" means:- (A) in the case of a Total Loss of a Mortgaged Ship, the date which is the earlier of:- (i) the date one hundred and eighty (180) days after such Ship became a Total Loss or such later date as may be agreed by the Agent on the direction of the Majority Banks from time to time if they are satisfied that the relevant Ship was insured at the time of the loss and that the proceeds of the Insurances will be received and applied in accordance - 14 - with the Commercial Documents and the Security Documents within such further period as may be acceptable to the Majority Banks; and (ii) the date upon which insurance proceeds or Requisition Compensation in respect of such Total Loss are received by the Security Agent, the Shipowner or the Stena Charterer in respect of such Ship or a charterer of such Ship by demise which is not a Stena Charterer pursuant to the relevant Security Documents or Commercial Agreements in relation to the relevant Ship; (B) in the case of a Total Loss of a Transferred Ship sold on Credit Terms, the date on which the Total Loss insurance proceeds are received by the seller of the relevant Ship or the Security Agent under the relevant Commercial Documents or, if earlier, the date on which the owner of the relevant Transferred Ship repays in full to the Shipowner the deferred consideration for the relevant Ship; (C) in the case of a sale of a Mortgaged Ship or any share therein, and except where the sale is effected on Credit Terms, the date on which the sale of such Ship or share is completed; (D) in the case of any Transferred Ship which is transferred on terms whereby the relevant Shipowner transfers title to the Ship whilst any part of the deferred consideration therefore remains outstanding (other than in the case of a Total Loss), each of the following:- (i) 31 December 2001 and each date falling at six (6) monthly intervals thereafter until the deferred purchase price of the relevant Ship has been paid in full; (ii) the date of the final payment of the deferred purchase price; (iii) in the case of an enforcement of security given for the purchaser's obligations by way of sale of the Ship, the date or dates on which consideration for the sale of the Ship is paid to the Shipowner or the Security Agent; and (iv) if any such Ship is sold by the buyer thereof before the deferred consideration payable to the Shipowner has been paid in full, the date on which the Shipowner receives payment of the balance of the deferred consideration following such sale; (E) in the case of a Transferred Ship which is disposed of on terms whereby the relevant Shipowner retains title to the Ship until the full amount of the deferred consideration has been paid (other than in the case of a Total Loss), each of the following:- (i) each date falling at six (6) monthly intervals from the date of completion of the Asset Disposition until the deferred consideration for the acquisition of the Ship has been settled in full; and - 15 - (ii) the date of such final settlement; (iii) in case of an enforcement of security for the purchaser's obligations by way of sale of the Ship, the date or dates on which the consideration for the sale of the Ship is paid to the Shipowner or the Security Agent; (iv) if the purchaser or lessee of the Ship defaults under the sale or hire agreement relating to the Ship and the owner thereof withdraws the Ship from such purchaser or lessee and the agreement is validly terminated by the owner or the agreement is terminated by agreement between the parties thereto and the Ship returned to the owner's possession, each date, prior to that on which such Ship again falls to be treated as a Mortgaged Ship for the purposes of this Agreement following repossession by the relevant owner, on which the owner receives any amount by way of damages or payment for the compromise of any legal action relating to the agreement or agreed compensation for termination of the agreement; (F) in the case of a sale of a Mortgaged Port or any part thereof (other than the sale of any part of a Mortgaged Port for a consideration of less than $25,000 or the equivalent thereof in any other currency) the date on which the sale of such Mortgaged Port or part thereof is completed; (G) in the case of a sale of the shares in the capital of any Port Owner, the date on which the sale of such shares is completed; "DISQUALIFIED STOCK" of any person means any Capital Stock of such person which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event:- (A) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise; or (B) is convertible or exchangeable for Debt or Disqualified Stock; or (C) is redeemable at the option of Stena AB, any Subsidiary of Stena AB or the holder thereof, in whole or in part, on or prior to the Termination Date; "DOCUMENTATION AGENTS" means Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) in their capacities as Co-Arrangers responsible for the negotiation and production of this Agreement and the other Security Documents; "DOLLARS" and "$" mean the lawful currency of the United States of America and in respect of all payments to be made under any of the Security Documents mean funds which are for same day settlement in the New York Clearing House Interbank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in U.S. dollars); - 16 - "DRAWDOWN NOTICE" means a notice substantially in the terms of Schedule 4; "DUTCH GAAP" means generally accepted accounting principles in the Kingdom of the Netherlands, consistently applied; "EARNINGS" of a person means, in relation to any Ship, all earnings whatsoever due or to become due to such person including, without limitation, all moneys receivable by such person and arising, in relation to such Ship, out of its hire, compensation for requisition for hire, remuneration for salvage and towage services, demurrage and detention moneys, damages for breach of any charterparty or other contract for employment or amounts payable in consideration of the termination or variation of any such charterparty or contract; "EVENT OF DEFAULT" means any of the events or circumstances described in Clause 15.1; "EXISTING DEBT" of any person means Debt incurred prior to the date of this Agreement which remains outstanding and shall include, without limitation, the aggregate amount of Debt available to be borrowed under committed credit or lease facilities existing on the date of this Agreement less:- (A) principal payments actually made by or on behalf of such person on any term Debt or lease facility under any agreement governing such Existing Debt (other than principal payments made in connection with or pursuant to a refinancing of such Existing Debt agreement); and (B) any amounts by which any revolving credit facility commitment under any Existing Debt agreement is permanently reduced (so long as and to the extent that any required payments in connection therewith are actually made); "FAIR MARKET VALUE" means, with respect to any asset or property, the sale value that would be obtained in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy; "FLAG STATE" means, in relation to any Ship or Linkspan, such state or territory as the Banks may approve pursuant to Clause 19.5, at the request of the Borrower, as being the "Flag State" of such Ship or Linkspan for the purposes of the Security Documents; "GOVERNMENT ENTITY" means and includes (whether having a distinct legal personality or not) any national or local government authority, board, commission, department, division, organ, instrumentality, court or agency and any association, organisation or institution of which any of the foregoing is a member or to whose jurisdiction any of the foregoing is subject or in whose activities any of the foregoing is a participant; - 17 - "GUARANTEE" by any person means any obligation, contingent or otherwise, of such person guaranteeing any Debt of any other person (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including, without limitation, any obligation of such person:- (A) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Debt; (B) to purchase property, securities or services for the purpose of assuring the holder of such Debt of the payment of such Debt; or (C) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt (and "GUARANTEED", "GUARANTEEING" and "GUARANTOR" shall be construed accordingly provided that the guarantee by any person shall not include endorsements by such person for collection or deposit, in either case, in the ordinary course of business); "HOLYHEAD CHARGE" means the English law first fixed legal charge in respect of Holyhead Port to be executed and delivered by Stena Line Ports in favour of the Security Agent in substantially the form set out in Schedule 14; "HOLYHEAD PORT" means all of the freehold and leasehold property belonging to Stena Line Ports at the port of Holyhead, Isle of Anglesey, Gwynedd as is more particularly described in the Holyhead Charge; "INCUR" means, with respect to any Debt or other obligation of any person, to create, issue, incur (by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Debt or other obligation or the recording, as required pursuant to Swedish GAAP or otherwise, of any such Debt or other obligation on the balance sheet of such person (and "INCURRENCE", "INCURRED", "INCURRABLE" and "INCURRING" shall be construed accordingly) provided that a change in Swedish GAAP that results in an obligation of such person that exists at such time becoming Debt shall not be deemed an Incurrence of such Debt and provided that:- (A) Debt of Stena AB or any Subsidiary of Stena AB in respect of the Post-Delivery Financing of Vessels shall be deemed to have been "Incurred" in the full amount of such Post-Delivery Financing only on the date Stena AB (or such Subsidiary) enters into a binding credit or lease commitment in good faith with a lender (or group of lenders) or lessor with respect to such financing; (B) no Debt shall be deemed to have been "Incurred" solely by reason of Stena AB or any Subsidiary of Stena AB entering into a Vessel Construction Contract; - 18 - (C) no Debt shall be deemed to have been "Incurred" solely by reason of the transfer (including, without limitation, by way of novation or assignment and assumption) of Debt secured by a Vessel from a Subsidiary of Stena AB to another Subsidiary of Stena AB in connection with the transfer of such Vessel from the former to the latter (including, without limitation, a transfer effected for the purpose of reflagging such Vessel) provided that such transfer is permitted pursuant to the provisions of clause (H) of the definition of "Permitted Liens"; "INDEBTEDNESS" means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent; "2005 INDENTURE" means the indenture dated as of 20 December 1995 made between Stena AB and The Chase Manhattan Bank (then called Chemical Bank) as trustee in relation to the issue of the 2005 Notes as referred to in the 2005 Prospectus; "2007 INDENTURE" means the indenture dated as of 1 October 1997 made between Stena AB and The Chase Manhattan Bank as trustee in relation to the issue of the 2007 Notes as referred to in the 2007 Prospectus; "INDENTURES" means the 2005 Indenture and the 2007 Indenture and, where the context so requires, means either of them; "INSURANCES" means, in relation to any Ship or Linkspan, all policies and contracts of insurance (which expression includes all entries of such Ship or Linkspan in a protection and indemnity or war risks association) which are from time to time during the Security Period in place or taken out or entered into by or for the benefit of the owner and/or any relevant charterer (or in the joint names of the owner and/or any relevant charterer or other person)(but not any insurances taken out for the sole benefit of a charterer which is not a member of the Stena AB Group) in respect of such Ship or Linkspan or otherwise howsoever in connection with such Ship or Linkspan and all benefits thereof (including claims of whatsoever nature and return of premiums); "INSURANCE ASSIGNMENT" means, in relation to each Owned Ship or Linkspan which is not a Designated Ship, the first priority assignment of all the right, title and interest of the relevant Shipowner in the Insurances and Requisition Compensation thereof executed or (as the context may require) to be executed in the form set out in Schedule 9 in favour of the Security Agent or, in relation to m.v. "STENA GERMANICA" (as long as she remains owned by Scandlines subject to the Stena Germanica Mortgage), in favour of the Borrower who, in accordance with the terms of the Stena Germanica Assignment, will forthwith on-assign it to the Security Agent as security for the Outstanding Indebtedness and "INSURANCE ASSIGNMENTS" means all of such assignments; - 19 - "INVESTMENT" by any person means any direct or indirect loan, advance or other extension of credit (including by way of guarantee or similar arrangement) or capital contribution to (by means of transfers of cash or other property to others or payments for property or services for the account or use of others, or otherwise), or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or evidence of Debt issued by any other person (other than through the exchange or conversion of other securities of such other person pursuant to the terms of such other securities or pursuant to a bona fide plan of liquidation or reorganisation of such other person in satisfaction of trade payable obligations owed from such other person) save that notwithstanding anything to the contrary set forth above:- (A) the receipt by Stena AB or any of its Subsidiaries of a promissory note or like evidence of indebtedness pursuant to an Asset Disposition otherwise permitted under Clause 10.7 (insofar as the receipt of such evidence of indebtedness is deemed to be a loan made by Stena AB or such Subsidiary) shall be deemed not to be an "Investment"; and (B) one or more investments by Stena AB or any of its Subsidiaries in persons whose only assets are a Vessel and property directly related thereto shall be deemed not to be an "Investment"; "ISM CODE" means the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation; "LEGAL OPINIONS" means the legal opinions delivered or, as the case may be, to be delivered to the Agent pursuant to Clause 14.1; "LIBOR" means, in relation to a particular period, the rate per annum for deposits of Dollars for a period equivalent to such period at or about 11.00 a.m. (London time) on the second London Banking Day before the first day of such period as displayed on Reuter page LIBOR 01 (British Bankers' Association Interest Settlement Rates) (or such other page as may replace such page LIBOR 01 on such system or on any other system of the information vendor for the time being designated by the British Bankers' Association to calculate the BBA Interest Settlement Rate (as defined in the British Bankers' Association's Recommended Terms and Conditions ("BBAIRS" terms) dated August, 1985)), provided that if on such date no such rate is so displayed, LIBOR for such period shall be the arithmetic mean (rounded upward if necessary to four decimal places) of the rates respectively quoted to the Agent by each of the Reference Banks at the request of the Agent as such Reference Bank's offered rate for deposits of Dollars in an amount approximately equal to the amount in relation to which LIBOR is to be determined for a period equivalent to such period to prime banks in the London Interbank Market at or about 11.00 a.m. (London time) on the second London Banking Day before the first day of such period; - 20 - "LIEN" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security deposit arrangement, security interest, lien, charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance, preference, priority or other security agreement or preferential arrangement (other than the subordination of inter-Subsidiary Debt to the extent required by a lender or lessor of Stena AB or any of its Subsidiaries) of any kind or nature whatsoever on or with respect to such property or assets (including, without limitation, any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing); "LINKSPAN MORTGAGE" means:- (A) in the case of the two Linkspans named "LINKSPAN I" and "LINKSPAN II" with call signs SFNH and SFNL respectively registered in the Swedish Register of Shipping, the mortgage and first priority pledge of mortgage of such Linkspan to be executed and registered by Stena Line Scandinavia in the form or substantially in the form set out in Schedule 8 together also with the deed of covenant collateral thereto to be executed by Stena Line Scandinavia in the form or substantially in the form set out in Schedule 11.2; (B) in the case of any other Linkspan over which a first priority mortgage is to be executed and, if appropriate, registered by the relevant Shipowner, a mortgage in form and substance acceptable to the Agent but in any event substantially similar to the mortgages and collateral deeds of covenant described in paragraph (A) above; "LINKSPANS" means:- (A) the linkspan named "LINKSPAN I" having call sign SFNH registered in the Swedish Register of Shipping in the ownership of Stena Line and which, prior to drawdown of the first Advance hereunder, is to be transferred into the name of Stena Line Scandinavia, which linkspan is at the date of this Agreement located at Gothenburg and used in connection with the operation of m.v. "STENA CARISMA"; (B) the linkspan named "LINKSPAN II" having call sign SFNL registered in the Swedish Register of Shipping in the ownership of Stena Line and which, prior to drawdown of the first Advance hereunder, is to be transferred into the name of Stena Line Scandinavia, which linkspan is at the date of this Agreement located at Frederikshavn and used in connection with the operation of m.v. "STENA CARISMA"; and (C) any other linkspan owned by a member of the Stena AB Group in relation to which a Linkspan Mortgage or other Lien may be granted to the Security Agent during the Security Period directly or indirectly as security for the obligations of the Borrower under this Agreement - 21 - and "LINKSPAN" means any of them; "LONDON BANKING DAY" means a day on which dealings and deposits in Dollars are carried on in the London Interbank Eurocurrency Market and (other than Saturday or Sunday) a day on which banks are open for business in London; "LOSS PAYABLE CLAUSES" means the provisions regulating the manner of payment of sums receivable under the Insurances of an Owned Ship or a Linkspan which are to be incorporated in the relevant insurance documents, such Loss Payable Clauses to be in the forms set out in the Schedules to the Deed of Covenant and/or Insurance Assignment and/or Charterer's Insurance Assignment and/or Stena Germanica Assignment in relation to the relevant Ship or Linkspan, in the form set out in Schedule 20 or in such other forms as may from time to time be agreed in writing by the Agent; "MAJOR CASUALTY" means an incident or occurrence whereby a Mortgaged Ship sustains damage or is the subject of a claim in excess of the Casualty Amount; "MAJORITY BANKS" means Banks the aggregate of whose Commitments exceed two-thirds (2/3rds) of the aggregate total of the Commitments of all the Banks; "MANAGER'S SUBORDINATION UNDERTAKINGS" means the undertakings in the form of Schedule 18 to be given by each Approved Manager which is a member of the Stena AB Group, on or before the date of drawdown of the first Advance or at the time such Approved Manager is appointed as manager of a Ship or Linkspan after such first drawdown date; "MARGIN" means one per cent (1.00%) (subject to adjustment under Clause 6.7); "MATURITY DATE" in relation to an Advance means, subject to Clause 7.4, the last day of its Term; "MINOR CASUALTY" means an incident or occurrence whereby a Mortgaged Ship sustains damage or is the subject of a claim of the Casualty Amount or less; "MONTH" means a period beginning in one calendar month and ending in the next calendar month on the day numerically corresponding to the day of the calendar month on which it started, provided that (i) if the period started on the last Banking Day in a calendar month or if there is no such numerically corresponding day, it shall end on the last Banking Day in such next calendar month and (ii) if such numerically corresponding day is not a Banking Day, the period shall end on the next following Banking Day in the same calendar month but if there is no such Banking Day it shall end on the preceding Banking Day and "MONTHS" and "MONTHLY" shall be construed accordingly; - 22 - "MORTGAGED LINKSPAN" means, at any relevant time, any Linkspan which is at such time subject to a Linkspan Mortgage; "MORTGAGED PORT" means, at any relevant time, any Port which is at such time subject to a Port Mortgage; "MORTGAGED SHIP" means, at any relevant time, any Owned Ship which is at such time subject to a Ship Mortgage and/or the Insurances and Requisition Compensation of which or sale proceeds or right to receive a rebate of rentals in respect whereof are subject to an Lien pursuant to the relevant Ship Mortgage and Deed of Covenant or any relevant Insurance Assignment or other Security Documents but not including a Transferred Ship (except that, for the purposes of Clauses 11 and 12, the term "MORTGAGED Ship" shall include any Transferred Ship where the ownership of such Transferred Ship is retained by the relevant Shipowner) and an Owned Ship shall for the purposes of this Agreement be deemed to be a Mortgaged Ship as from the date that the Lien in respect of that Ship or rights relating thereto shall have been executed and registered in accordance with this Agreement until whichever shall be the earlier of (i) the release of the Ship Mortgage in respect of such Ship or Total Loss of such Ship and (ii) the end of the Security Period; "NET AVAILABLE PROCEEDS" from any Asset Disposition or Sale and Leaseback Transaction by any person means cash or Cash Equivalents (including, when received, payments (including any related interest payments) in respect of deferred payment obligations pursuant to a promissory note or instalment receivable or otherwise) received (including by way of sale or discounting of a note, instalment receivable or other receivable, but excluding any other consideration received in the form of assumption by the acquirer of Debt or other obligations relating to such properties or assets or received in any other non-cash form) therefrom by such person net of:- (A) all legal, title and recording tax expenses, commissions and other fees and expenses incurred and all federal, state, foreign and local taxes required to be accrued as a liability as a consequence of such Asset Disposition or Sale and Leaseback Transaction; (B) all payments made by such person or its Subsidiaries on any Debt outstanding immediately prior to such Asset Disposition or Sale and Leaseback Transaction which is secured by such assets in accordance with the terms of any Lien upon or with respect to such assets or which must by the terms of such Lien, or in order to obtain a necessary consent to such Asset Disposition or by applicable law, be repaid out of the proceeds from such Asset Disposition or Sale and Leaseback Transaction or by applicable laws, be repaid out of the proceeds from such Asset Disposition or Sale and Leaseback Transaction; and (C) all distributions and other payments required to be made to any person (other than Stena AB or any Subsidiary of Stena AB) owning a beneficial interest in - 23 - the assets subject to such Asset Disposition or Sale and Leaseback Transaction; "NET CASH SALE PROCEEDS" means:- (A) in relation to a Mortgaged Ship and (if relevant) its related Linkspans or share thereof which is sold (otherwise than on Credit Terms), the sale price of such Ship and (if relevant) Linkspans or share received by or on behalf of the relevant Shipowner (after deducting the relevant Shipowner's reasonable costs and out-of-pocket expenses incurred in connection with such sale including reasonable and proper costs of drydocking the relevant vessel and carrying out any repairs on the vessel for the purposes of complying with its obligations under the relevant sale agreement except insofar as the costs of such repairs are covered by insurance for the benefit of the relevant Shipowner); and (B) in relation to a Mortgaged Port or any part thereof, the sale price thereof received by or on behalf of the relevant Port Owner (after deducting the relevant Port Owner's reasonable costs and out-of-pocket expenses incurred in connection with such sale); "NON-RECOURSE DEBT" means Debt or that portion of Debt of any person:- (A) as to which neither Stena AB nor any of its Subsidiaries:- (i) provides credit support (including any undertaking, agreement or instrument which would constitute Debt); or (ii) is directly or indirectly liable (whether pursuant to a guarantee or otherwise) for such Debt; and (B) no default with respect to such Debt (including any rights which the holders thereof may have to take enforcement action against such an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Debt of Stena AB or any Subsidiary of Stena AB to declare a default on such other Debt or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; "2005 NOTEHOLDERS" means the holders from time to time of the 2005 Notes; "2007 NOTEHOLDERS" means the holders from time to time of the 2007 Notes; "2005 NOTES" means the Senior Notes due 2005 issued by Stena AB in an amount of $175,000,000 pursuant to the 2005 Indenture; - 24 - "2007 NOTES" means the Senior Notes due 2007 issued by Stena AB in an amount of $175,000,000 pursuant to the 2007 Indenture; "NOTES" means the 2005 Notes and the 2007 Notes or, where the context so requires, means either of them; "NOTICE OF ASSIGNMENT OF INSURANCES" means, in respect of a Mortgaged Ship or Mortgaged Linkspan, a notice of assignment in the form set out in Schedule 1 to the relevant Deed of Covenant or Schedule 1 to the relevant Insurance Assignment or Schedule 1 to the relevant Charterer's Insurance Assignment or Schedule 5 to the Stena Germanica Assignment (as the case may be), or in such other form as may from time to time be required or agreed in writing by the Agent; "OFFICER'S CERTIFICATE" means a certificate of Stena AB signed by the Chairman of the Board, the Chief Executive Officer, the President or the Chief Financial Officer (or any other officer identified by any of the foregoing officers in an Officer's Certificate to be an executive officer of Stena AB), the Secretary, any Assistant Secretary, the Treasurer, the Financial Manager, any Assistant Treasurer or the Controller of Stena AB; "OPINION OF COUNSEL" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to Stena AB, and who shall be counsel reasonably satisfactory to the relevant trustee under each Indenture (or any applicable Successor Financing); "OUTSTANDING INDEBTEDNESS" means all sums of any kind arising at any time for any reason payable actually or contingently by the Borrower to the Banks, the Co-Arrangers, the Agent, the Security Agent or any of them under this Agreement or any other of the Security Documents (whether by way of repayment of principal, payment of interest or default interest, payment upon any indemnity or counter-indemnity, reimbursement for costs or otherwise howsoever); "OWNED SHIPS" means the Ships specified in Part 1 of Schedule 2 and such other Ships owned by a member of the Stena AB Group as may from time to time be mortgaged to the Security Agent as security for the Borrower's obligations under this Agreement; "PERCENTAGE" as at any date means, in relation to a Bank, the proportion, expressed as a percentage, which the amount of the Commitment of such Bank bears to the total amount of the Commitments of all of the Banks (including such Bank) as at such date and being in relation to each Bank, on the date of this Agreement, the percentage set out against its name in Schedule 1; - 25 - "PERMITTED INVESTMENTS" means:- (A) any Investment in any Cash Equivalent provided that the Average Life of the aggregate of all Cash Equivalents held by Stena AB and its Subsidiaries may not exceed one year at any time; (B) any Related Business Investment in an amount not in excess of the amount of Restricted Payments that Stena AB and its Subsidiaries will be permitted to make under Clause 10.14 immediately prior to the making of such Investment; (C) Investments made after 1 October 1997 in Unrestricted Subsidiaries, Stena Line and Coflexip S.A. and Related Business Investments in an aggregate amount not to exceed:- (i) ten per cent (10%) of Consolidated Tangible Assets plus (ii) the aggregate amount of all moneys from time to time actually received by Stena AB or any of its Subsidiaries in respect of Investments made from time to time pursuant to this paragraph (C) or (in respect of Investments made after 1 October 1997 but before the date of this Agreement) paragraph (iii) of the definition of "Permitted Investments" in the 2007 Indenture, whether such moneys are received as interest or principal payments (in the case of Investments made in the form of loans or other debt instruments or other extensions of credit), as dividends or redemption payments or return of capital (in the case of Investments made in the form of the purchase of Capital Stock or capital contributions) or otherwise, provided that the aggregate amount permitted to be invested pursuant to this sub- paragraph (ii) shall not exceed the aggregate amount of Investments from time to time actually made by Stena AB and its Subsidiaries pursuant to this paragraph (C) or (in respect of Investments made after 1 October 1997 but before the date of this Agreement) paragraph (iii) of the definition of "Permitted Investments" in the 2007 Indenture; plus (iii) the aggregate amount of all Investments made in any person pursuant to this paragraph (C) or (in respect of Investments made after 1 October 1997 but before the date of this Agreement) paragraph (iii) of the definition of "Permitted Investments" in the 2007 Indenture if (and for so long as) any such person becomes a Subsidiary of Stena AB and provided further, that upon giving effect to such Investment, Stena AB could incur at least $1 of additional Debt pursuant to Clause 10.8(A); and (D) other Investments not otherwise permitted to be made pursuant to paragraphs (A) to (C) above, which, together with the then outstanding amount of other Investments made pursuant to this paragraph (D) or (in respect of Investments made after 1 October 1997 but before the date of this Agreement) paragraph (iv) of the definition of "Permitted Investments" in the 2007 Indenture, shall not exceed five per cent (5%) of Consolidated Tangible Assets in aggregate at the time the Investment is made; - 26 - "PERMITTED LIENS" means:- (A) Liens securing only the Notes granted pursuant to Section 10.14 of either Indenture where equivalent Liens are granted to the Security Agent on a pari passu basis as security for the Outstanding Indebtedness; (B) Liens in favour of Stena AB or, with respect to Liens granted by any Subsidiary of Stena AB, in favour of Stena AB or any Wholly Owned Subsidiary of Stena AB; (C) Liens on property existing immediately prior to the time of acquisition thereof (and not created in anticipation of such acquisition); (D) (x) Liens to secure Debt Incurred for the purpose of financing all or any part of the purchase price or the cost of construction or lease (pursuant to a Capitalised Lease Obligation) of a Vessel or other property, or the cost of improvements of a Vessel or other property used in the business of Stena AB and its Subsidiaries and (y) Liens on any Vessel or other property (including, without limitation, the Related Collateral) owned or leased (pursuant to a Capitalised Lease Obligation) by a Subsidiary of Stena AB prior to the time it becomes a Subsidiary of Stena AB to secure Debt Incurred by Stena AB (or any Subsidiary of Stena AB), in an amount not to exceed the Fair Market Value of such Vessel or other property or such Subsidiary, for the purpose of financing (or refinancing) all or part of the acquisition cost of such Subsidiary, but only if such Debt is Incurred within 180 days after the acquisition of such Subsidiary; provided that, with respect to clauses (x) and (y) above:- (i) in the case of a Vessel or Vessels, the principal amount of any Debt secured by such a Lien does not exceed 80% of the Ready for Sea Cost of a Vessel (or, with respect to Debt Incurred under a single financing facility to finance all or part of the purchase price or construction cost of two or more Vessels, the aggregate Ready for Sea Cost of such group of Vessels) or such Fair Market Value (as the case may be) of such Vessel or other property; and provided further that the principal amount of Debt secured by such a Lien may be up to 100% of the Ready for Sea Cost of such Vessel or Vessels if such Debt financing consists of Capitalised Lease Obligations; and provided further that, with respect to any Debt Incurred to finance the replacement of a Vessel as described in Clause 10.8(B)(iv) or 10.9(A), the principal amount of such Debt secured by such Lien may be up to 100% of the Ready for Sea Cost of such replacement Vessel less all compensation, damages or other such payments (including insurance proceeds other than in respect of business interruption insurance, protection and indemnity insurance or other third-party liability insurance) received in connection with a Total Loss in excess of amounts actually used to repay Debt secured by the Vessel subject to the Total Loss; - 27 - (ii) such Liens do not extend to or cover any property other than such Vessel or other property and Related Collateral and any such improvements; (iii) the Incurrence of such Debt is permitted by the provisions of Clause 10.8 and, if applicable, Clause 10.9; and (iv) any such Liens (other than Liens of the type described in paragraph (D) of the definition of "Related Collateral") attach within 180 days after the date of the acquisition or delivery (or completion of such improvements) of such Vessel or group of Vessels or person or other property; (E) Liens on property of a person existing at the time such person is merged into or consolidated with or acquired by Stena AB or any Subsidiary of Stena AB that were not created in anticipation of the acquisition of such person; (F) Permitted Ship Liens and any other Liens in respect of Vessels and Related Collateral arising in the ordinary course of business which, individually or in the aggregate do not materially and adversely affect such Vessel or materially impair the use and operation thereof or the business of Stena AB and its Subsidiaries; (G) Liens to secure obligations under workmen's compensation laws or similar legislation, including Liens with respect to judgments which are not currently dischargeable; (H) Liens to secure Debt Incurred to refinance, in whole or in part, (i) any secured Debt existing on the date of this Agreement or (ii) any Debt secured by Liens referred to in paragraphs (A) to (G) above and paragraphs (J) and (M) below, so long as in each such case the Liens do not extend to any other property (except for the Related Collateral, or other property and Related Collateral secured by Debt which is being concurrently refinanced on a cross-collateralised basis) and the aggregate principal amount of Debt so secured (which amount shall be deemed to include the amount of any undrawn or available amounts under any credit or lease facility to be so refinanced) is not increased (other than as permitted pursuant to Clause 10.8(B)(vi)(a)(y) or Clause 10.9(F)(i)(b) by an amount greater than the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Debt refinanced or the amount of any premium reasonably determined by Stena AB as necessary to accomplish such refinancing by means of a tender offer or privately negotiated repurchase, plus the expenses of Stena AB or any of its Subsidiaries incurred in connection with such refinancing; (I) any Liens securing Debt owing by Stena AB to one or more Wholly Owned Subsidiaries of Stena AB; (J) subject to compliance with sections (i), (iii) and (iv) of paragraph (D) above, a pledge of, or other Lien in respect of, the Capital Stock of a Single-Purpose Vessel-Owning Subsidiary made to secure (i) Debt Incurred by such Single- - 28 - Purpose Vessel-Owning Subsidiary to finance or refinance the acquisition, construction or improvement of a Vessel by such Subsidiary or (ii) Debt Incurred by Stena AB or any Subsidiary of Stena AB to finance or refinance the acquisition of any or all of the Capital Stock of such Single-Purpose Vessel-Owning Subsidiary; (K) Liens in respect of Vessels and Related Collateral otherwise permitted hereunder and incurred solely by reason of the substitution of a new mortgage or other security agreements for an existing agreement (or the novation or assignment of such existing agreement), the effect of which new agreement, novation or assignment is to effect the reflagging of the Vessel or Vessels to which such existing agreement relates; (L) Liens created by this Agreement and the Security Documents; (M) Liens created by the Stena Discovery Facility Agreement and the "Security Documents" referred to therein; (N) a pledge or assignment of a promissory note (or other evidence of indebtedness), or the assignment of a mortgage or other security interest, or guarantee received by or granted to Stena AB or any of its Subsidiaries pursuant to an Asset Disposition to secure the unpaid portion of any Debt of Stena AB or any of its Subsidiaries attributable to the property sold in such Asset Disposition; (O) subject to the limit imposed by Clause 10.6, Liens in respect of Related Collateral and/or other property required to be granted under the terms of an agreement governing Debt of Stena AB or any Subsidiary of Stena AB to provide additional security to the lenders under such agreement in the event the value of the Vessel or Vessels and other property securing such Debt falls below the level specified in such agreement; (P) Liens on a Vessel, Related Collateral (and/or the contract for the acquisition of such Vessel and/or Related Collateral) existing only during the construction of such Vessel and granted to secure the builder's obligations in respect of construction financing for such Vessel obtained by such builder; and (Q) Liens incurred to secure the Revolving Credit Facilities as required by the terms thereof; "PERMITTED SHIP LIENS" means:- (A) any ship repairer's or outfitter's possessory lien for a sum not (except with the prior written consent of the Agent or where the cost of the relevant work is covered by the vessel's insurances or is required for the purpose of maintaining the vessel's classification) exceeding the Casualty Amount; (B) any lien on a vessel for master's, officer's or crew's wages outstanding in the ordinary course of trading; - 29 - (C) any lien for salvage; (D) liens arising in the ordinary course of trading by statute or by operation of law in respect of obligations which are not overdue or which are being contested in good faith by appropriate proceedings (and for the payment of which adequate reserves have been provided) so long as any such proceedings or the continued existence of such lien do not involve any likelihood of the sale, forfeiture or loss of, or of any interest in, any vessel owned by or chartered to a Security Party or any other member of Stena AB Group; (E) liens securing liabilities for Taxes against which adequate reserves have been provided; (F) liens arising in respect of a Ship or Linkspan by reason of an act or omission of a charterer (other than a Stena Charterer) of the Ship or Linkspan, in relation to which the relevant Shipowner or Stena Charterer demonstrates to the reasonable satisfaction of the Agent that it is taking all reasonable steps available to it with due dispatch to procure the lifting of the lien; "PLANNING ACTS" means, in the case of Holyhead Port or any other Port situated in England and Wales, the Town and Country Planning Acts 1990 and, in the case of Stranraer Port or any other Port situated in Scotland, the Town and Country Planning (Scotland) Act 1972 (including in each case any Act or Acts for the time being amending or replacing such Acts and any orders, regulations and direction issued under or by virtue of such Acts or such amending or replacing Acts for the time being in force); "P&O STENA" means P&O Stena Line (Holdings) Limited, a company incorporated with limited liability under the laws of England and Wales with company number 3291852 and having its registered office at Channel House, Channel View Road, Dover, CT17 9TJ; "P&O STENA LOAN STOCK" means all of SLUK's 30,000,000 units of the (pound)150,000,000 nominal amount of zero per cent second unsecured loan stock 2017 issued by P&O Stena constituted by a loan stock instrument dated 9 March 1998 issued by P&O Stena (and any other loan stock from time to time issued by P&O Stena and held by SLUK or any other member of the Stena AB Group); "P&O STENA SHARES" means all of SLUK's 5,625,000 ordinary shares designated "B" shares in the capital of P&O Stena (and any other shares from time to time issued by P&O Stena and held by SLUK or any other member of the Stena AB Group); "PORT" means each of Holyhead Port and Stranraer Port and includes any other port which is or may become owned by a member of the Stena AB Group; - 30 - "PORT MORTGAGE" means:- (A) in the case of Holyhead Port, the Holyhead Charge; and (B) in the case of Stranraer Port, the Stranraer Charge; "PORT OWNER" means, in relation to a Mortgaged Port, the owner thereof being, at the date of this Agreement, Stena Line Ports in respect of both Holyhead Port and Stranraer Port; "PORT OWNER'S GUARANTEE" means, in respect of each Port Owner, the deed of guarantee and indemnity to be executed and delivered by that Port Owner in favour of the Security Agent in substantially the form set out in Schedule 7.2; "PORT OF REGISTRY" means in relation to a Mortgaged Ship the port of registry approved in writing by the Banks at which such Ship is, or is to be registered on, or at any relevant time after, the date hereof; "POST COMPLETION REGISTRATIONS" means registration of the Liens created by any of the Security Documents and the restriction contained in Clause 10.6 which require to be completed within a period after execution thereof and/or hereof under the laws of any relevant jurisdiction; "POST-DELIVERY FINANCING" means Debt Incurred by Stena AB or any Subsidiary of Stena AB to finance the total Ready for Sea Cost of a Vessel or group of Vessels and "Post-Delivery Financing" shall include the amount of any Construction Financing with respect to any Vessel or group of Vessels, but only to the extent that fully committed Post-Delivery Financing for such Vessel or group of Vessels has been arranged at such time; "PREFERRED STOCK" as applied to the Capital Stock of any person, means Capital Stock of such person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such person, to shares of Capital Stock of any other class of such person; "2005 PROSPECTUS" means the final prospectus of Stena AB relating to the initial public offering of the 2005 Notes, such prospectus having been filed with the Securities and Exchange Commission in Washington, D.C. with registration number 33-99284; "2007 PROSPECTUS" means the final prospectus of Stena AB relating to the initial public offering of the 2007 Notes, such prospectus having been filed with the Securities and Exchange Commission in Washington, D.C. with registration number 333-7486; - 31 - "READY FOR SEA COST" means, with respect to a Vessel or Vessels to be acquired or leased (pursuant to a Capitalised Lease Obligation) by Stena AB or any Subsidiary of Stena AB, the aggregate amount of all expenditures incurred to acquire or construct and bring such Vessel or Vessels to the condition and location necessary for its intended use which would be classified and accounted for as "property, plant and equipment" in accordance with Swedish GAAP; "RECEIVABLES ASSIGNMENT" means the first priority assignment to be granted in favour of the Security Agent in respect of the deferred purchase consideration and Insurances and other security granted in relation to a Transferred Ship in accordance with Clause 5.3(L) substantially in the form set out in Schedule 16 in relation to a Ship sold on terms set out in paragraph (A) of the definition of Transferred Ship and substantially in the form set out in Schedule 17 in relation to a Ship sold on terms set out in paragraph (B) of the definition of Transferred Ship; "REDEEMABLE STOCK" of any person means any equity security of such person that by its terms or otherwise is required to be redeemed prior to the Termination Date or is redeemable at the option of the holder thereof at any time prior to the Termination Date; "REFERENCE BANKS" means the principal London offices of Svenska Handelsbanken AB (publ), J. P. Morgan plc and Nordbanken AB (publ) and/or any other Bank appointed as such pursuant to this Agreement; "REFINANCE" has the meaning ascribed to it in Clause 10.8(B)(vi) and shall be deemed to include successive refinancings; "RELATED BUSINESS INVESTMENT" means an Investment made in a person engaged in the same or a similar line of business as Stena AB and its Subsidiaries or made for the purpose of maintaining, enhancing the productivity of or expanding the capabilities of Stena AB and its Subsidiaries in any business activity permitted under Clause 10.12 (as determined, with respect to any such Investment or series of related Investments in an aggregate amount of $5,000,000 or more, in good faith by the Board of Directors of the person making such Investment); "RELATED COLLATERAL" means, with respect to a Vessel:- (A) any insurance policies on such Vessel; (B) any requisition compensation payable in respect of any compulsory acquisition thereof; (C) any earnings derived from the use or operation thereof and/or any earnings account with respect to such earnings, provided that any assignment with - 32 - respect thereto may only permit the assignee thereof to apply such earnings to the repayment of Debt held by such assignee:- (i) upon the occurrence and during the continuation of a payment default with respect to such Debt or upon the acceleration of such Debt (unless such acceleration has been rescinded); or (ii) in the case of any other default with respect to such Debt which would allow for the acceleration of such Debt at such time, but only until the earliest of:- (a) 180 days after the initial occurrence of such default; (b) the date such default is cured or waived; and (c) the date such Debt is repaid in full; (D) any charters, operating leases, licences and related agreements entered into in respect of the Vessel and any security or guarantee in respect of the relevant charterer's or lessee's obligations under any relevant charter, operating lease, licence or related agreement; (E) any cash collateral account established with respect to such Vessel pursuant to the financing arrangements with respect thereto; (F) any inter-company loan or facility agreements relating to the financing of the acquisition of, and/or the leasing arrangements ,pursuant to Capitalised Lease Obligations) with respect to, such Vessel; (G) any building or conversion contracts relating to such Vessel and any security or guarantee in respect of the builder's obligations under such contracts; (H) any interest rate swap, foreign currency hedge, exchange or similar agreement incurred in connection with the financing of such Vessel and required to be assigned by the lender; and (I) any security interest in, or agreement or assignment relating to, any of the foregoing or any mortgage in respect of such Vessel; "RELATED PERSON" of any person means any other person directly or indirectly owning:- (A) five per cent (5%) or more of the outstanding Common Stock of such person (or, in the case of a person that is not a corporation, five per cent (5%) or more of the equity interest in such person); or (B) five per cent (5%) or more of the combined voting power of Voting Stock of such person; - 33 - "REQUISITION COMPENSATION" means, in relation to a Ship or Linkspan, all sums of money or other compensation from time to time payable during the Security Period by reason of the Compulsory Acquisition of such Ship or Linkspan; "REVOLVING CREDIT FACILITIES" means one or more revolving or other credit facilities to which Stena AB and/or one or more Subsidiaries of Stena AB may be parties (as obligor or guarantor) in an aggregate principal amount not to exceed $600,000,000 at any time outstanding; "SALE AND LEASEBACK TRANSACTION" of any person means an arrangement with any lessor, lender, obligee or investor or to which such lessor, lender, obligee or investor is a party providing for the leasing or renting by such person of any property or asset of such person which has been or is being sold or transferred by such person more than two hundred and seventy (270) days after the acquisition thereof or, if later, the delivery or commencement of operation thereof, to such lessor, lender, obligee or investor or to any person to whom funds have been or are to be advanced by such lessor, lender, obligee or investor on the security of such property or asset and the Stated Maturity of such arrangement shall be the date of the last scheduled payment of rent or any other amount due under such arrangement prior to the first date on which such arrangement may be terminated by the lessee without payment of a penalty; "SCANDLINES" means Scandlines AB, a company incorporated under the laws of the Kingdom of Sweden with registration number 556206-4575 in the Swedish Companies Register and having its registered office at Knutpunkten 43, SE-252 78 Helsingborg, Sweden; "SECURITIES ACT" refers to the Securities Act of 1933 of the United States of America as it may be amended and any successor act thereto; "SECURITY AGENT" means Svenska Handelsbanken AB (publ) or such other person as may be appointed security agent for the Banks, the Co-Arrangers and the Agent pursuant to this Agreement; "SECURITY DOCUMENTS" means this Agreement, the Ship Mortgages, the Deeds of Covenant, the Insurance Assignments, the Shipowner's Guarantees, the Linkspan Mortgages, the Charterer's Insurance Assignments, the Charterer's Subordination Undertakings, the Manager's Subordination Undertakings, the Stena Germanica Assignment, each Receivables Assignment, the Port Owner's Guarantees, the Port Mortgages and any other documents as may have been or shall from time to time after the date of this Agreement be executed to guarantee and/or secure all or any part of any moneys from time to time owing by the Borrower pursuant to this Agreement (whether or not any such document also secures moneys from time to time owing pursuant to any other document or agreement); - 34 - "SECURITY PARTY" means any person who may at any time be a party to any of the Security Documents (other than the Banks, the Co-Arrangers, the Agent and the Security Agent) but does not include either any such party as and when it has ceased to be under any continuing obligation under the Security Documents and its property has ceased to be (or was never) subject to any Lien pursuant to any of the Security Documents or any party which is not a member of the Stena AB Group; "SECURITY PERIOD" means the period commencing on the date hereof and terminating upon the later of (i) the end of the Availability Period and (ii) the discharge of the security created by the Security Documents by payment of moneys payable thereunder; "SHIP MORTGAGE" means, in relation to an Owned Ship:- (A) in the case of a Designated Ship (other than a Ship registered in Sweden), the first priority statutory mortgage of the Ship executed (or as the context may require) to be executed and registered by the relevant Shipowner in favour of the Security Agent including the narrative text set out in Schedule 10; (B) in the case of a Ship which is registered in Sweden the first priority mortgage and pledge of mortgage of the Ship to be executed and registered by the relevant Shipowner in the form or substantially in the form set out in Schedule 8, which mortgage and pledge of mortgage in the case of m.v. "STENA GERMANICA" (the Stena Germanica Mortgage) has been executed and assigned to the Borrower (as assignee from Stena Line Scandinavia (as assignee from Stena Line)) and on-assigned by it to the Security Agent under the Stena Germanica Assignment as security for the Outstanding Indebtedness; (C) in the case of any other Owned Ship over which, after drawdown of the first Advance, a first priority mortgage is to be executed and registered by the relevant Shipowner, a mortgage in a form and substance acceptable to the Agent but in any event substantially similar to the mortgages described in paragraphs (A) and (B) above and including, where appropriate, mortgage covenants substantially similar to those contained in the pro forma Deed of Covenants set out in Schedule 11.1; and "SHIP MORTGAGES" means all of such mortgages; "SHIPOWNER" means, in relation to a Ship or Linkspan, the registered owner or owners thereof and being at the date of this Agreement, in relation to a Ship identified in Schedule 2, the company whose name is set forth opposite the name of such Ship in Schedule 2; "SHIPOWNER'S GUARANTEE" means, in respect of each Shipowner and each member of the Stena International Group which at any time during the Security Period owns a Ship or Linkspan or sells a Mortgaged Ship on Credit Terms, the deed of guarantee and indemnity to be - 35 - executed and delivered by that Shipowner or other member of the Stena International Group in favour of the Security Agent in substantially the form set out in Schedule 7.1 (provided that no Shipowner's Guarantee shall be required from Scandlines by reason of its registered ownership of m.v. "STENA GERMANICA" as long as the Stena Germanica Loan Documents remain in place in favour of the Borrower and are assigned to the Security Agent under the Stena Germanica Assignment); "SHIPS" means each of the ships listed in Schedule 2 and includes any other Vessel in relation to which a Ship Mortgage, or in relation to rights to the sale proceeds, Insurances or rebate of rentals of which a Lien, may be granted to the Security Agent during the Security Period directly or indirectly as security for the obligations of the Borrower under this Agreement and "SHIP" means any of them; "SINGLE-PURPOSE VESSEL-OWNING SUBSIDIARY" means a Subsidiary of Stena AB the sole purpose of which is to own or lease (pursuant to a Capitalised Lease Obligation) one (but not more than one) Vessel; "SLUK" means Stena Line (UK) Limited, a company incorporated with limited liability under the laws of England and Wales with company number 2454575 and having its registered office at Charter House, Park Street, Ashford, Kent, TN24 8EX; "STATED MATURITY" means:- (A) with respect to any debt security, the date specified in such debt security as the fixed date on which the final instalment of principal of such debt security is due and payable; or (B) with respect to any specified scheduled instalment of principal or interest on any debt security, the date specified in such debt security as the fixed date on which such instalment is due and payable; "STENA AB" means Stena AB a company incorporated under the laws of the Kingdom of Sweden with registration number 556001-0802 in the Swedish Companies Register and having its registered office at Masthuggskajen, SE-405 19 Gothenburg, Sweden; "STENA AB GROUP" means Stena AB and its Subsidiaries and "MEMBER OF THE STENA AB GROUP" means Stena AB or any of its Subsidiaries; "STENA CHARTERER" means any member of the Stena AB Group to whom a Mortgaged Ship or a Transferred Ship or a Mortgaged Linkspan may be chartered; "STENA DISCOVERY FACILITY AGREEMENT" means the facility agreement dated of even date herewith made between the Borrower as borrower and Deutsche Bank AG as lender pursuant to which Deutsche Bank AG - 36 - has agreed to make available to the Borrower a secured term loan facility in the amount of $75,000,000 to be secured on, inter alia, m.v. "STENA DISCOVERY" and her linkspans and to be applied towards partly refinancing the existing indebtedness of Stena Line under the Stena Line Revolving Credit Facility; "STENA GERMANICA ASSIGNMENT" means the first priority assignment of all the right, title and interest of the Borrower in the Stena Germanica Loan Documents to be executed and delivered by the Borrower in favour of the Security Agent in substantially the form set out in Schedule 19; "STENA GERMANICA CHARTERER'S INSURANCE ASSIGNMENT" means the Charterer's Insurance Assignment executed or (as the case may be) to be executed by Stena Line Scandinavia in favour of the Borrower on or before the Availability Date; "STENA GERMANICA CHARTERER'S SUBORDINATION UNDERTAKING" means the Charterer's Subordination Undertaking executed or (as the case may be) to be executed by Stena Line Scandinavia in favour of the Borrower on or before the Availability Date; "STENA GERMANICA DEED OF COVENANT" means the deed of covenant dated 21 December 2000 made between Scandlines as owner and Stena Line as mortgagee as assigned by Stena Line to Stena Line Scandinavia pursuant to the Stena Line Asset Purchase Agreement and as amended by an amendment no. 1 thereto to be made on or before the Availability Date between Scandlines, Stena Line Scandinavia and the Borrower amending certain provisions thereof and assigning all of Stena Line Scandinavia's rights, title and interest thereunder to the Borrower; "STENA GERMANICA LOAN AGREEMENT" means the inter-company loan agreement dated 21 December 2000 made between Scandlines as borrower and Stena Line as lender under which Stena Line made available to Scandlines a loan in the amount of $52,000,000 as assigned by Stena Line to Stena Line Scandinavia pursuant to the Stena Line Asset Purchase Agreement and as amended by an amendment no. 1 thereto to be made on or before the Availability Date between Scandlines, Stena Line Scandinavia and the Borrower amending certain provisions thereof and assigning all of Stena Line Scandinavia's right, title and interest thereunder to the Borrower; "STENA GERMANICA LOAN DOCUMENTS" means the Stena Germanica Loan Agreement, the Stena Germanica Mortgage, the Stena Germanica Deed of Covenant, the Stena Germanica Charterer's Insurance Assignment and the Stena Germanica Charterer's Subordination Undertaking; "STENA GERMANICA MORTGAGE" means the first priority mortgage and pledge of mortgage of m.v. "STENA GERMANICA" dated 21 December 2000 executed and registered by Scandlines in favour of Stena Line as assigned by Stena Line to Stena Line Scandinavia pursuant to the Stena Line Asset Purchase Agreement and as assigned by Stena Line Scandinavia to the Borrower on or before the Availability Date; - 37 - "STENA INTERNATIONAL GROUP" means Stena International B.V. and its Subsidiaries; "STENA LINE" means Forvaltningsaktiebolaget Lastluckan (formerly Stena Line AB), a company incorporated under the laws of the Kingdom of Sweden with registration number 556207 - 8005 in the Swedish Companies Register and having its registered office at Masthuggsterminalen, SE-405 19 Gothenburg, Sweden; "STENA LINE ASSET PURCHASE AGREEMENT" means the agreement made or (as the context may require) to be made between Stena Line and Stena Line Scandinavia pursuant to which (inter alia) Stena Line shall assign all its rights in respect of the Stena Germanica Loan Agreement, the Stena Germanica Mortgage and the Stena Germanica Deed of Covenant to Stena Line Scandinavia; "STENA LINE PORTS" means Stena Line Ports Limited, a company incorporated with limited liability under the laws of England and Wales with company number 1824328 and having its registered office at Charter House, Park Street, Ashford, Kent, TN24 8EX; "STENA LINE REVOLVING CREDIT FACILITY" means the $425,000,000 secured revolving credit and guarantee facility provided to Stena Line pursuant to a facility agreement dated 28 May 1998 (as amended) made between, amongst others, (1) Stena Line as borrower, (2) the various banks and financial institutions named therein as lenders, (3) The Bank of Nova Scotia as issuing bank and (4) Svenska Handelsbanken AB (publ) as agent and security agent; "STENA LINE SCANDINAVIA" means Stena Line Scandinavia AB, a company incorporated under the laws of the Kingdom of Sweden with registration number 556231-7825 in the Swedish Companies Register and having its registered office at SE-405 19 Gothenburg, Sweden; "STEN A. OLSSON FAMILY" means:- (A) Sten Allan Olsson; (B) all the lineal descendants in direct line of the said Sten Allan Olsson; (C) a husband and wife or former husband or wife or widower or widow of any of the above persons; and (D) the estates or legal representatives of any of the above persons and so that for the purposes of this definition a step-child or adopted child or illegitimate child of any person shall be deemed to be a lineal descendant of such person and of the lineal ascendants of such person; - 38 - "STEN A. OLSSON FAMILY TRUSTS" means trusts (whether arising under settlement, declaration of trust or other instrument by whomsoever or wheresoever made or under a testamentary disposition or on an intestacy) under which no immediate beneficial interest in the property which is the subject of such trust is for the time being vested in any person other than members of the Sten A. Olsson Family; "STRANRAER CHARGE" means the Scots law first priority standard security in respect of Stranraer Port to be executed and delivered by Stena Line Ports in favour of the Security Agent in substantially the form set out in Schedule 15; "STRANRAER PORT" means all of the property belonging to Stena Line Ports at Stranraer Harbour, Stranraer, County of Wigtown, Scotland as is more particularly described in the Stranraer Charge; "SUBORDINATED DEBT" means Debt of Stena AB or any Subsidiary of Stena AB which is subordinate or junior in right of payment to the Notes (or any applicable Successor Financing) pursuant to a written agreement; "SUBSIDIARY" of any person means:- (A) a corporation more than fifty per cent (50%) of the outstanding Voting Stock of which is owned, directly or indirectly, by such person or by one or more other Subsidiaries of such person or by such person and one or more Subsidiaries thereof; or (B) any other person (other than a corporation) in which such person, or one or more other Subsidiaries of such person or such person and one or more other Subsidiaries thereof, directly or indirectly, has at least a majority ownership and power to direct the policies, management and affairs thereof but for the purposes of the definitions of "Affiliate", "Asset Disposition", "Consolidated Cash Flow", "Consolidated Interest Coverage Ratio", "Consolidated Interest Expense", "Consolidated Net Income", "Consolidated Tangible Assets", "Construction Financing", "Disqualified Stock", "Investment", "Lien", "Net Available Proceeds", "Non-Recourse Debt", "Permitted Investments", "Permitted Liens", "Post-Delivery Financing", "Ready for Sea Cost", "Related Business Investment", "Revolving Credit Facilities", "Single-Purpose Vessel-Owning Subsidiary", "Subordinated Debt", "Unrestricted Subsidiary", "Vessels", "Vessel Construction Contract", "Wholly Owned Subsidiary" and the proviso to the definition of "Incur" and Clauses 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12 and 10.14 Unrestricted Subsidiaries shall be deemed not to be Subsidiaries of Stena AB; "SUCCESSOR FINANCING" has the meaning ascribed thereto in Clause 10.18; - 39 - "SWEDISH GAAP" means generally accepted accounting principles in the Kingdom of Sweden, consistently applied and (but only in relation to the definitions of "Capitalised Lease Obligation", "Consolidated Cash Flow", "Consolidated Interest Coverage Ratio", "Consolidated Interest Expense", "Consolidated Net Income", "Consolidated Operating Income", "Consolidated Tangible Assets" and "Tangible Assets" and not for any other purpose of this Agreement) as in effect on the date of the 2007 Indenture; "TANGIBLE ASSETS" of any person means, at any date, the gross book value as shown by the accounting books and records of such person of all its property both real and personal, less (without duplication):- (A) the net book value of all its licences, patents, patent applications, copyrights, trademarks, trade names, goodwill, non-compete agreements or organisational expenses and other like intangibles; (B) unamortised Debt discount and expenses; (C) all reserves for depreciation, obsolescence, depletion and amortisation of its properties; and (D) all other proper reserves which in accordance with Swedish GAAP should be provided in connection with the business conducted by such person; "TAXES" includes all present and future taxes, levies, imposts, duties, fees or charges of whatever nature together with interest thereon and penalties in respect thereof and "TAXATION" shall be construed accordingly; "TERM" means, in relation to an Advance, the period for which such Advance is, or is to be, borrowed, as specified in the Drawdown Notice for such Advance; "TERMINATION DATE" means, subject to Clause 7.4, the date falling sixty (60) months after the date hereof; "TOTAL LOSS" in relation to a Ship or Linkspan means:- (A) actual, constructive, compromised or arranged total loss of such Ship or Linkspan; or (B) the Compulsory Acquisition of such Ship or Linkspan; or (C) the condemnation, capture, seizure, arrest, detention or confiscation of such Ship or Linkspan (other than where the same amounts to the Compulsory Acquisition of such Ship or Linkspan) by any Government Entity, or by persons acting or purporting to act on behalf of any Government Entity, unless - 40 - the Ship or Linkspan be released and restored to the relevant Shipowner, Stena Charterer or other charterer from such hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation within one hundred and eighty (180) days after the occurrence thereof; "TRANSFER CERTIFICATE" means a transfer certificate for the purposes of Clause 20.3 substantially in the form set out in Schedule 6 (or in such other form as the Banks may approve or require); "TRANSFEREE BANK" and "TRANSFEROR BANK" shall have the meaning ascribed to those expressions in Clause 20.3; "TRANSFERRED SHIP" means a ship which was a Mortgaged Ship but the ownership or possession of which has been transferred to a person which is not a Subsidiary of Stena AB on Credit Terms so that either:- (A) such person has obtained title thereto on terms that all or part of the purchase price of the Ship is payable after the date such person acquired title thereto; or (B) such person will or may obtain title thereto under a hire purchase or conditional sale agreement by payment of hire payable in respect of the Ship and either by virtue of the exercise of an option, or an obligation, to purchase such Ship at the end of the hire period upon payment of a nominal sum or final obligatory rental payment or a sum referrable to the written down value or unamortised capital cost of the Ship provided that a Ship shall cease to be a Transferred Ship for the purposes of this Agreement if the Ship, having been sold by the relevant Shipowner on hire purchase or conditional sale terms is repossessed by the Shipowner following a default by the purchaser under the relevant Commercial Documents or by agreement between the Shipowner and the purchaser and is not required to be sold by the Shipowner pursuant to its agreement with the relevant purchaser and the Ship shall thereupon be treated as a Mortgaged Ship for all purposes of this Agreement; "UNENCUMBERED ASSETS" means:- (A) the P&O Stena Shares; (B) the P&O Stena Loan Stock; and (C) all the issued shares in the Borrower from time to time; "UNRESTRICTED SUBSIDIARY" means:- (A) Stena Fastigheter; (B) Stena Realty BV; - 41 - (C) any Subsidiary of Stena AB which Stena AB by resolution of its Board of Directors shall classify as an Unrestricted Subsidiary and, for this purpose, a Subsidiary of Stena AB may only be classified as an Unrestricted Subsidiary if, immediately after giving effect to such classification:- (i) there would be no Default or Event of Default under and as defined in the Indentures (or any applicable Successor Financing); (ii) such Subsidiary would have no Debt other than Non-Recourse Debt, as certified in an Opinion of Counsel delivered to the relevant trustee under each Indenture or any Successor Financing; (iii) Stena AB would be able to Incur at least $1.00 of Debt pursuant to Clause 10.8; (iv) such Subsidiary has no assets which are essential to the operations of Stena AB and its Subsidiaries, taken as a whole; and (v) neither Stena AB nor any of its Subsidiaries has any obligation:- (a) to subscribe for additional shares of Capital Stock or other equity interests of such Subsidiary; or (b) to maintain or preserve such Subsidiary's financial condition or to cause such Subsidiary to achieve certain levels of operating results; Provided however that:- (x) any Subsidiary of Stena AB may not be reclassified more than once in any thirteen (13) month period; (y) an Unrestricted Subsidiary may only be reclassified as a Subsidiary of Stena AB if immediately after giving effect to such reclassification, there would be no Default or Event of Default as defined in the Indentures (or any applicable Successor Financing); and (z) any such classification or reclassification shall be evidenced by, and shall become effective upon, the filing with each relevant trustee under the Indentures (or any Successor Financing) of the resolution of the Board of Directors of Stena AB giving effect to such designation, an Officer's Certificate certifying that such designation complies with the applicable conditions set forth above and, if applicable, the Opinion of Counsel required under paragraph (C)(ii) above, in each case in form and substance as satisfactory to such trustee; (D) any Subsidiary of an Unrestricted Subsidiary; - 42 - "UNSECURED REVOLVING CREDIT FACILITY AGREEMENT" means the facility agreement dated of even date herewith made between (1) Stena AB as borrower, (2) the banks and financial institutions defined therein as "Banks" as lenders, (3) the Co-Arrangers as arrangers and (4) Svenska Handelsbanken AB (publ) as agent pursuant to which such lenders have agreed to make available to Stena AB a 364 day unsecured revolving credit facility in the amount of two hundred million Euro ((eurodollar) 200,000,000); "VESSEL CONSTRUCTION CONTRACT" means any contract for the construction (or construction and acquisition) or conversion of a Vessel or Vessels entered into by Stena AB or any Subsidiary of Stena AB; "VESSELS" means the shipping vessels whose primary purpose is the maritime transportation of cargo and/or passengers or which are otherwise engaged or used in any business activities of Stena AB and its Subsidiaries permitted under Clause 10.12 (including, without limitation, semi-submersible and other drilling rigs and drillships) and which are owned by and registered (or to be owned by and registered) in the name of Stena AB or any of its Subsidiaries or operated by Stena AB or any of its Subsidiaries pursuant to a lease or other operating agreement constituting a Capitalised Lease Obligation, in each case together with all related equipment and any additions or improvements; "VOTING STOCK" of any person means Capital Stock of such person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency; and "WHOLLY OWNED SUBSIDIARY" of any person means a Subsidiary of such person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such person or by one or more Wholly Owned Subsidiaries of such person or by such person and one or more Wholly Owned Subsidiaries of such person. 1.3 Insurance terms In Clause 11:- (A) "EXCESS RISKS" means the proportion (if any) of claims for general average, salvage and salvage charges and under the ordinary collision clause not recoverable in consequence of the value at which a Ship is assessed for the purpose of such claims exceeding her insured value; (B) "PROTECTION AND INDEMNITY RISKS" means:- (i) the usual risks (including oil pollution) covered by a United Kingdom protection and indemnity association or a protection and indemnity association which is managed in London, Norway or Sweden or is a - 43 - member of the "International Group" of protection and indemnity associations (including, without limitation, the maximum proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of Clause 1 of the Institute Time Clauses (Hulls) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision; or (ii) (if placed on Norwegian terms) means protection and indemnity risks as defined in the Norwegian Marine Insurance Plan of 1996 as amended; and (C) "WAR RISKS" includes those risks covered by the standard form of English marine policy with Institute War and Strikes Clauses (Time) (1/10/83) attached or similar cover which may be insured by entry with such association or (if placed on Norwegian terms) means the war risks described in the Norwegian Marine Insurance Plan of 1996 as amended or (if placed on Swedish terms) means the Swedish War Insurance Conditions for Ships 1992/01/01; 1.4 Accounting terms All accounting terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with Swedish GAAP where used in relation to the Stena AB Group and Dutch GAAP where used in relation to the Stena International Group (whether or not such is indicated in this Agreement). 1.5 Headings Clause headings and the table of contents are inserted for convenience of reference only and shall be ignored in the interpretation of this Agreement. 1.6 Construction of certain terms In any Security Document unless the context otherwise requires:- (A) references to Clauses and Schedules are to be construed as references to Clauses of, and Schedules to, such Security Document and references to such Security Document include its Schedules; (B) references to (or to any specified provision of) any Security Document or any other document shall be construed as references to such Security Document, that provision or that document as in force for the time being and as novated and/or as amended in accordance with terms thereof, or, as the case may be, with the agreement of the relevant parties and (where such consent is, by the terms of any Security Document or the relevant document, required to be obtained as a condition to such amendment) with the consent of the Agent; (C) references to a "regulation" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any agency, authority, central bank or government department or any self-regulatory or other national or supra-national authority; - 44 - (D) words importing the plural shall include the singular and vice versa; (E) references to a time of day are to London time; (F) references to a person shall be construed as references to an individual, firm, company, corporation, unincorporated body of persons or any Government Entity; (G) references to any person includes such person's assignees and successors in title; and (H) references to any enactment shall be deemed to include references to such enactment as re-enacted, amended or extended. 1.7 Consents and approvals (A) Where any matter requires the approval or consent of the Agent and/or the Security Agent and/or the Banks, such approval or consent shall not be deemed to have been given unless given in writing. (B) Unless the context otherwise expressly states to the contrary, where in any Security Document any party is required or requested to consent or agree to, authorise or approve, either with or without conditions, or give an opinion or express satisfaction or certify, make payments, determinations or determine requirements in any such case at its discretion, then it is hereby agreed that such consent, agreement, authorisation, approval, conditions, opinion, expression of satisfaction, certification, determination, payment or requirement shall not (when taking into account all the circumstances) be unreasonably withheld, imposed, given or determined. Where in any Security Document the Agent, the Co-Arrangers, the Security Agent or any of the Banks is required to give any notice, document or other information or to do any act or thing (unless the context otherwise expressly states to the contrary) such notice, document or other information shall be given and such act or thing shall be done as soon as is reasonably practicable. 1.8 Conflict with Facility Agreement In the event of any conflict between the provisions of this Agreement and any other of the Security Documents, the provisions of this Agreement shall prevail. 1.9 Majority Banks Where this Agreement provides for any matter to be determined by reference to the opinion of the Majority Banks or to be subject to the consent or request of the Majority Banks or for any action to be taken on the instructions of the Majority Banks, such opinion, consent, request or instructions shall (as between the Banks) only be regarded as having been validly given or issued by the Majority Banks if all the Banks shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Banks shall have given or issued such opinion, consent, request or instructions but so that the Borrower shall be entitled (and bound) to assume that such notice shall - 45 - have been duly received by each Bank and that the relevant majority shall have been obtained to constitute Majority Banks whether or not this is in fact the case. 1.10 Transfer and Succession In this Agreement all references to the Agent, the Security Agent, the Banks and/or the Co-Arrangers shall in each case include:- (A) any successor in title to or assignee or transferee of all or any portion of that respective party's rights, title and interest in, to and under this Agreement including any Transferee to whom all or part of such person's rights and obligations hereunder are transferred; and (B) any other person whomsoever in whose favour all or any portion of such rights, title and interest are transferred including any person who becomes a party to this Agreement by way of a novation hereof and the expression "Bank" shall include any such person aforesaid notwithstanding that such person may have made no advance to the Borrower hereunder and notwithstanding also that the indebtedness of the Borrower to such person may be operation of law or otherwise constitute, or be deemed to constitute, an indebtedness separate and distinct from the indebtedness arising on the date of drawing of the Commitment in respect of which the assignment or other transfer of rights, title and interest is made. 2. THE COMMITMENTS 2.1 Agreement to lend Upon and subject to the terms and conditions of this Agreement and in reliance on the representations and warranties in Clause 9 the Banks agree to lend Advances to the Borrower and the obligation of each Bank under this Agreement shall be to contribute its Percentage of each Advance. 2.2 Obligations of Banks several The obligations of each Bank under this Agreement are several; the failure of any Bank to perform such obligations shall not relieve any other Bank, the Co-Arrangers, the Agent, the Security Agent or the Borrower of any of their respective obligations or liabilities under this Agreement nor shall the Co-Arrangers, the Agent or the Security Agent be responsible for the obligations of any Bank (except for its own obligations, if any, as a Bank) nor shall any Bank be responsible for the obligations of any other Bank under this Agreement. Provided that, in the event of the failure of any Bank (the "defaulting Bank") to perform its obligations under this Agreement:- (A) the Agent shall consult with the Borrower and the other Banks with a view to taking steps to mitigate the effects of such default including the procuring of another bank to assume the obligations of the defaulting Bank; and (B) the defaulting Bank shall indemnify the Borrower against any losses, costs and expenses which the Borrower may sustain or incur as a result of such failure. - 46 - 2.3 Interests several Notwithstanding any other term of this Agreement (but without prejudice to Clause 21.4 (I) or the provisions of this Agreement relating to or requiring action by the Majority Banks) the interests of the Co-Arrangers, the Agent, the Security Agent and the Banks are several and the amount due to the Co-Arrangers, the Agent, the Security Agent and each Bank (each for its own account) is a separate and independent debt. The Co-Arrangers, the Agent, the Security Agent and each Bank shall have the right to protect and enforce its rights arising out of this Agreement and it shall not be necessary for the Co-Arrangers, the Agent, the Security Agent or any Bank (as the case may be) to be joined as an additional party in any proceedings for this purpose. 3. ADVANCES 3.1 Drawdown Subject to the terms and conditions of this Agreement, an Advance may be made to the Borrower following receipt by the Agent from the Borrower of a Drawdown Notice not later than 10.00 a.m. on the third Banking Day before the date on which the Advance is intended to be made which shall be a Banking Day falling within the Availability Period. A Drawdown Notice shall be effective on actual receipt by the Agent and, once given, shall, subject as provided in Clause 4.5(A), be irrevocable. No Drawdown Notice may be given in respect of an amount which is the subject of a notice of cancellation under Clause 5. 3.2 Amount Each Advance shall be a minimum of $10,000,000 and an integral multiple of $5,000,000 or the balance of the Available Commitments or such other amount (not exceeding the Available Commitments) as the Banks may agree but no Advance may be drawn down on any day of an amount exceeding the Available Commitments on such day, taking into account for this purpose any Advance to be repaid on such day and any other Advance which is to be made which is the subject of a current Drawdown Notice. 3.3 Term Subject to Clause 3.6, Advances may be borrowed only for a Term of one (1), three (3), six (6), nine (9) or twelve (12) months or such other period as the Banks may agree, in each case ending on or before the Termination Date. 3.4 Availability Upon receipt of a Drawdown Notice complying with the terms of this Agreement the Agent shall notify each Bank thereof and of the date on which the Advance is to be made and, subject to the provisions of Clause 14, on such date each of the Banks shall make available to the Agent its portion of such Advance for payment by the Agent in accordance with Clause 7.2. Except with the Banks' consent, no Advances shall be made to the Borrower under this Agreement after the date falling one (1) month before the Termination Date. - 47 - 3.5 The Termination Date Without prejudice to any other provisions of this Agreement, the Commitments shall in any event be reduced to zero on the Termination Date and no Advances shall be made to the Borrower under this Agreement thereafter. 3.6 Number of Advances Notwithstanding the provisions of Clauses 3.2 and 3.3, Advances may be drawn only so that the number of separate Advances outstanding at any time does not exceed fifteen (15) or such other number as may be agreed by all the Banks or so that on the Maturity Date in respect of the next Advance to be repaid the number of Advances outstanding (excluding those repayable on such Maturity Date) will not exceed fifteen (15) or such other number as may be agreed by all the Banks. No more than twelve (12) Terms of one month (or, if agreed by the Banks, any shorter period) may be selected by the Borrower in respect of Advances during any calendar year. 3.7 Application of proceeds Without prejudice to the Borrower's obligations under Clause 10.19, none of the Banks, the Co-Arrangers or the Agent shall have any responsibility for the application of proceeds of any Advance by the Borrower. 4. INTEREST ON ADVANCES 4.1 Normal interest rate The Borrower shall pay interest on each Advance on its Maturity Date (or, in the case of an Advance having a Term of more than six (6) months, by instalments, the first six (6) months from the drawdown of such Advance and the subsequent instalments at intervals of six (6) months or, if shorter, the period from the date of the preceding instalment until the relevant Maturity Date) at the rate per annum determined by the Agent to be the aggregate of (i) the Margin and (ii) LIBOR PROVIDED HOWEVER THAT, in the case of any Advance which is borrowed for a Term of one month or less, the amount of interest payable in respect thereof shall be that amount which is the higher of:- (A) the amount of interest which would be payable thereon if calculated at the interest rate specified in the foregoing provisions of this Clause 4.1; and (B) the amount which is equal to the aggregate of (i) that amount of interest which would be payable thereon pursuant to the foregoing provisions of this Clause 4.1 if the Margin were zero and (ii) eight thousand three hundred and thirty three Dollars ($8,333). - 48 - 4.2 Default interest If the Borrower fails to pay any sum (including, without limitation, any sum payable pursuant to this Clause 4.2) on its due date for payment under any of the Security Documents, the Borrower shall pay interest on such sum on demand from the due date up to the date of actual payment (as well after as before judgment) at a rate determined by the Agent pursuant to this Clause 4.2. The period beginning on such due date and ending on such date of payment shall be divided into successive periods of not more than three (3) months as selected by the Agent (after consultation with the Banks) each of which (other than the first, which shall commence on such due date) shall commence on the last day of the preceding such period. The rate of interest applicable to each such period shall be the aggregate (as determined by the Agent) of (i) two point seven five per cent (2.75%) per annum and (ii) LIBOR for such period provided that if such unpaid sum is an amount of principal which became due and payable, by reason of a declaration by the Agent under Clause 15.2 or a prepayment pursuant to Clauses 5.3, 5.6, 5.7, 5.9 or 17.1 on a date other than a Maturity Date relating thereto, the first such period selected by the Agent shall be of a duration equal to the period between the due date of such principal sum and such Maturity Date and interest shall be payable on such principal sum during such period at a rate of two point seven five per cent (2.75%) above the rate of LIBOR applicable thereto immediately before it shall have become so due and payable. Default interest shall be due and payable on the last day of each such period as determined by the Agent pursuant to this Clause 4.2 or, if earlier, on the date on which the sum in respect of which such default interest is accruing shall actually be paid. If, for the reasons specified in Clause 4.5(A), the Agent is unable to determine a rate in accordance with the foregoing provisions of this Clause 4.2, each Bank shall promptly notify the Agent of the cost of funds to such Bank and interest on any sum not paid on its due date for payment shall be calculated for each Bank at a rate determined by the Agent to be two point seven five per cent (2.75%) per annum above the cost of funds to such Bank. Each Bank shall (without prejudice to the obligation of the Borrower to pay such interest) provide reasonable detail as to the basis on which it has determined such cost of funds. 4.3 Notification of interest rate The Agent shall notify the Borrower promptly of each rate of interest determined by it under this Clause 4. 4.4 Reference Bank quotations If any Reference Bank is unable or otherwise fails to furnish a quotation for the purpose of calculating LIBOR pursuant to the proviso contained in the definition of LIBOR the interest rate shall be determined, subject to Clause 4.5, on the basis of the quotations furnished by the remaining Reference Banks. 4.5 Market disruption; non-availability (A) If and whenever, at any time prior to the making of an Advance:- - 49 - (i) the Agent shall have determined (which determination shall, in the absence of manifest error, be conclusive) that adequate and fair means do not exist for ascertaining LIBOR during the Term of that Advance; (ii) where applicable, none of the Reference Banks supplies the Agent with a quotation for the purpose of calculating LIBOR; or (iii) the Agent shall have received notification from Banks with Commitments aggregating not less than one-half of the total of the Commitments (or, if no Advance has been made, Commitments aggregating not less than one-half of the Commitments of all the Banks) that deposits in Dollars are not available to such Banks in the London Interbank Market in the ordinary course of business in sufficient amounts to fund their Contributions to such Advance or, where applicable, that the arithmetic mean of the quotations for LIBOR supplied by the Reference Banks does not accurately reflect the cost to such Banks of obtaining such deposits, the Agent shall forthwith give notice (a "DETERMINATION NOTICE") thereof to the Borrower and to each of the Banks and such Advance shall not be made. A Determination Notice shall contain particulars of the relevant circumstances giving rise to its issue. (B) After the giving of any Determination Notice no further Advances may be borrowed until notice to the contrary is given to the Borrower by the Agent. (C) During the period of twenty (20) days following the giving of any Determination Notice, the Borrower and the Agent in consultation with the Banks shall negotiate in good faith in order to arrive at a mutually acceptable substitute basis for each Bank to continue its Contribution to any further Advances and, if within such twenty (20) day period the Borrower and the Agent (in consultation as aforesaid) shall agree in writing upon such an alternative basis (the "SUBSTITUTE BASIS") the Substitute Basis shall be retroactive to and effective from the first day of the relevant Term. (D) If the Borrower and the Agent (in consultation with the Banks) fail to agree on a Substitute Basis within such twenty (20) day period, the Borrower shall pay interest on the Advances to each Bank at the rate certified by each such Bank and notified through the Agent to the Borrower as being a reasonable interest rate reflecting the cost to such Bank of funding its Contribution to such Advances during the period from the date of the relevant Determination Notice, plus the Margin and such rate plus the Margin shall be the Substitute Basis. (E) So long as any Substitute Basis is in force, the Agent shall from time to time (but at least monthly) and in consultation with the Banks review whether or not the circumstances are such that such Substitute Basis is no longer necessary and, if the Agent so determines it shall notify the Borrower and the Banks that the Substitute Basis shall cease to be effective from such date as the Agent shall reasonably specify. - 50 - 5. REPAYMENT, REDUCTION AND CANCELLATION 5.1 Repayment of Advances The Borrower shall repay each Advance on its Maturity Date. If an Advance (the "NEW ADVANCE") is to be made on a day on which another Advance (the "MATURING ADVANCE") is due to be repaid then, subject to the terms of this Agreement, (i) the maturing Advance shall be deemed to have been repaid on its Maturity Date either in whole (if the new Advance is equal to or greater than the maturing Advance) or in part (if the new Advance is less than the maturing Advance) and (ii) to the extent that the maturing Advance is so deemed to have been repaid, the principal amount of the new Advance to be made on such date shall be deemed to have been credited to the account of the Borrower by the Agent on behalf of the Banks in accordance with the terms of this Agreement and the Banks shall only be obliged to make available to the Borrower pursuant to Clause 3 a principal amount equal to the amount by which the new Advance exceeds the maturing Advance. On the Termination Date, all outstanding Advances and other sums (if any) then owing under this Agreement shall in any event be repaid or paid in full. 5.2 Scheduled reductions of Commitments Without prejudice to any other provision of this Agreement, the Commitments shall be reduced in aggregate by the following amounts on the following dates:- (A) on the date falling twelve (12) months after the date of this Agreement, by $30,000,000 or, if lower, by an amount in Dollars equal to 30/275ths of the then aggregate amount of the Commitments; (B) on the date falling twenty four (24) months after the date of this Agreement, by $30,000,000 or, if lower, by an amount in Dollars equal to 30/245ths of the then aggregate amount of the Commitments; (C) on the date falling thirty six (36) months after the date of this Agreement, by $30,000,000 or, if lower, by an amount in Dollars equal to 30/215ths of the then aggregate amount of the Commitments; (D) on the date falling forty eight (48) months after the date of this Agreement, by $30,000,000 or, if lower, by an amount in Dollars equal to 30/185ths of the then aggregate amount of the Commitments; (E) on the Termination Date by the whole of the aggregate amount of the Commitments so that all of the Commitments shall be reduced to zero on such date. 5.3 Reduction of Commitments on Total Loss or sale or by receipt of instalments (A) Total Loss or sale of Mortgaged Ships If a Mortgaged Ship is sold or becomes a Total Loss, the Commitments shall, subject to Clause 5.3(E), be reduced on the Disposal Reduction Date for such Ship by the relevant Disposal Reduction Amount. - 51 - (B) Transferred Ships On each Disposal Reduction Date applicable to a Transferred Ship, the Commitments shall, subject to Clause 5.3(E), be reduced by the relevant Disposal Reduction Amount. (C) Sale of Mortgaged Ports and/or Port Owner If a Mortgaged Port or any part thereof is sold (other than any part of a Mortgaged Port which is sold for a consideration of less than $25,000 or the equivalent thereof in any other currency), or any of the shares in the capital of any Port Owner are sold, the aggregate amount of the Commitments shall, subject to Clause 5.3(E), be reduced on the Disposal Reduction Date relating thereto by the relevant Disposal Reduction Amount. (D) Prepayment upon reduction of Commitments If, upon reduction or suspension of the Commitments by any such Disposal Reduction Amount, the aggregate of the Advances at such time exceeds the Commitments as thereby reduced or after deduction of the amount to be suspended as the case may be, the Borrower shall on such Disposal Reduction Date prepay such amount of the outstanding Advances as will ensure that immediately thereafter the aggregate amount of the Advances will not exceed the Commitments as so reduced or after deduction of the amount to be suspended as the case may be. (E) Substitute security (i) Without prejudice to the Borrower's obligation to make any payment due under Clause 5.3(D) the Commitments shall be suspended for a period of up to twelve (12) months from the relevant Disposal Reduction Date in an amount equal to the relevant Disposal Reduction Amount. The Borrower shall within such twelve (12) month period provide the Security Agent with substitute security with a value equal to the Disposal Reduction Amount (adjusted if appropriate in accordance with the following provisions of this paragraph). On the Agent giving notice to the Borrower and the Banks that such security has been duly granted, the relevant amount of the Commitments shall cease to be suspended by the Disposal Reduction Amount previously suspended (adjusted if appropriate in accordance with the following provisions of this paragraph) or such lesser amount as the Borrower requests, but so that the Commitments may not at any time exceed the amount of the Commitments as they would have stood but for the suspension of part thereof and taking into account reductions and cancellations by virtue of the other provisions of this Agreement. For the purpose of this paragraph (i) the Disposal Reduction Amount shall be reduced during the period of the suspension in proportion to the reduction of the Commitments (including the suspended portions) which takes effect by virtue of any reduction or partial cancellation in respect of the Commitments which takes effect during the period of the suspension by virtue of the other provisions of this Agreement. - 52 - (ii) The Borrower's obligation to provide substitute security in relation to an amount of the Commitments suspended by virtue of this Clause 5.3(E) shall be deemed discharged if the relevant member of the Stena AB Group provides security over a Vessel (a "SUBSTITUTE VESSEL") owned by such member of the Stena AB Group if the following conditions are satisfied:- (a) the relevant member of the Stena AB Group has executed a Shipowner's Guarantee in favour of the Security Agent and a Ship Mortgage (the "SUBSTITUTE MORTGAGE") and either a Deed of Covenant or an Insurance Assignment in respect of the Substitute Vessel in substantially the forms of Schedule 11.1 and Schedule 9; (b) the market value of the Substitute Vessel (determined in accordance with Clause 5.3(G)) is not less than one hundred and fifty per cent (150%) of the relevant amount suspended by virtue of paragraph (i) of this Clause as reduced or cancelled by virtue of the other provisions of this Agreement; (c) the Substitute Vessel is registered under the laws and flag of an Approved Flag State; (d) the Agent shall have received the documents and evidence referred to in Clause 19.5(F) in relation to the Substitute Vessel. If the Borrower provides substitute security in any other form such security shall be in such form and constituted in such manner as shall be in all respects satisfactory to the Majority Banks. (iii) To the extent that the Borrower does not grant or procure the grant of additional security as provided in this Clause 5.3(E) or cancel the whole or part of the suspended amount under paragraph (iv) of this Clause 5.3(E) within the period of twelve (12) months after the relevant Disposal Reduction Date, then the Commitments shall be treated as permanently reduced by the suspended amount or lesser amount in respect of which the Borrower has not granted or procured the grant of substitute security in accordance with the preceding provisions of this Clause 5.3(E). (iv) The Borrower may, during any period for which a part of the Commitments is suspended under this Clause 5.3(E), by notice to the Agent cancel with effect from a date not less than thirty (30) days after the receipt by the Agent of such notice in whole or part (being $1,000,000 or any larger sum which is an integral multiple of $1,000,000) of the suspended amount. Any such notice of cancellation, once given, shall be irrevocable and upon such cancellation taking effect the Commitment of each of the Banks shall be reduced proportionately. - 53 - (v) Nothing in this Clause 5.3(E) shall affect the Borrower's obligation to procure that all amounts realised from the property pledged to the Security Agent as security under the Security Documents shall, after an Event of Default has occurred and is continuing, be applied in payment of the relevant Disposal Reduction Amounts and, following a declaration by the Agent under Clause 15.2, be applied in accordance with Clause 7.10. (F) Defined terms For the purposes of this Clause 5.3:- "DISPOSAL REDUCTION AMOUNT" means:- (x) in relation to a Mortgaged Ship which has become a Total Loss or is sold, an amount in Dollars which is the lesser of:- (i) (aa) where the Ship has become a Total Loss, the minimum amount for which such Ship was required to have been insured under the Security Documents less any applicable deductible, collection commissions and any other expenses incurred by the relevant Shipowner or Stena Charterer or third party demise charterer in recovering under the Insurances of the Ship in respect of such Total Loss and/or recovering any Requisition Compensation in respect thereof; or (bb) where the Ship has been sold (otherwise than on Credit Terms) the Net Cash Sale Proceeds of such Ship and (if relevant) its related Linkspans; and (ii) such amount (if any) as will, after reduction of the Commitments and, if required by Clause 5.3(B), after any prepayment of Advances on the Disposal Reduction Date for such Ship, result in the Security Value being not less than one hundred and fifty per cent (150%) of the aggregate total of the Commitments (as so reduced); (y) in relation to a Transferred Ship, an amount in Dollars which is the lesser of:- (i) (aa) if the Ship has become a Total Loss, the amount which the seller or lessor of the Ship is contractually entitled as against the relevant purchaser or lessee (as the case may be) to receive, and has received, from the Insurances of the Ship less any part thereof due to, or belonging to, or by reference to which a payment is to be made to, the purchaser or lessee (as the case may be); or - 54 - (bb) if the Ship is sold pursuant to a power conferred on the mortgagee or lessor thereof, or an obligation on the lessor thereof, following a default by the purchaser or lessee, the net sale proceeds of the Ship received by the mortgagee or lessor (after deducting the costs and out-of-pocket expenses incurred in connection with the sale) less any part thereof due to, or belonging to, or by reference to which a payment is to be made to, the purchaser or lessee (as the case may be); (cc) in any other case the amount of deferred payment instalments, rent or other deferred consideration received since the drawdown date of the first Advance or, as the case may be, the preceding Disposal Reduction Date by the member of the Stena AB Group which has disposed of the relevant Ship; (dd) if, following a default by the purchaser or lessee of the Ship under an agreement for the sale of the Ship on Credit Terms or the agreed early termination thereof the agreement is validly terminated, and the Ship is sold by the Shipowner following the default or agreed early termination the amount received by the Shipowner by way of damages for breach of the agreement (or any payment received by the Shipowner or Stena Charterers on the compromise of legal proceedings in respect of such breach) or compensation for early termination; and (ii) the amount referred to in paragraph (x)(ii) of this Clause 5.3(F); and (z) in relation to any Mortgaged Port or part of a Mortgaged Port (other than any such part sold for a consideration of less than $25,000 or the equivalent thereof in any other currency) and/or any shares in the capital of a Port Owner which is or are sold, an amount in Dollars which is the lesser of:- (i) the Net Cash Sale Proceeds thereof; and (ii) the amount referred to in paragraph (x)(ii) of this Clause 5.3(F). However, if the Security Value has not been determined by the relevant Disposal Reduction Date, the Disposal Reduction Amount shall be the amount referred to in sub-paragraph (x)(i), (y)(i) or (z)(i) (as the case may be) of this definition, provided that if, no later than thirty (30) days after such Disposal Reduction Date, the Borrower demonstrates to the Agent's satisfaction that, on the basis of the Security Value as at the relevant Disposal Reduction Date, a lower Disposal Reduction Amount would have applied at such date, such lower Disposal Reduction Amount shall, for the purposes of determining the respective Commitments of the Banks and for all other relevant purposes of - 55 - this Agreement, be deemed to have applied on and from such Disposal Reduction Date; "SECURITY VALUE" means the amount in Dollars (as certified by the Agent whose certificate shall, in the absence of manifest error, be conclusive and binding on the parties hereto) which, at any relevant time, is the aggregate of: (w) the market value of all the Owned Ships which are then Mortgaged Ships (together with their related Linkspans, if any, but only if they are Mortgaged Linkspans) determined in accordance with Clause 5.3(G) provided that if the Ship Mortgage on any such Owned Ship or the Linkspan Mortgage on such Linkspan (as the case may be) is restricted to a registered maximum amount recoverable thereunder then such maximum mortgage amount shall be used towards calculating the Security Value if it is lower than the market value determined as aforesaid in respect of such Owned Ship or Linkspan provided further that, in the case of m.v. "STENA GERMANICA", if the principal amount due under the Stena Germanica Loan Agreement is less than the market value of the Ship and the registered maximum amount recoverable under the Stena Germanica Mortgage then such principal amount shall be used towards calculating the Security Value in respect of such Ship; (x) in the case of a Transferred Ship which is sold on terms which provide for capital payments to be paid over a period of time together with interest at an agreed rate or let on hire purchase terms where the rentals are calculated by reference to an inherent rate of interest, the aggregate amount of the capital payments or the capital element of such payments payable in respect of the Ship during the period for which such payments are to be made under the relevant Commercial Documents; (y) in the case of a Transferred Ship which is sold or let on hire purchase terms and the relevant Commercial Documents do not distinguish between capital and interest payments inherent in the instalment or rental payments made the aggregate of the payments payable in respect of the Ship during the period for which such payments are to be made under the relevant Commercial Documents, discounted to their net present value at a discount rate certified by an Officer's Certificate as the average cost of funds of the Stena AB Group as at the date on which the Asset Disposition affecting the relevant ship is completed and in the case that any of the above are initially expressed in a currency other than Dollars the relevant value shall be taken to be the amount in Dollars obtained by converting the amount in foreign currency at the Agent's spot rate for the purchase of the relevant foreign currency with Dollars as at the date of determination of the Security Value; (z) the market value of the Ports which are then subject to a Port Mortgage determined in accordance with Clause 5.3(H) unless the Port Mortgage on any such Port is restricted to a registered maximum amount - 56 - recoverable thereunder in which case such maximum mortgage amount shall be used towards calculating the Security Value if it is lower than the market value determined as aforesaid in respect of such Port. (G) Valuation of Ships and Linkspans The value of each Mortgaged Ship shall be determined as being the mortgage free value thereof after deduction of the aggregate amount of any mortgage debt secured thereon in favour of any creditor other than the Security Agent and, in the case of m.v. "STENA CARISMA" and any other Ship which may become a Mortgaged Ship and which requires the use of Linkspans for its operation, such value shall be taken as the mortgage free value thereof together with the book value of its related Linkspans (but only if they are Mortgaged Linkspans) as shown in the then latest Asset Coverage Compliance Certificate delivered to the Agent. For these purposes, the mortgage free value of each such Ship (together, if relevant, with its Linkspans) shall be the mean of the valuations of the charter-free market value thereof on a willing buyer/willing seller basis as assessed as at the relevant date by three leading European shipbrokers active in the ro-ro/ferry market appointed by the Borrower from the following list of brokers:- Barry Rogliano Salles Brax Shipping HB Simsonship AB Maersk Sales Parimar Francharte S.A. English White Shipping Ltd. Nor Ocean or any other broker nominated by the Borrower and approved by the Agent. Valuations of each Mortgaged Ship and each Mortgaged Linkspan shall be obtained once annually as at 30 December 2001 and as at the dates falling at twelve (12) monthly intervals thereafter and as at any other Disposal Reduction Date (which valuations are to be received by the Agent within twenty one (21) days after the relevant dates) provided however that where a Disposal Reduction Date occurs within six (6) months of a previous valuation pursuant to this Clause 5.3(G), the value of each such Ship or Linkspan shall be the value previously determined pursuant to this Clause 5.3(G) and no further valuations shall be obtained for the relevant Disposal Reduction Date unless required by the Borrower. (H) Valuation of Holyhead Port and Stranraer Port The value of each Port shall be the amount (expressed in Dollars by reference to exchange rates prevailing on the day of computation of the Security Value) determined as the earnings before interest, taxes, depreciation and amortisation in respect of such Port for the previous period of twelve (12) months as shown in the documents relating to such Port most recently delivered to and accepted by the Agent pursuant to Clause 10.2(E) multiplied by six and one half (6.5) provided that if the Agent on the instructions of the - 57 - Majority Banks gives notice to the Borrower that the foregoing does not represent a fair market value of Holyhead Port and/or Stranraer Port the value shall be determined by the auditors of the Borrower or such other firm of auditors as the Agent shall on the instructions of the Majority Banks appoint on a basis which in the opinion of such auditors provides a Fair Market Valuation in accordance with the practice adopted by auditors in valuing similar port facilities in the United Kingdom. The foregoing procedure shall also be used to value any other Port which may from time to time be subject to a Port Mortgage in favour of the Security Agent. The initial values in Sterling of Holyhead Port and Stranraer Port (computed in accordance with the foregoing procedure for each Port for the twelve (12) month period ended 31 December 2000) shall be (pound)66,300,000 and (pound)17,600,000 respectively. (I) Valuation costs The reasonable costs of valuations carried out pursuant to this Clause 5.3 shall be reimbursed by the Borrower to the Agent on the Agent's request. (J) Date of Total Loss For the purpose of this Agreement, a Total Loss shall be deemed to have occurred:- (i) in the case of an actual total loss of a Ship or Linkspan on the actual date and at the time such Ship or Linkspan was lost or, if such date is not known, on the date on which the Ship or Linkspan was last reported; (ii) in the case of a constructive total loss of a Ship or Linkspan, upon the date and at the time notice of abandonment of such Ship or Linkspan is given to the insurers of such Ship or Linkspan for the time being (provided a claim for total loss is admitted by such insurers) or, if such insurers do not forthwith admit such a claim, at the date and at the time at which either a total loss is subsequently admitted by the insurers or a total loss is subsequently adjudged by a competent court of law or arbitration panel to have occurred or, if earlier, the date falling six (6) months after notice of abandonment of such Ship or Linkspan was given to the insurers; (iii) in the case of a compromised or arranged total loss, on the date upon which a binding agreement as to such compromised or arranged total loss has been entered into by the insurers of the relevant Ship or Linkspan; (iv) in the case of Compulsory Acquisition of a Ship or Linkspan, on the date upon which the relevant requisition of title or other compulsory acquisition of such Ship or Linkspan occurs; and - 58 - (v) in the case of hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation of a Ship or Linkspan (other than where the same amounts to Compulsory Acquisition of such Ship or Linkspan) by any Government Entity, or by persons purporting to act on behalf of any Government Entity, which deprives the relevant Shipowner of the use or the relevant Stena Charterer or third party demise charterer of such Ship or Linkspan for more than one hundred and eighty (180) days, upon the expiry of the period of one hundred and eighty (180) days after the date upon which the relevant hijacking, theft, condemnation, capture, seizure, arrest, detention or confiscation occurred. (K) Application of Total Loss and sale proceeds Provided no Event of Default has occurred and is continuing, and provided the Borrower shall have complied with Clauses 5.3 and 5.4, any insurance moneys or Requisition Compensation or proceeds of sale received by the Agent or the Security Agent in respect of a Total Loss of a Ship or sale of a Mortgaged Ship or Mortgaged Port or Mortgaged Linkspan under the relevant Security Documents or in consideration of the agreement of the Security Agent to release its security in relation to any Ship or Port shall be paid to the relevant mortgagor or assignor or (if and to the extent necessary to ensure compliance with Clause 5.3) retained by the Agent for application in or towards making any prepayment and paying any other moneys required under Clauses 5.3 and 5.4. For this purpose, any such insurance moneys or Requisition Compensation or proceeds of sale so received (or the relevant part thereof) may be applied, if the relevant mortgagor or assignor so requests the Agent in writing before the date of receipt thereof, in effecting any prepayment required in accordance with Clause 5.3 and paying related amounts due under Clause 5.4 provided that in relation to any Transferred Ships the references in this Clause 5.3(K) to sale proceeds, insurance moneys and Requisition Compensation shall be deemed to refer to the moneys received by the Security Agent under the relevant Receivables Assignment. Pending each Disposal Reduction Date in relation thereto such moneys shall be accumulated in an account of the relevant assignor with the Agent and the balance thereof after making applications required by Clauses 5.3 and 5.4 shall, provided no Event of Default has occurred and is continuing or would be occasioned thereby, be released to the relevant assignor on the relevant Disposal Reduction Date or as soon thereafter as is reasonably practicable. (L) Sale of Ships on Credit Terms Where a Shipowner sells its Mortgaged Ship on Credit Terms, the relevant Shipowner shall before completion of the sale (in the case of a credit sale) or delivery of the Ship to the relevant charterer (in the case of a hire purchase or conditional sale) execute and deliver to the Security Agent an assignment in substantially the form of the Receivables Assignment of the amounts receivable in respect of the sale or letting of the Ship and all security granted to such Shipowner in respect of the obligation of the buyer to pay the outstanding balance of the purchase price or rentals and the option price under any relevant hire purchase agreement in respect of such Ship. Where the Ship - 59 - is sold pursuant to a credit sale or other arrangement under which the purchaser acquires title to the Ship, such security shall in any event include either:- (i) a first priority mortgage in favour of the seller of the Ship constituted under the laws of an Approved Flag State and a first priority assignment in favour of the seller of the Insurances of the Ship which shall be placed on terms which are not materially less favourable to the seller than the terms set out in the form of Deed of Covenant in Schedule 11.1 in the case of mortgage covenants and the terms set out in Schedule 9 in the case of an Insurance Assignment; or (ii) a bank guarantee from a first class international bank guaranteeing to the seller of the Ship repayment of the full amount of the deferred consideration for the sale of the Ship. The Borrower and Stena AB shall procure that without the consent of the Banks no Ship is sold on Credit Terms for a consideration the principal or capital amount of which is less than the Fair Market Value of the Ship at the time the Ship is sold. 5.4 Amounts payable on prepayment Any prepayment under this Agreement shall be made together with:- (A) accrued interest on the amount to be prepaid to the date of such prepayment (calculated in respect of the period during which the relevant Substitute Basis has applied by virtue of Clause 4.5, at a rate per annum equal to the aggregate of (i) the Margin and (ii) for such period the cost to such Bank of funding its Contribution); (B) any additional amounts payable under Clauses 7.7 and 17.2; (C) costs certified by the Agent as necessary to compensate the Banks for the cost of repaying fixed deposits borrowed to fund any part of any Advance which is prepaid before the Maturity Date of any Advance or the fixed term by reference to which the relevant rate of interest has been ascertained; (D) all other sums payable by the Borrower to the relevant Bank under this Agreement or any of the other Security Documents including, without limitation, any accrued commitment commission payable under Clause 6.2 and any amounts payable under Clause 17. 5.5 Notice of prepayment No voluntary prepayment of an Advance may be effected under this Clause 5 unless the Borrower shall have given the Agent at least three (3) Banking Days' notice of its intention to make such prepayment, except on the sale of a Ship or a Total Loss. Every notice of prepayment shall be effective only on actual receipt by the Agent, shall be irrevocable, shall specify the amount to be prepaid and shall oblige the Borrower to make such prepayment on the date specified. Unless and to the extent that the Commitments are cancelled or reduced on or with effect from the date of any - 60 - such prepayment, amounts prepaid may be re-drawn under this Agreement. The Borrower may not prepay any Advance or any part thereof save as expressly provided in this Agreement. 5.6 Change of control of Stena AB: mandatory cancellation If at any time during the Security Period less than seventy five per cent (75%) of the issued voting share capital of Stena AB (including any votes attached to any shares of Stena AB into which outstanding warrants or other securities may be converted) is held by members of the Sten A. Olsson Family the Borrower or the Agent shall immediately upon becoming aware thereof give notice to the other. The Agent shall consult with the Banks as to the appropriate action to be taken in the light of representations by the Borrower as to the consequences of the change of shareholding. Without prejudice to Clause 15, not earlier than one hundred and twenty (120) days after receiving from or giving notice to the Borrower as provided above the Agent shall unless all of the Banks agree otherwise if the shareholding of the Sten A. Olsson Family in Stena AB does not then exceed seventy five per cent (75%), give notice to the Borrower requiring the Borrower to prepay all the Advances within thirty (30) days of the Agent's notice and upon such notice the Borrower shall within such period make payment to the Agent accordingly and the Commitments shall be cancelled at the end of such thirty (30) day period. 5.7 Change of control of the Borrower: mandatory cancellation If at any time during the Security Period Stena AB ceases directly or via a Wholly Owned Subsidiary of Stena AB to hold the entire issued share capital of the Borrower without the prior consent of the Majority Banks the Advances shall forthwith become repayable on the Agent's demand and the Agent may, and if so directed by the Majority Banks shall, make such a demand on the Borrower whereupon the Advances shall be repayable on the date specified in such notice together with all interest and any commitment commission accrued and all other sums payable under this Agreement and the Commitments shall be cancelled in full. 5.8 Voluntary cancellation of Commitments The Borrower may at any time during the Availability Period by notice to the Agent (effective only on actual receipt) cancel with effect from a date not less than thirty (30) days after the receipt by the Agent of such notice the whole or any part (being $10,000,000 or any larger sum which is an integral multiple of $10,000,000 but not more than the Available Commitments of all of the Banks as at such date) of the total of the Available Commitments as at such date of all the Banks. Any such notice of cancellation, once given, shall be irrevocable and upon such cancellation taking effect the Commitment of each of the Banks shall be reduced proportionately and the Borrower shall on the date designated in its notice prepay such amount of the outstanding Advances as will ensure that immediately thereafter the aggregate amount of the Advances will not exceed the Commitments as so reduced by virtue of the Borrower's cancellation. - 61 - 5.9 Additional partial cancellation The Borrower may also at any time during the Availability Period by notice to the Agent (effective only on actual receipt) cancel with effect from a date not less than thirty (30) Banking Days after receipt by the Agent of such notice the whole but not part only, but without prejudice to its obligations under Clauses 7.7 and 17.2, of the Commitment of any Bank to which the Borrower shall have become obliged to pay additional amounts under Clause 7.7 or 17.2. Upon any notice of such prepayment being given, the Commitment of the relevant Bank shall be reduced to zero and the Borrower shall be obliged to prepay the Contribution of such Bank on such date. 5.10 Prepayment during Term The Borrower may at any time by notice to the Agent (effective only on actual receipt) prepay the whole or any part (being $5,000,000 or any larger sum which is an integral multiple of $1,000,000) of any Advance prior to its Maturity Date on not less than three (3) Banking Days notice (whether or not any part of the Commitment is also being cancelled on such date pursuant to any provision of this Agreement) and the Borrower shall when making such prepayment, make such prepayment together with any amounts as referred to in Clause 5.4. 5.11 Transferred Ships : Application of moneys received The Borrower shall procure that moneys payable by the purchasers of Transferred Ships on account of the deferred consideration for the purchase of the relevant Ships shall be paid to accounts in the name of the Security Agent established with itself. The amounts accumulated in such accounts shall be applied on each Disposal Reduction Date in payment to the Agent of the Disposal Reduction Amount in respect of the relevant Ship and, provided that no Event of Default has occurred and is continuing, the balance standing to the credit of the relevant accounts shall be released to the relevant seller immediately following such application. Moneys credited to the relevant accounts will bear interest at the normal rates paid by the Agent for accounts of the relevant type to first class customers. 6. FEES, COMMISSION, MARGIN AND EXPENSES 6.1 Agency fee The Borrower shall pay to the Agent and Security Agent on the date hereof and on each anniversary thereof during the Security Period an agency fee of the amount set out in a separate letter agreement dated 21 September 2001 made between Svenska Handelsbanken AB (publ), the Borrower and Stena AB. 6.2 Commitment commission The Borrower shall pay to the Agent for the account of the Banks quarterly in arrears during the Availability Period commitment commission computed from the date of this Agreement at an annual rate equal to zero point five per cent (0.5%) on the daily average undrawn and uncancelled amount of each Bank's Available Commitment in relation to the relevant period. Commitment commission shall also be payable in - 62 - respect of any portion of the Commitments which has been suspended pursuant to Clause 5.3 (E) but not cancelled. The first period in respect of which such commitment commission shall be calculated will be the period from the date of this Agreement up to and including 30 September 2001; thereafter the commitment commission shall be calculated for each of the following consecutive periods of three (3) months ending on 31 March, 30 June, 30 September and 31 December respectively in each year with a final instalment being calculated in respect of the period ending on the last day of the Availability Period. The amount of commitment commission payable in respect of each such period shall be calculated by the Agent within five (5) Banking Days of the end of such period and shall be notified by the Agent to the Borrower who shall pay such amount to the Agent not later than five (5) Banking Days after receiving the Agent's notification thereof. 6.3 Arrangement fee The Borrower shall pay to the Agent for the account of the Co-Arrangers on the date of this Agreement an arrangement fee of the amount set out in a separate letter agreement dated of even date herewith made between the Agent and the Borrower. 6.4 Expenses The Borrower shall pay to the Agent on a full indemnity basis on demand all expenses (including external and internal legal, printing and out-of-pocket expenses) incurred:- (A) by the Agent and/or the Security Agent and/or the Co-Arrangers in connection with the negotiation, preparation, primary syndication, execution and, where relevant, registration of the Security Documents and of any amendment or extension of or the granting of any waiver or consent under, any of the Security Documents (but excluding, for the avoidance of doubt, any such expense incurred in connection with the transfer, assignment or sub-participation of any of the rights and/or obligations of any Bank under the Security Documents other than by the Co-Arrangers in connection with the primary syndication of the facility granted hereunder); and (B) by the Agent, the Security Agent and any of the Banks in contemplation of, or otherwise in connection with, the enforcement of, or preservation of any rights under, any of the Security Documents, or otherwise in respect of the moneys owing under any of the Security Documents together with interest at the rate referred to in Clause 4.2 from the date on which such expenses were incurred, to the date of payment (as well after as before judgment) provided that the Borrower shall not be liable to reimburse the costs of any external legal advisers under paragraph (A) except the legal fees and disbursements of Messrs Sinclair Roche & Temperley as counsel to the Co-Arrangers and the fees and disbursements of the legal counsel who are to render opinions in respect of any of the Security Documents or to deal with registration of any of the Ship Mortgages or other Security Documents on behalf of the Security Agent. - 36 - 6.5 Value added tax All fees, commissions and expenses payable pursuant to this Clause 6 shall be paid together with an amount equal to any value added tax payable by the Agent, the Security Agent, the Co-Arranger or any Bank in respect of such fees and expenses and any value added tax chargeable in respect of any services supplied by the Agent, the Security Agent, the Co-Arrangers or any Bank under this Agreement shall, on delivery of a value added tax invoice, be paid in addition to any sum agreed to be paid hereunder to the extent that, in either case, the Agent, the Security Agent, the Co-Arrangers or the relevant Bank (as the case may be) shall have certified (such certificate to be binding and conclusive, in the absence of manifest error, on the Borrower) to the Borrower that it is not entitled to credit for such value added tax as input tax. 6.6 Stamp and other duties The Borrower shall pay all stamp, documentary, registration or other like duties or taxes (including any duties or taxes payable by the Agent, the Security Agent, the Co-Arrangers and the Banks but excluding any such duties or taxes incurred in connection with any transfer, assignment or sub-participation of any of the rights and/or obligations of a Bank under any of the Security Documents) imposed on or in connection with any of the Commercial Documents or the Security Documents and shall indemnify the Agent, the Co-Arrangers, the Security Agent and the Banks against any liability arising by reason of any delay or omission by the Borrower to pay such duties or taxes. 6.7 Supplemental Margin (A) The Margin is calculated on the basis that the daily average of the Advances of each Bank during each Calculation Period will not exceed thirty three and one-third of one per cent (33 1/3%) of the daily average of the Commitment of that Bank during such Calculation Period. If such daily average for a Calculation Period exceeds thirty three and one-third of one per cent (33 1/3%) and sixty six and two-thirds of one per cent (66 2/3%) (as the case may be) an additional amount shall be payable by the Borrower to each Bank in the manner provided by this Clause 6.7. (B) For the purposes of this Clause 6.7:- (i) "CALCULATION PERIOD" means the period commencing on the Availability Date and ending on the first Review Date and each of the successive three (3) monthly periods thereafter each expiring on a Review Date with the final Calculation Period (whether of three (3) months or shorter) ending on the final Review Date; and (ii) "REVIEW DATE" means 30 September 2001 and 31 March, 30 June and 30 September and 31 December in each year thereafter up to the date upon which all of the Commitments are reduced to zero, and such date itself. (C) Within five (5) Banking Days after each Review Date the Agent shall - 64 - calculate the actual daily average of the Advances of each Bank during the Calculation Period expiring on such Review Date according to the following formula - A = O x 100 - C where - A is the actual daily average of the Advances of the relevant Bank during the relevant Calculation Period, expressed as a percentage. O is the aggregate of the amounts of such Bank's Advances on each day during such Calculation Period; and C is the aggregate of the amounts of the Commitment of such Bank on each day during such Calculation Period. (D) For the purposes of this Clause 6.7, the rate of supplemental margin in relation to a Calculation Period will be as follows:- (i) where A as so calculated exceeds thirty three and one-third of one per cent (33 1/3%) but does not exceed sixty six and two-thirds of one per cent (66 2/3%), the supplemental margin for such part of such Calculation Period will be zero point twenty five per cent (0.25%); and (ii) where A as so calculated exceeds sixty six and two-thirds of one per cent (66 2/3%), the supplemental margin for such part of such Calculation Period will be zero point three hundred and seventy five per cent (0.375%). (E) Upon calculating the rate of supplemental margin (if any), the Agent shall promptly calculate an amount (the "Supplemental Margin Amount") equal to interest accruing at an annual percentage rate equal to the supplemental margin for such Calculation Period on the daily Advances of each Bank from the beginning of such Calculation Period to the Review Date on which it ends. The Agent shall then notify the Borrower and each Bank of the rate of supplemental margin (if any) for such Calculation Period and the Supplemental Margin Amount (if any) due to such Bank for such Calculation Period. (F) The Borrower shall pay to the Agent, for the account of the Banks, the aggregate of the Supplemental Margin Amounts due to each of the Banks for a Calculation Period within five (5) Banking Days of being notified by the Agent of the rate of supplemental margin and the amount of the Supplemental Margin Amounts for that Calculation Period. 7. PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS 7.1 No set-off or counterclaim; distribution to the Banks - 65 - The Borrower acknowledges that in performing their obligations under this Agreement, the Banks will be incurring liabilities to third parties in relation to the funding of amounts to the Borrower, such liabilities matching the liabilities of the Borrower to the Banks and that it is reasonable for the Banks to be entitled to receive payments from the Borrower gross on the due date in order that the Banks are put in a position to perform their matching obligations to the relevant third parties. Accordingly all payments to be made by the Borrower under any of the Security Documents shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in Clause 7.7, free and clear of any deductions or withholdings, in Dollars (except for costs, charges or expenses which shall, at the request of the Agent, be payable in the currency in which they are incurred) on the due date to the account required under Clause 7.12. Save where this Agreement specifically provides for a payment to be made for the account of a particular Bank (including, without limitation, Clauses 6, 7.7, 16.2, 17.1, 17.2 and 18.2) in which case the Agent shall distribute the relevant payment to the Bank concerned, payments to be made by the Borrower under this Agreement shall be for the account of all the Banks and the Agent shall forthwith distribute such payments in like funds as are received by the Agent to the Banks rateably in accordance with their Commitments. 7.2 Payments by the Banks (A) To the Agent All payments to be made by a Bank to or for the account of the Agent under this Agreement shall be made in full, without any set-off or counterclaim whatsoever and, subject as provided in Clause 7.8, free and clear of any deductions or withholdings, in Dollars on the due date to the account of the Agent at such bank as the Agent may from time to time specify for this purpose. (B) To the Borrower All sums to be advanced by the Banks to the Borrower under this Agreement shall be remitted in Dollars on the date of the Advance to the account of the Agent at such bank as the Agent may have notified to the Banks and shall be paid by the Agent on such date in like funds as are received by the Agent to the account specified in the relevant Drawdown Notice. 7.3 Agent may assume receipt Where any sum is to be paid under any of the Security Documents to the Agent for the account of another person, the Agent may assume that the payment will be made when due and the Agent may (but shall not be obliged to) make such sum available to the person so entitled. If it proves to be the case that such payment was not made to the Agent, then the person to whom such sum was so made available shall on request refund such sum to the Agent together with interest thereon sufficient to compensate the Agent for the cost of making available such sum up to the date of such repayment and the person by whom such sum was payable shall indemnify the Agent and/or person to whom such sum was made available by the Agent for any and all loss or expense which the Agent or such person may sustain or incur as a consequence of such sum not having been paid on its due date. - 66 - 7.4 Non-Banking Days When any payment under any of the Security Documents would otherwise be due, or the Termination Date would otherwise fall, on a day which is not a Banking Day, the due date for payment or (as the case may be) the Termination Date shall be extended to the next following Banking Day unless such Banking Day falls in the next calendar month in which case payment shall be made, or (as the case may be) the Termination Date shall fall, on the immediately preceding Banking Day. 7.5 Calculations All interest, commissions, fees and other payments of an annual nature under any of the Security Documents shall accrue from day to day and be calculated on the basis of actual days elapsed and a 360 day year. 7.6 Certificates conclusive Any certificate or determination of the Agent or any Bank as to any rate of interest or any other amount pursuant to and for the purposes of any of the Security Documents shall substantiate in reasonably sufficient detail the interest or other amount concerned and, subject thereto, shall, in the absence of manifest error, be conclusive and binding on the Borrower and (in the case of a certificate or determination by the Agent) on the Banks. The Agent shall, promptly upon the request of the Borrower, send to the Borrower such details as may reasonably be required by the Borrower setting out the manner in which any such rate or amount has been determined, together with such documents and calculations as may reasonably be required by the Borrower in order to verify the same. 7.7 Grossing-up for Taxes - Borrower (A) Grossing up If at any time the Borrower or Stena AB is required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of any Bank, the Co-Arrangers, the Security Agent or the Agent (or if the Agent is required to make any deduction or withholding from a payment to the Co-Arrangers, the Security Agent or a Bank), the sum due from the Borrower or, as the case may be, Stena AB in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, each Bank, each Co-Arranger, the Security Agent, and the Agent receives on the due date for such payment (and retains, free from any liability in respect of such deduction or withholding), a net sum equal to the sum which it would have received had no such deduction or withholding been required to be made and the Borrower and Stena AB shall indemnify each Bank, the Co-Arrangers, the Security Agent and the Agent against any losses or costs incurred by any of them by reason of any failure of the Borrower or Stena AB to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. The Borrower or, as the case may be, Stena AB shall promptly deliver to the Agent any receipts, certificates or other proof - 67 - evidencing the amounts (if any) paid or payable in respect of any deduction or withholding as aforesaid. (B) Tax credits If, following any such deduction or withholding as is referred to in Clause 7.7(A) from any payment by the Borrower or Stena AB, the recipient of that payment shall receive or be granted a credit against or remission for any Taxes payable by it, such recipient shall, subject to the Borrower or, as the case may be, Stena AB having made any increased payment in accordance with Clause 7.7(A) and to the extent that the recipient can do so without prejudicing the retention of the amount of such credit or remission and without prejudice to the right of the recipient to obtain any other relief or allowance which may be available to it, reimburse the Borrower or, as the case may be, Stena AB with such amount as the recipient shall in its absolute discretion certify to be the proportion of such credit or remission as will leave the recipient (after such reimbursement) in no worse position than it would have been in had there been no such deduction or withholding from the payment by the recipient as aforesaid. Such reimbursement shall be made forthwith upon the Bank certifying that the amount of such credit or remission has been received by it. Nothing contained in this Agreement shall oblige the recipient to rearrange its tax affairs or to disclose any information regarding its tax affairs and computations. Without prejudice to the generality of the foregoing, neither the Borrower nor Stena AB shall by virtue of this Clause 7.7(B) be entitled to enquire about the recipient's tax affairs. 7.8 Grossing-up for Taxes - Banks If at any time any Bank is required to make any deduction or withholding in respect of Taxes from any payment due under any of the Security Documents for the account of the Agent or the Security Agent the sum due from such Bank in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the Agent and the Security Agent receive on the due date for such payment (and retains free from any liability in respect of such deduction or withholding) a net sum equal to the sum which they would have received had no such deduction or withholding been required to be made and each Bank shall indemnify the Agent and the Security Agent against any losses or costs incurred by any of them by reason of any failure of such Bank to make any such deduction or withholding or by reason of any increased payment not being made on the due date for such payment. 7.9 Bank accounts Each Bank shall maintain, in accordance with its usual practice, an account or accounts evidencing the amounts from time to time lent by, owing to and paid to it under the Security Documents. The Agent shall maintain a control account showing the Advances and other sums owing to the Agent, the Security Agent and the Banks under the Security Documents and all payments in respect thereof made from time to time. The control account shall, in the absence of manifest error, be conclusive as to the amount from time to time owing to the Agent, the Security Agent and the Banks under the Security Documents. - 68 - 7.10 Application of moneys All moneys received by the Agent, the Security Agent or any Bank under or pursuant to this Agreement or any other of the Security Documents and expressed to be applicable in accordance with this Clause 7.10 or whose application is not otherwise specifically provided for in the Security Documents shall (if not already done so) be paid to the Agent and shall be applied by the Agent:- FIRST: in or towards satisfaction pari passu of any amounts in respect of the balance of the Outstanding Indebtedness as are then accrued due and payable or are then due and payable by virtue of payment demanded; SECONDLY: the surplus (if any) shall be paid to the Borrower or whomsoever else shall be entitled thereto. 7.11 Suspense account Notwithstanding the provisions of Clause 7.10, insofar as any moneys are received or recovered by the Security Agent under or in connection with the guarantee and indemnity contained in Clause 8, such moneys may at the Security Agent's discretion be transferred to a suspense or impersonal account and may be held in such account for so long as the Security Agent thinks fit pending payment to the Agent for application in or towards discharging the obligations of the Borrower under this Agreement and the other Security Documents. 7.12 Place of payment All payments to be made by the Borrower or Stena AB under any of the Security Documents shall be made not later than 10.00 a.m. New York time on the due date and in same day funds to the account of the Agent at The Chase Manhattan Bank New York City, USA by way of payment order MT100 SWIFT Address HANDSESG or tested telex no. 27500 answerback HANDGBS quoting reference RVIC STBNL 647 or at such other office or bank in New York City as the Agent may from time to time designate. 8. GUARANTEE AND INDEMNITY 8.1 Guarantee In consideration of the Banks agreeing at the request of Stena AB to make available to the Borrower the loan facility provided for in this Agreement in accordance with the terms of this Agreement and in order to secure the payment of the Outstanding Indebtedness in accordance with the provisions of the Security Documents and the performance and observance of all of the obligations contained in the Security Documents:- (A) Stena AB as primary obligor as and for its own debt and not merely as surety hereby undertakes to the Security Agent as trustee for and on behalf of itself, the Banks, the Co-Arrangers and the Agent to be responsible for and hereby guarantees to the Security Agent the due and punctual payment by the Borrower to the Agent on behalf of the Banks, the Co-Arrangers, the Security - 69 - Agent and the Agent (as and when due by acceleration, demand or otherwise howsoever) of the Outstanding Indebtedness and every part thereof; (B) Stena AB unconditionally undertakes immediately on demand by the Security Agent from time to time to pay and/or perform its obligations under Clause 8.1(A); and (C) Stena AB unconditionally undertakes immediately on demand by the Agent from time to time to indemnify and hold harmless the Security Agent, the Banks, the Co-Arrangers and the Agent in respect of:- (i) any loss incurred by the Security Agent, the Banks, the Co-Arrangers and/or the Agent as a result of any of the Security Documents or any provision thereof being or becoming invalid, void, voidable or unenforceable for any reason whatsoever; and (ii) all loss or damage of any kind arising directly or indirectly from any failure on the part of the Borrower to perform any obligation to be performed by the Borrower under and pursuant to the Security Documents or any of them. The obligations of Stena AB under this Clause 8 shall not be diminished by any of the other obligations undertaken by Stena AB in this Agreement and the obligations of Stena AB set out in Clause 8.1(A) shall be construed as a guarantee of payment and not of collection. 8.2 Survival of Stena AB's liability Stena AB's liability to the Security Agent and the Banks, the Co-Arrangers and the Agent under Clause 8.1 shall not be discharged, impaired or otherwise affected by reason of any of the following events or circumstances (regardless of whether any such events or circumstances occur with or without the knowledge or consent of Stena AB):- (A) any time, forbearance or other indulgence given or agreed by the Security Agent, the Banks, the Co-Arrangers and/or the Agent to or with any Security Party in respect of any of its respective obligations to the Security Agent, the Banks, the Co-Arrangers and/or the Agent hereunder or under any other of the Security Documents; or (B) any legal limitation, disability or incapacity relating to any Security Party; or (C) any invalidity, irregularity, unenforceability, imperfection or avoidance of or any defect in any security granted by, or the obligations of any Security Party under, this Agreement or any other of the Security Documents or any amendment to or variation thereof or to or of any other document or security comprised therein; or (D) any change in the name, constitution or otherwise of any Security Party or the merger of any Security Party with any other corporate entity; or - 70 - (E) the liquidation, bankruptcy or dissolution (or proceedings analogous thereto) of any Security Party or the appointment of a receiver or administrative receiver or administrator or trustee or similar officer of any of the assets of any Security Party or the occurrence of any circumstances whatsoever affecting any Security Party's liability to discharge its respective obligations under any of the Security Documents; or (F) any challenge, dispute or avoidance by any liquidator of any Security Party in respect of any claim by Stena AB or the Borrower or any of them by right of subrogation in any such liquidation; or (G) any release of any other Security Party or any renewal, exchange or realisation of any security or obligation provided under or by virtue of any of the Security Documents or the provision to the Security Agent, the Banks, the Co-Arrangers and/or the Agent at any time of any further security for the obligations of the Borrower under any of the Security Documents; or (H) the release of any co-guarantor and/or indemnor who is now or may hereafter become under a joint and several liability with Stena AB under this guarantee or the release of any other guarantor, indemnor or other third party obligor in respect of the obligations of any Security Party under any of the Security Documents; or (I) any failure on the part of the Security Agent, the Banks, the Co-Arrangers and/or the Agent (whether intentional or not) to take or perfect any security agreed to be taken under or in relation to any of the Security Documents or to enforce any of the Security Documents; or (J) any other act, matter or thing (save for repayment in full of the Outstanding Indebtedness) which might otherwise constitute a legal or equitable discharge of any of Stena AB's obligations under this Clause 8. 8.3 Continuing guarantee The guarantee contained in Clause 8.1 shall be: (A) a continuing guarantee remaining in full force and effect until payment in full has been received by the Security Agent, the Banks, the Co-Arrangers and the Agent of each and every part and the ultimate balance of the Outstanding Indebtedness in whatever currency or currencies the same may from time to time be denominated in accordance with this Agreement; and (B) in addition to and not in substitution for or in derogation of any other security held by the Security Agent, the Banks, the Co-Arrangers and/or the Agent from time to time in respect of the Outstanding Indebtedness or any part thereof. 8.4 Circumstances where discharge to be void ab initio -------------------------------------------------- Any satisfaction of obligations by Stena AB to the Security Agent, the Banks, the Co-Arrangers and/or the Agent or any discharge given by the Security Agent, the Banks, the Co-Arrangers and/or the Agent to Stena AB or any other agreement reached by - 71 - Stena AB with the Security Agent, the Banks, the Co-Arrangers and/or the Agent in relation to this Clause 8 shall be, and be deemed always to have been, void ab initio if any act satisfying any of the said obligations or on the faith of which any such discharge was given or any such agreement was entered into is subsequently avoided in whole or in part by or pursuant to any provision of any applicable law whatsoever. 8.5 Exclusion of the rights of Stena AB as guarantor Until the actual and contingent obligations of each Security Party under the Security Documents have been performed in full Stena AB shall not:- (A) be entitled to share in or succeed to or benefit from (by subrogation or otherwise) any rights which the Security Agent, the Banks, the Co-Arrangers and/or the Agent may have in respect of the Outstanding Indebtedness or any security therefor or all or any of the proceeds of such rights or security; or (B) without the prior consent of the Security Agent (as directed by the Banks):- (i) exercise in respect of any amount paid by it hereunder any right of subrogation, contribution or any other right or remedy which it may have in respect thereof; or (ii) prove in a liquidation of any Security Party in competition with the Security Agent or the Agent, the Co-Arrangers or any of the Banks for any moneys owing to Stena AB by any other Security Party on any account whatsoever. 9. REPRESENTATIONS AND WARRANTIES 9.1 Continuing The Borrower and Stena AB each represent and warrant (subject to the reservations or qualifications as to matters of law as set forth in the Legal Opinions delivered to the Agent) to the Agent, the Security Agent, the Co-Arrangers and the Banks that as at the date hereof (and each other date referred to in Clause 9.3):- (A) Status each of the Security Parties is a limited liability company, duly constituted and validly existing under the laws of its place of incorporation, possessing perpetual corporate existence, the capacity to sue and be sued in its own name and the power to own its assets and carry on its business as it is now being conducted; (B) Powers and authority each of the Security Parties has the power and capacity to enter into, and to perform its obligations under, those of the Security Documents to which it is or will be a party and has taken all necessary action to authorise the entry into such Security Documents and the performance by it of its obligations thereunder; - 72 - (C) Legal validity this Agreement constitutes and each other of the Security Documents, upon execution and delivery thereof, will constitute (subject to any Post-Completion Registrations) the legal, valid and binding obligations of each Security Party which is a party thereto enforceable in accordance with its terms except as such enforcement may be limited by any relevant bankruptcy, insolvency, administration or similar laws affecting creditors' rights generally and by general principles of equity and subject to any relevant qualifications contained in any of the Legal Opinions delivered to the Agent; (D) Non-conflict with laws the entry into and performance of the Security Documents to which each Security Party is or will be a party and the transactions contemplated hereby and thereby do not and will not contravene or conflict with:- (i) any law or regulation or any official or judicial order; or (ii) the constitutional documents of such Security Party; or (iii) any material agreement or document to which such Security Party is a party or which is binding upon it or any of its assets; nor, save as contemplated by this Agreement and the other Security Documents, result in the creation or imposition of any Lien on the assets of any Security Parties pursuant to the provisions of any such agreement or document; (E) Pari passu status the claims of the Banks, the Co-Arrangers, the Agent and the Security Agent against each Security Party under the Security Documents will (subject to the terms of the relevant Security Documents) rank at least pari passu with the claims of all other unsecured creditors of such Security Party other than claims of such creditors to the extent that they are statutorily preferred; (F) No immunity no Security Party nor any of its respective assets enjoys any right of immunity from set-off, suit or execution in respect of its obligations under this Agreement or any other of the Security Documents to which it is a party; (G) Executive office none of the Security Parties has an executive office in any part of the U.S.A. which would entitle it to apply for a reorganisation under Chapter XI of the United States Bankruptcy Act; - 73 - (H) No money laundering in relation to the utilisation by the Borrower of the facilities granted to it hereunder, the performance and discharge of its obligations and liabilities under the Security Documents to which it is a party, and the transactions and other arrangements effected or contemplated by the Security Documents to which the Borrower is a party, the Borrower confirms that it is acting for its own account and that the foregoing will not involve or lead to contravention of any law, official requirement or other regulatory measure or procedure implemented to combat "money laundering" (as defined in Article 1 of the Directive (91/308/EEC) of the Council of the European Communities). 9.2 Initial The Borrower and Stena AB each represent and warrant (subject to the reservations or qualifications as to matters of law as set forth in the Legal Opinions delivered to the Agent) to the Agent, the Security Agent, the Co-Arrangers and the Banks that as at the date hereof:- (A) No default no event has occurred which constitutes a material default under or in respect of:- (i) any agreement or document relating to Debt to which any Security Party is a party or by which any Security Party may be bound; or (ii) any other agreement or document to which any Security Party is a party or by which any Security Party may be bound and which default will have, or may reasonably be expected to have, a material adverse effect on the ability of such Security Party to perform its respective obligations under this Agreement and the other Security Documents; (B) Consents save as disclosed in writing to the Agent or as disclosed in any of the documents or evidence referred to in Schedule 5 delivered to, and accepted by, the Agent under this Agreement, all authorisations, approvals, consents, licences, exemptions, filings, registrations, notarisations and other matters, official or otherwise, required by any Security Party:- (i) in connection with the entry into, performance, validity and enforceability of this Agreement and the other Security Documents and the transactions contemplated hereby and thereby; (ii) in order to maintain its corporate existence in good standing; and (iii) in order to ensure that it has the right, and is duly qualified and able, to conduct its business as it is conducted in all applicable jurisdictions including, without limitation to the generality of the foregoing, all such consents and approvals as are required to conduct its business and/or own and operate its assets - 74 - have been obtained or effected and are in full force and effect other than (a) Post-Completion Registrations in respect of paragraph (i) above; and (b) any consent or approval required by a Security Party to conduct its business and/or own and operate its assets to the extent that such Security Party is unaware or cannot reasonably be expected to be aware of the requirement to obtain such consent or approval or to the extent that the absence of such consent or approval would not have a material adverse effect on the ability of such Security Party to perform its obligations under the Security Documents; (C) Accuracy of information all factual information furnished in writing to the Co-Arrangers by the Borrower and Stena AB relating to the businesses and affairs of the Stena AB Group in connection with this Agreement, the other Security Documents and the Commercial Documents was (when given) true and correct in all material respects and there are no other material facts or considerations the omission of which would render any such information misleading; (D) Accounts the Audited Stena AB Financial Statements for the financial year ended 31 December 2000 (which accounts were prepared in accordance with Swedish GAAP) fairly represent the consolidated financial condition of the Stena AB Group as at 31 December 2000 and since that date there has been no material adverse change in the consolidated financial condition of the Stena AB Group as shown in such audited accounts save as disclosed in writing to the Agent; (E) No Liens none of the Unencumbered Assets is subject to any Liens other than in favour of Svenska Handelsbanken AB (publ) (in the case of the P&O Stena Shares and the P&O Stena Loan Stock) as security for the Stena Line Revolving Credit Facility; (F) Existing Debt neither Stena AB nor any of its Subsidiaries (other than Unrestricted Subsidiaries) has incurred any Debt other than: (i) in respect of Existing Debt; or (ii) the Notes (to the extent not included in the definition Existing Debt); (iii) pursuant to this Agreement; (iv) pursuant to the Stena Discovery Facility Agreement; - 75 - (v) pursuant to the Unsecured Revolving Credit Facility Agreement; (vi) pursuant to the ABN Standby Facility Agreement; (G) Winding-up, etc. no Security Party has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of the knowledge and belief of the Borrower and Stena AB) threatened against any of Stena AB or any other Security Party for its winding-up or dissolution or for the appointment of a liquidator, administrator, receiver, administrative receiver, trustee or similar officer of any Security Party of any or all of its assets or revenues nor has any Security Party sought any other relief under any applicable insolvency or bankruptcy law; (H) Litigation save as disclosed in writing to the Agent, no litigation, arbitration or administrative proceedings are current or pending or, to the knowledge of the Borrower and/or Stena AB, threatened, which involve a claim against any Security Party in an amount exceeding $2,000,000; (I) Taxes on payments all amounts payable by each Security Party under the Security Documents may be made free and clear of and without deduction for or on account of any Taxes; (J) Completeness of documents the copies of the Commercial Documents delivered to the Agent are true and complete copies of each such document and no amendments thereto or variations thereof have been made or agreed which are substantial in relation to the business as presently conducted of the Stena AB Group as a whole. 9.3 Repetition of continuing representations and warranties On and as of the Availability Date, each date of drawing an Advance and each Maturity Date the Borrower and Stena AB shall be deemed to repeat the representations and warranties in Clause 9.1 as if made with reference to the facts and circumstances existing on such day. 9.4 Future financial statements In relation to the financial statements provided or to be provided under Clause 10, the Borrower and Stena AB each represent and warrant, as at the date to which such statements were prepared, that the statements were prepared in accordance with Swedish GAAP (in the case of Stena AB) or Dutch GAAP (in the case of the Borrower) and fairly represent the consolidated financial position of (as the case may be) the Stena AB Group or the Stena International Group as at such date. - 76 - 10. UNDERTAKINGS 10.1 Duration The undertakings contained in this Clause 10 shall remain in force from the date of this Agreement until the end of the Security Period. 10.2 Provision of financial and other information The Borrower will provide to the Agent in sufficient copies for distribution to each of the Banks:- (A) within one hundred and eighty (180) days after the close of the relevant financial years, copies of the Audited Stena AB Financial Statements and of the Audited Stena International Financial Statements for that financial year; (B) as soon as practicable, but in any event within ninety (90) days after 30 September 2001 and each of the dates falling quarterly thereafter (other than the final quarter of each financial year), certified copies of the unaudited consolidated management accounts of the Stena AB Group and of the Stena International Group for the preceding quarter; (C) promptly, such further information in the possession or control of the Borrower or Stena AB regarding the financial condition and operations of the Stena AB Group and/or the Stena International Group as the Agent may reasonably request; (D) within ninety (90) days after the end of each financial year of Stena AB, an Officer's Certificate (one of the signors of which is the principal executive, financial or accounting officer of Stena AB), stating whether or not to the best knowledge of the signors thereof, Stena AB is in default in the performance and observance of any of the terms, provisions and conditions of Clauses 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.14, 10.17, 10.20 and 10.21 and, if Stena AB shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge; (E) as soon as practicable, but in any event within one hundred and twenty (120) days after the close of each financial year:- (i) a certificate from the chief financial officer of each Port Owner certifying the amount of earnings before interest, taxes, depreciation and amortisation during the previous twelve (12) month period of each Mortgaged Port owned by the Port Owner; and (ii) copies of the unaudited management accounts of each Port Owner for such financial year showing the earnings before interest, taxes, depreciation and amortisation of each such Port such documents to be in a form reasonably acceptable to the Agent so that, if they are not so acceptable, the Borrower shall, if requested by the Agent, procure that an auditor's certificate and/or audited accounts are delivered to the - 77 - Agent showing the earnings before interest, taxes, depreciation and amortisation of each Mortgaged Port as referred to in paragraph (i) above, and (F) not later than 28 September 2001 in respect of the position as at 30 June 2001 and thereafter within ninety (90) days after 31 December 2001 and each of the dates falling at six (6) monthly intervals thereafter or, if the Agent so requests in writing pursuant to Clause 10.21(B), within ninety (90) days after the end of any other relevant financial quarter (or (if later) within ten (10) business days in Gothenburg (excluding public holidays, Saturdays and Sundays) of receipt of the Agent's written request), an Officer's Certificate together with the method of the calculation of the asset coverage ratio and all supporting documents, in substantially the form set out in Schedule 21 in respect of the asset coverage ratio set out in Clause 10.21(A) confirming:- (i) the respective amounts of the Appraised Value of Restricted Group Assets, Secured Debt, Strategic Investments, Cash and Marketable Securities, Net Market Value of the Unrestricted Group, Other Assets and Working Capital, Available Asset Value and Unsecured Debt (as each of those terms is defined in Clause 10.21(C)) as at the relevant date and that such amounts were calculated in accordance with this Agreement and Swedish GAAP; and (ii) the amounts of the valuations of the assets comprised in the calculation of the Available Asset Value (including a list of each of the vessels and ports and their respective valuations). 10.3 Notification of default The Borrower or Stena AB will notify the Agent of any Default promptly upon their becoming aware of the occurrence thereof. 10.4 Preparation of financial statements Each set of financial statements and management accounts to be provided to the Agent pursuant to Clause 10.2 shall be prepared in accordance with Swedish GAAP (in the case of the Stena AB Group) or Dutch GAAP (in the case of the Stena International Group) consistently applied (or, if not consistently applied, accompanied by details of the inconsistencies) and shall fairly represent the financial condition of Stena AB Group and the Stena International Group respectively. 10.5 Consents and registrations and maintenance of status Each of the Borrower and Stena AB will do, and will procure that each other Security Party will do, all such things as are necessary to enable it to comply with any of its financial obligations under those of the Security Documents to which it is a party including, without limitation, obtaining, maintaining, promptly renewing (when necessary) and complying at all times with (and promptly furnishing certified copies to the Agent of) all such authorisations, approvals, consents, licences and exemptions as are from time to time required under any applicable law or regulation in connection with any of the matters aforesaid. - 78 - Insofar as any such filings or registrations aforesaid have not been completed on or before the first Advance is drawn the Borrower and Stena AB will procure the filing or registration within applicable time limits of each Security Document which requires filing or registration together with all ancillary documents required to preserve the priority and enforceability of the Security Documents. Where the operation of any Mortgaged Ship or Mortgaged Linkspan in accordance with its owner's or operator's requirements requires the obtaining or maintenance of a route licence or port licence, the Borrower and Stena AB further undertake to procure that such licence is obtained, maintained, promptly renewed (when necessary) and complied with in all material respects at all relevant times during the Security Period. 10.6 Limitation on Liens Except with the prior written consent of the Majority Banks, the Borrower and Stena AB will not, and shall procure that no other member of the Stena AB Group will:- (A) create or incur or permit to subsist any Lien (other than a Permitted Ship Lien) on the whole or any part of any property or rights which is or are presently or may in future during the Security Period be subject to any Lien in favour of the Security Agent pursuant to the Security Documents or over any Earnings of any Shipowner or Stena Charterer in relation to any Mortgaged Ship; or (B) create or incur any Lien (other than Permitted Liens) on or with respect to any other property or assets of Stena AB or any Subsidiary thereof now owned or hereafter acquired to secure Debt of any person without making, or causing such Subsidiary to make, effective provision for securing the Outstanding Indebtedness equally and rateably with such Debt or, in the event such Debt is subordinate in right of payment to the Outstanding Indebtedness, prior to such Debt, as to such property or assets for so long as such Debt shall be so secured provided however that Stena AB and its Subsidiaries may incur Liens to secure any Debt under this paragraph (B) without securing the Outstanding Indebtedness equally and rateably with or prior to such Debt, as applicable, if the outstanding amount of Debt secured by Liens created after the date of this Agreement and otherwise prohibited by this Agreement does not at the time of such incurrence, when aggregated with the outstanding amount of Debt secured by Liens created after 1 October 1997 but before the date of this Agreement otherwise prohibited by the 2007 Indenture but which Liens are permitted by Section 10.14(b) thereof, exceed:- (i) 5% of Consolidated Tangible Assets; minus; (ii) the lesser of (a) the Fair Market Value of the Related Collateral and/or other property granted as additional security pursuant to paragraph (O) of the definition of "Permitted Liens" and subject to Liens at such time and (b) the maximum amount of Debt secured at such time or thereafter by such additional collateral set forth in a written security or other agreement at such time or thereafter with respect to such additional collateral. - 79 - 10.7 Asset Dispositions (A) Stena AB will not, and will not permit any Subsidiary of Stena AB to, make any Asset Disposition in one or more related transactions by Stena AB or a Subsidiary of Stena AB unless:- (i) Stena AB or the Subsidiary of Stena AB, as the case may be, receives consideration for such disposition at least equal to the Fair Market Value for the shares or assets sold or disposed of as determined by the Board of Directors of Stena AB or such Subsidiary in good faith; (ii) at least eighty five per cent (85%) of the consideration for such disposition consists of one or more of the following:- (w) cash or Cash Equivalents, provided that any promissory note (or other evidence of indebtedness) received by Stena AB or such Subsidiary that is immediately converted into cash or Cash Equivalents shall be deemed to be cash for the purposes of this provision to the extent of the cash or Cash Equivalents actually received upon such conversion; (x) in the case of an Asset Disposition relating to a Vessel or Vessels, a promissory note (or other evidence of indebtedness) issued by the purchaser of the asset sold or disposed of and secured by a first perfected security interest in such asset, (provided such security interest remains in full force and perfected, or is replaced by a bank guarantee, letter of credit or cash collateral, until all obligations arising under such promissory note (or other evidence of indebtedness) are paid in full), a bank guarantee, a letter of credit or cash collateral; (y) the assumption of Debt (which, for the purposes of the calculation of the consideration received pursuant to the Asset Disposition, shall be valued at the principal amount so assumed) of Stena AB or such Subsidiary or other obligations relating to such assets and release from all liability on such Debt or other obligations assumed; (z) in the case of an Asset Disposition relating to a Vessel or Vessels, notes received in consideration for such disposition, provided, that at no time shall there be, in the aggregate, more than $15,000,000 of notes received under this sub-clause (z) outstanding (exclusive of notes complying with the requirements of clauses (w) or (x) above); and (iii) no Default or Event of Default (as defined in either Indenture or any Successor Financing) shall have occurred and be continuing at the time of, or after giving effect to, such Asset Disposition. (B) The Net Available Proceeds of any Asset Disposition shall subject to Clauses 5.3 and 5.4 be applied by Stena AB or any Subsidiary of Stena AB (as the case - 80 - may be) within three hundred and sixty (360) days after such Asset Disposition:- (i) first, to repay permanently any outstanding Debt of:- (a) Stena AB that ranks senior to or pari passu with the Notes or any Successor Financing; or (b) any Subsidiary of Stena AB that does not constitute Subordinated Debt, in each case as required by the terms thereof, (ii) second, to the extent of any then remaining Net Available Proceeds and to the extent Stena AB or such Subsidiary so elects:- (a) to the prepayment of Debt of:- (x) Stena AB that ranks senior to or pari passu with the Notes or any Successor Financing; or (y) any Subsidiary of Stena AB that does not constitute Subordinated Debt; and/or (b) to an investment (which shall be deemed to include entering into a legally binding agreement, subject to customary conditions, to invest) in assets, other than Cash Assets, that will be used in the business of Stena AB and its Subsidiaries subject to the limitations of Clause 10.11; provided that Stena AB or any Subsidiary of Stena AB may deem that the amount of any prior investment (including, without limitation, any payments made in respect of Vessel Construction Contracts) made in connection with the delivery or acquisition of any Vessel, equal to the difference between the Ready for Sea Cost of such Vessel and the aggregate Debt Incurred to finance the purchase of such Vessel (or related assets) occurring within one (1) year prior to such Asset Disposition, shall be considered an investment made with the Net Available Proceeds of such Asset Disposition. If any legally binding agreement to invest any Net Available Proceeds is terminated, then Stena AB, or any Subsidiary of Stena AB, may invest such Net Available Proceeds, prior to the end of the one (1) year period after such Asset Disposition or six (6) months from such termination, whichever is later, in the business of Stena AB and Subsidiaries of Stena AB as provided above. The amount of such Net Available Proceeds neither used to repay or prepay Debt nor used or invested (or deemed used or invested) as set forth in the preceding sentences constitutes "Excess Proceeds." - 81 - (C) If at any time the aggregate amount of Excess Proceeds not previously applied pursuant to this Clause 10.7 equals $30,000,000 or more, Stena AB shall apply such Excess Proceeds:- (i) first, to the extent of the remaining Excess Proceeds at Stena AB's option, (a) to make an offer to purchase the outstanding 2005 Notes (as required by the 2005 Indenture or any Successor Financing) at one hundred per cent (100%) of their principal amount plus accrued interest to the date of purchase or (b) to make an offer to purchase the outstanding 2007 Notes at one hundred per cent (100%) of their principal amount plus accrued interest to the date of purchase; (ii) second, if an offer to purchase is made under (C)(i)(a) above and there are any, and to the extent of any, remaining Excess Proceeds following completion of such purchase, to make an offer to purchase the outstanding 2007 Notes (as required by the 2007 Indenture or any Successor Financing) at one hundred per cent (100%) of their principal amount plus accrued interest to the date of purchase; (iii) third, to the extent of any remaining Excess Proceeds following the completion of the offer to purchase, to the repayment of other Debt (other than Subordinated Debt) of Stena AB and its Subsidiaries to the extent permitted by the agreements governing such Debt; and (iv) fourth, to the extent of any then remaining Excess Proceeds, for general corporate purposes of Stena AB and its Subsidiaries, (D) This Clause 10.7 will not apply to a transaction consummated in compliance with Section 8.1 (Mergers, Consolidations and Certain Sales and Purchases of Assets) of each of the Indentures (or the corresponding provision in any Successor Financing). 10.8 Incurrence of Debt by Stena AB (A) Stena AB shall not Incur any Debt unless:- (i) immediately after giving effect to the Incurrence of such Debt and the receipt and application of the proceeds thereof, the Consolidated Interest Coverage Ratio for the four full fiscal quarters for which quarterly or annual financial statements are available next preceding the Incurrence of such Debt, calculated on a pro forma basis as if such Debt had been Incurred (and the receipt and application thereof had been made) at the beginning of such four full fiscal quarters, would be greater than 2 to 1; and (ii) no Default or Event of Default (as defined in the Notes or any Successor Financing) shall have occurred and be continuing at the time of, or after giving effect to, the Incurrence of such Debt. (B) Notwithstanding the foregoing limitation, Stena AB may Incur the following Debt:- - 82 - (i) Existing Debt; (ii) Debt pursuant to the 2005 Notes or any Successor Financing (to the extent not included in the definition Existing Debt); (iii) Debt pursuant to the 2007 Notes or any Successor Financing (to the extent not included in the definition Existing Debt); (iv) Debt to finance the replacement of a Vessel owned or leased under a Capitalised Lease Obligation by Stena AB or any Subsidiary of Stena AB secured by a Lien of the type described under paragraph (D) of the definition of "Permitted Liens" upon a total loss, destruction, condemnation, confiscation, requisition, seizure, forfeiture or other taking of title to or use of such Vessel (provided that such loss, destruction, condemnation, confiscation, requisition, seizure, forfeiture or other taking of title to or use of such Vessel was covered by insurance or resulted in the payment of compensation or similar payments to such person) (collectively, a "RELEVANT TOTAL LOSS") in an aggregate amount up to the Ready for Sea Cost for such replacement Vessel less all compensation, damages and other payments (including insurance proceeds other than in respect of business interruption insurance, protection and indemnity insurance or other third-party liability insurance) received from any person in connection with the Relevant Total Loss in excess of amounts actually used to repay Debt secured by the Vessel subject to the Relevant Total Loss; (v) Debt under any interest rate swap, foreign currency hedge, exchange or similar agreements to the extent entered into to hedge any other Debt permitted under this Agreement or otherwise entered into in the ordinary course of business; (vi) Debt to renew, extend, refinance, replace or refund (herein, "REFINANCE") any Debt permitted to be Incurred under Clause 10.8(A) (including, without limitation, Debt in respect of binding commitments for Post-Delivery Financing permitted under Clause 10.8(A)), any Existing Debt or any Debt permitted to be incurred under paragraphs (ii), (iii), (v), (vi) or (viii) of this Clause 10.8(B) provided that:- (a) the amount of such Debt does not exceed:- (x) except as provided in (y) below, the principal amount of Debt to be so refinanced (which amount shall be deemed to include the amount of any undrawn or available amounts under any committed credit or lease facility being so refinanced); or (y) in the case of the refinancing of the Post-Delivery Financing of a Vessel within two hundred and seventy (270) days after the acquisition or delivery of such Vessel pursuant to a Capitalised Lease Obligation, one - 83 - hundred per cent (100%) of the Ready for Sea Cost of such Vessel plus, in either case, the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Debt refinanced or the amount of any premium reasonably determined by Stena AB as necessary to accomplish such refinancing by means of a tender offer or privately negotiated repurchase, plus the expenses of Stena AB or any of its Subsidiaries Incurred in connection with such refinancing; and (b) the Incurrence of Debt the proceeds of which are used to refinance Debt shall only be permitted if the refinancing Debt by its terms, or by the terms of any agreement or instrument pursuant to which such Debt is issued, has an Average Life and Stated Maturity which is equal to or greater than that of the Debt to be refinanced at the time of the Incurrence of such refinancing Debt; (vii) Debt owed by Stena AB to any Subsidiary of Stena AB; provided that upon either:- (a) the transfer or other disposition by any such Subsidiary of any Debt so permitted to a person other than Stena AB or a Subsidiary of Stena AB or (b) the issuance, sale, transfer or other disposition (other than a pledge of the shares of such Subsidiary permitted under Clause 10.6) of shares of Capital Stock (including by consolidation or merger) of such Subsidiary to a person other than Stena AB or a Subsidiary of Stena AB which, after giving effect thereto, results in such Subsidiary ceasing to be a Subsidiary of Stena AB, the provisions of this paragraph (vii) shall no longer be applicable to such Debt and such Debt shall be deemed to have been Incurred at the time of such transfer or other disposition; (viii) Debt Incurred pursuant to this Agreement or under the Revolving Credit Facilities and/or the Unsecured Revolving Credit Facility and Debt Incurred by Stena AB as guarantor in respect of the Stena Discovery Facility Agreement and/or the ABN Standby Facility Agreement; and (ix) Debt of Stena AB not otherwise permitted to be Incurred pursuant to paragraphs (ii) to (viii) above, which, together with:- (a) any other outstanding Debt Incurred pursuant to this paragraph (ix) and/or Clause 10.9(I) (and any outstanding Preferred Stock issued by Subsidiaries of Stena AB pursuant to Clause - 84 - 10.10(D)); and (b) any other outstanding Debt Incurred after 1 October 1997 but before the date of this Agreement pursuant to Section 10.8(vii) and/or Section 10.9(viii) of the 2007 Indenture (and any outstanding Preferred Stock issued by Subsidiaries of Stena AB after 1 October 1997 but before the date of this Agreement pursuant to Section 10.10(iv) of the 2007 Indenture) has an aggregate principal amount (and/or liquidation preference) not in excess of $50,000,000 at any time outstanding. 10.9 Incurrence of Debt by Subsidiaries Stena AB will not permit any Subsidiary of Stena AB to Incur any Debt except:- (A) Debt to finance the replacement of a Vessel owned or leased under a Capitalised Lease Obligation by that Subsidiary secured by a Lien of the type described under paragraph (D) of the definition of "Permitted Lien" upon a Relevant Total Loss of such Vessel (as defined in Clause 10.8(B)(iv)) in an aggregate amount up to the Ready for Sea Cost for such replacement Vessel less all compensation, damages and other payments (including insurance proceeds other than in respect of business interruption insurance, protection and indemnity insurance or other third-party liability insurance) received from any person in connection with the Relevant Total Loss in excess of amounts actually used to repay Debt secured by the Vessel subject to the Relevant Total Loss; provided that if the Debt Incurred by that Subsidiary in financing the Vessel subject to the Relevant Total Loss is subordinated to the Debt Incurred under this Agreement, the Debt Incurred to finance the replacement Vessel shall be subordinated to the same degree; (B) Debt under any interest rate swap, foreign currency hedge, exchange or similar agreements to the extent entered into by that Subsidiary to hedge any other Debt permitted to be Incurred by it under this Agreement or otherwise entered into in the ordinary course of business; (C) Debt owed to Stena AB or a Subsidiary of Stena AB provided that upon either (x) the transfer or other disposition by Stena AB or such Subsidiary of any Debt so permitted to a person other than Stena AB or a Subsidiary of Stena AB or (y) the issuance, sale, transfer or other disposition (other than a pledge of the shares of such Subsidiary permitted under Clause 10.6) of shares of Capital Stock (including by consolidation or merger) of such Subsidiary to a person other than Stena AB or another such Subsidiary which, after giving effect thereto, results in such Subsidiary ceasing to be a Subsidiary of Stena AB, the provisions of this paragraph (C) shall no longer be applicable to such Debt and such Debt shall be deemed to have been Incurred at the time of such transfer or other disposition; (D) subject to the satisfaction of the incurrence test set forth in Clause 10.8(A), Debt Incurred by a person prior to the time (a) such person became a Subsidiary of Stena AB, (b) such person merges with or into or consolidates - 85 - with a Subsidiary of Stena AB or (c) another Subsidiary of Stena AB merges with or into or consolidates with such person (in a transaction in which such person becomes a Subsidiary of Stena AB), which Debt was not Incurred or issued in anticipation of such transaction and was outstanding prior to such transaction; (E) subject to the satisfaction of the incurrence test set forth in Clause 10.8(A), Debt of a Subsidiary of Stena AB secured by a Lien of the type described under paragraph (D) of the definition of "Permitted Liens"; (F) Debt to refinance Existing Debt of any Subsidiary and Debt to refinance any Debt permitted to be Incurred pursuant to paragraphs (A), (D), (E), (F) and (G) of this Clause 10.9 provided that:- (i) the amount of such Debt does not exceed:- (a) except as provided in (b) below, the principal amount of Debt to be so refinanced (which amount shall be deemed to include the amount of any undrawn or available amounts under any committed credit or lease facility being so refinanced); or (b) in the case of the refinancing of the Post-Delivery Financing of a Vessel within 270 days after the acquisition or delivery of such Vessel pursuant to a Capitalised Lease Obligation, 100% of the Ready for Sea Cost of such Vessel plus, in either case, the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of the Debt refinanced or the amount of any premium reasonably determined by Stena AB as necessary to accomplish such refinancing by means of a tender offer or privately negotiated repurchase, plus the expenses of Stena AB or any of its Subsidiaries Incurred in connection with such refinancing; (ii) such refinancing Debt shall not be used to refinance outstanding Debt or Preferred Stock of Stena AB; and (iii) such refinancing Debt by its terms, or by the terms of any agreement or instrument pursuant to which such Debt is issued, has an Average Life and Stated Maturity which is equal to or greater than that of the Debt to be refinanced at the time of the Incurrence of such refinancing Debt; (G) Debt Incurred under this Agreement and/or the Stena Discovery Facility Agreement and/or the ABN Standby Facility Agreement and/or the Revolving Credit Facilities including, without limitation, Debt Incurred pursuant to guarantees made by Subsidiaries of Stena AB in respect of this Agreement and/or the Stena Discovery Facility Agreement and/or the ABN Standby Facility Agreement and/or the Revolving Credit Facilities; (H) Debt of any Subsidiary pursuant to a guarantee issued pursuant to the first paragraph of Section 10.13 of either Indenture or the corresponding provision - 86 - of any Successor Financing; (I) Debt of Subsidiaries of Stena AB not otherwise permitted to be Incurred pursuant to paragraphs (A) through (H) above which together with:- (i) any other outstanding Debt Incurred pursuant to this paragraph (I) and/or Clause 10.8(B)(ix) (and any outstanding Preferred Stock issued by Subsidiaries of Stena AB pursuant to Clause 10.10(D)); and (ii) any other outstanding Debt Incurred after 1 October 1997 but before the date of this Agreement pursuant to Section 10.8(vii) and/or Section 10.9(viii) of the 2007 Indenture (and any outstanding Preferred Stock issued by Subsidiaries of Stena AB after 1 October 1997 but before the date of this Agreement pursuant to Section 10.10(iv) of the 2007 Indenture) has an aggregate principal amount (and/or liquidation preference) not in excess of $50,000,000 at any time outstanding. 10.10 Limitation on Preferred Stock of Subsidiaries Stena AB will not permit any of its Subsidiaries to issue, directly or indirectly, any Preferred Stock except:- (A) Preferred Stock of a Subsidiary of Stena AB issued to and held by Stena AB or any of its Wholly Owned Subsidiaries, provided that any subsequent issuance or transfer of any Capital Stock which results in such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary of Stena AB or any transfer of such Preferred Stock by any such Wholly Owned Subsidiary will, in each case, be deemed an issuance of Preferred Stock; (B) Preferred Stock issued by a person prior to the time (i) such person becomes a Subsidiary of Stena AB, (ii) such person merges with or into or consolidates with a Subsidiary of Stena AB or (iii) another Subsidiary of Stena AB merges with or into or consolidates with such person (in a transaction in which such person becomes a Subsidiary of Stena AB), which Preferred Stock was not issued in anticipation of such transaction; (C) Preferred Stock (other than Disqualified Stock) which is exchanged for Preferred Stock permitted to be outstanding pursuant to paragraphs (A) and (B) above or which is used to refinance Debt (or any refinancing thereof), having a liquidation preference not to exceed the liquidation preference of the Preferred Stock in the principal amount of the Debt so refinanced; and (D) Preferred Stock issued by Subsidiaries of Stena AB not otherwise permitted to be issued pursuant to paragraphs (A) through (C) above which together with:- (i) any other Preferred Stock outstanding pursuant to this paragraph (D); (ii) any Debt of Subsidiaries of Stena AB Incurred pursuant to Clause 10.9(I); - 87 - (iii) any Debt of Stena AB Incurred pursuant to Clause 10.8(B)(ix); and (iv) any other outstanding Debt Incurred after 1 October 1997 but before the date of this Agreement pursuant to Section 10.8(vii) and/or Section 10.9(viii) of the 2007 Indenture (and any outstanding Preferred Stock issued by Subsidiaries of Stena AB after 1 October 1997 but before the date of this Agreement pursuant to Section 10.10(iv) of the 2007 Indenture) has an aggregate principal amount (and/or liquidation preference) not in excess of $50,000,000 at any time outstanding. 10.11 Limitation on Investments Except with the prior written consent of the Majority Banks, the Borrower and Stena AB will not, and shall procure that no other member of the Stena AB Group will, make any Investment in any person (other than Stena AB, any Subsidiary of Stena AB or any person which, after giving effect to such Investment, would become a Subsidiary of Stena AB) except Permitted Investments. 10.12 Business activities Stena AB will not, and will not permit any of its Subsidiaries (other than any Unrestricted Subsidiaries) to, engage in any type of business other than the business Stena AB and its Subsidiaries are engaged in on the date of this Agreement, other business activities within the shipping, offshore oilfield services and real estate investment and management industries and (as determined in good faith by the Board of Directors of Stena AB) other business activities complementary, incidental or reasonably related thereto. 10.13 Mergers and consolidation Except with the prior written consent of the Majority Banks, neither the Borrower nor any other Security Party will merge or consolidate with any other person save for a merger or consolidation by operation of law with one or more other entities into a single surviving entity which is the Borrower or (as the case may be) such other Security Party and which succeeds by operation of law to all of the assets and liabilities of the Borrower or (as the case may be) such other Security Party immediately prior to such merger or consolidation. 10.14 Restricted payments by Stena AB Group Stena AB will not, and will not permit any Subsidiary of Stena AB (other than an Unrestricted Subsidiary) to, directly or indirectly:- (A) declare or pay any dividend, or make any distribution of any kind or character (whether in cash, property or securities), in respect of any class of Stena AB's Capital Stock to the holders thereof, excluding any dividends or distributions payable solely in shares of the Capital Stock of Stena AB or in options, warrants or other rights to acquire the Capital Stock of Stena AB; (B) purchase, redeem, defease, or otherwise acquire or retire for value:- -88- (i) any Capital Stock of Stena AB or any Related Person of Stena AB; or (ii) any options, warrants or rights to purchase or acquire shares of Capital Stock of Stena AB or any Related Person of Stena AB or any securities convertible or exchangeable into shares of Capital Stock of Stena AB or any Related Person of Stena AB, in either case other than acquisitions of Capital Stock or options, warrants or rights to acquire such Capital Stock pursuant to paragraph (C) of the definition of "Permitted Investments"; (C) make any Investment in any Affiliate or Related Person of Stena AB (other than Stena AB or a Subsidiary of Stena AB) and other than a person which becomes a Subsidiary of Stena AB as a result of such Investment) provided that this paragraph (C) shall not prohibit the making of an Investment otherwise permitted under Clause 10.11; (D) redeem, defease, repurchase, retire or otherwise acquire or retire for value prior to any scheduled maturity, repayment or sinking fund payment, Debt of Stena AB which is subordinate in right of payment to the 2005 Notes and the 2007 Notes or any Successor Financing, except to the extent that payment for such Debt is made from the proceeds of a simultaneous refinancing of such Debt otherwise permitted under the Indentures or any Successor Financing; or (E) declare or pay any dividend or make any distribution of any kind or character (whether in cash, property or securities) on any Capital Stock of any Subsidiary of Stena AB (except where Stena AB or any Subsidiary of Stena AB receives a rateable portion of such dividend or distribution) to any person (other than Stena AB or any Subsidiary of Stena AB) or purchase, redeem or otherwise acquire or retire for value any Capital Stock of any Subsidiary of Stena AB held by any person (other than Stena AB or any Subsidiary of Stena AB) each of the matters described in paragraphs (A) to (E) being a "Restricted Payment" if at the time thereof:- (i) a Default or Event of Default as defined in the Indentures shall have occurred and is continuing; or (ii) upon giving effect to such Restricted Payment, Stena AB could not Incur at least $1 of additional Debt pursuant to Clause 10.8(A); or (iii) upon giving effect to such Restricted Payment, the aggregate of all Restricted Payments, together with, (a) payments on guarantees of obligations of Affiliates or Related Persons (other than Stena AB or a Subsidiary of Stena AB) of Stena AB in effect on the date of the 2007 Indenture but only to the extent such payments have not been reimbursed in accordance with the terms of the relevant guarantee or other agreement, and (b) outstanding Investments made pursuant to paragraph (B) of the definition of "Permitted Investments" (or, in respect of Investments made prior to the date of this Agreement, paragraph (ii) of the definition of "Permitted Investments" in the 2007 -89- Indenture) in either case made after the date of the 2007 Indenture exceeds the greater of:- (a) the sum of (x) fifty per cent (50%) of cumulative Consolidated Net Income of Stena AB (or, if cumulative Consolidated Net Income of Stena AB shall be negative, less one hundred per cent (100%) of such deficit) since the end of the most recent fiscal quarter of Stena AB ended on or prior to the date of the 2007 Indenture through the last day of the period for which quarterly or annual financial statements of Stena AB are available, plus (y) one hundred per cent (100%) of the aggregate net proceeds received after the date of the 2007 Indenture, including the fair value of property other than cash, from the issuance of Capital Stock (other than Disqualified Stock) of Stena AB and warrants, rights or options on Capital Stock (other than Disqualified Stock) of Stena AB and the principal amount of Debt that has been converted into Capital Stock (other than Disqualified Stock) of Stena AB after the date of the 2007 Indenture, plus (z) $50,000,000; or (b) $50,000,000. The foregoing provisions will not prohibit the payment of any dividend on Capital Stock of any class within sixty (60) days after the declaration thereof if, on the date when the dividend was declared, such dividend could have been paid in accordance with the provisions of the foregoing covenant. Under Swedish law, any shareholder of a Swedish corporation owning ten per cent (10%) or more of the outstanding shares of such corporation has the right to demand the payment of dividends from the profits of the corporation in accordance with the Swedish Companies Act. Whilst this Agreement cannot prevent the payment of a dividend by Stena AB under such circumstances, the declaration or payment by Stena AB of dividends (or other distributions) in excess of the amount then permitted under this Clause 10.14 shall constitute an Event of Default under this Agreement. 10.15 Financial year Except with the prior written consent of the Agent (such consent not to be unreasonably withheld or delayed), the Borrower and Stena AB will not alter their respective financial years. 10.16 Ownership of Stena AB Group companies Stena AB will procure that each of the Security Parties which are at the date hereof members of the Stena AB Group (other than Stena AB itself) remain Subsidiaries of Stena AB and that none of the shares of any person which is a Security Party at any time during the Security Period shall (except in favour of the Security Agent) be pledged to any person. 10.17 Stena International Group working capital -90- (A) Stena AB and the Borrower will procure that:- (i) the aggregate of (i) the Consolidated Current Assets and (ii) Available Facilities shall be not less than one hundred and twenty five per cent (125%) of the Consolidated Current Liabilities; and (ii) the aggregate of (i) Consolidated Liquid Assets and (ii) Available Facilities shall be not less than $50,000,000. (B) The requirements contained in this Clause 10.17 as to the financial condition of the Stena International Group shall be tested as at 30 September 2001 and each of the dates falling three (3) monthly thereafter in each case by reference to the Audited Stena International Financial Statements and the unaudited financial statements delivered to the Agent pursuant to Clause 10.2 provided however that no breach shall be deemed to have arisen under this Clause 10.17 unless and until the Borrower shall, within ten (10) Banking Days following receipt by the Borrower of written notification from the Agent that a shortfall has occurred under this Clause 10.17 have failed to satisfy the Agent that such shortfall has been eliminated. (C) For the purposes of this Clause 10.17, accounting terms are used and shall be construed in accordance with Dutch GAAP but so that:- "AVAILABLE FACILITIES" means, at any relevant time, the undrawn amount of any committed loan or overdraft facilities (including the facilities provided under this Agreement) available to one or more members of the Stena International Group at the date of such financial statements; "CONSOLIDATED CURRENT ASSETS" means the aggregate at the date of computation of the consolidated stocks, assets held for sale, receivables and prepayments, intercompany receivables, securities, cash at banks and in hand and other current assets (as determined in accordance with Dutch GAAP) of the Stena International Group; "CONSOLIDATED CURRENT LIABILITIES" means the aggregate at the date of computation of intercompany payables and other current liabilities (as determined in accordance with Dutch GAAP) of the Stena International Group; "CONSOLIDATED LIQUID ASSETS" means the aggregate of:- (i) the cash and Cash Equivalents of the Borrower and its Subsidiaries; and (ii) the market value of shares or other marketable debt or equity securities held by members of the Stena International Group which are quoted on any recognised stock exchange or over the counter or similar market in any member of the European Union or European Economic Area, U.S.A., Canada, Hong Kong, Tokyo, Singapore or as otherwise approved by the Agent and other marketable securities having a rating of no less than BBB- from Standard & Poor's Corporation or Moody's -91- Investors Service Inc or other rating agency which the Agent accepts to be of equivalent standing provided that cash or Cash Equivalents expressed or denominated in a currency other than Dollars shall be converted into Dollars by reference to the rate of exchange used for conversion of such currency in the consolidation of the relevant consolidated balance sheets or, if the relevant currency was not thereby involved, by reference to the rate of exchange or approximate rate of exchange ruling on such date and determined on such basis as the Borrower's auditors may determine or approve. 10.18 Early redemption or defeasance of Notes Stena AB will not exercise its rights of optional redemption of any of the Notes under Article XI (Redemption of Securities) of either of the Indentures or its rights of defeasance of the Notes under Article XII (Defeasance and Covenant Defeasance) of either of the Indentures or voluntarily redeem or repay any Successor Financing unless such optional redemption, defeasance or voluntary repayment of the Notes or (as the case may be) such voluntary redemption, defeasance or repayment of the Successor Financing is fully financed on the date thereof by an Acceptable Refinancing and for the purposes of this clause:- "ACCEPTABLE REFINANCING" means Debt incurred by Stena AB or any Subsidiary of Stena AB other than the Borrower (otherwise than from other members of the Stena AB Group) which:- (A) is for an amount not less than the amount required to effect such optional redemption, defeasance or voluntary repayment of the Notes or (as the case may be) voluntarily to redeem, defease or repay the relevant Successor Financing; (B) is on terms that the scheduled date for repayment or redemption of such Debt is no earlier than the scheduled maturity date of the relevant Notes or (as the case may be) Successor Financing being refinanced and that the person or persons to whom such Debt is owed is or are not entitled to require any earlier repayment or redemption in circumstances more onerous upon Stena AB or such Subsidiary of Stena AB than those applicable in respect of the Notes or relevant Successor Financing; and (C) is not secured or preferred by any Liens over any of the Mortgaged Ships or other assets or rights mortgaged, charged or assigned to the Security Agent pursuant to the Security Documents from time to time or any of their Insurances or Requisition Compensation or by a pledge of shares of any Security Party; and "SUCCESSOR FINANCING" means:- (A) any Debt incurred for the purpose of assisting Stena AB to effect optional redemption of the Notes under Article XI of the Indentures or for the purpose of assisting Stena AB or any other member of the Stena AB Group voluntarily to repay the Notes; or -92- (B) any other Debt incurred for the purpose of assisting Stena AB or any other member of the Stena AB Group to redeem or repay any such Debt referred to in sub-paragraph (A) or which, directly or indirectly, refinances any such Debt. 10.19 Application of proceeds Stena AB and the Borrower will procure that the facilities provided under this Agreement are applied for the purposes specified in Clause 1.1. 10.20 Restrictions on guarantees, etc. Except as provided in this Agreement, the Borrower shall not, and shall procure that none of its Subsidiaries shall, give any guarantee or indemnify or grant any security in favour of any person in respect of any obligation of any member of the Stena AB Group other than the Borrower or a Subsidiary or another Subsidiary of the Borrower except that the Borrower or a Subsidiary of the Borrower may in its capacity as charterer of a Vessel owned by, or let under a Capitalised Lease Obligation to, a member of the Stena AB Group which is not the Borrower or a Subsidiary of the Borrower give security by way of a charterer's assignment of earnings and/or insurances if required in connection with the financing or refinancing of that Vessel where the liability of the Borrower or its relevant Subsidiary in respect of such financing or refinancing is limited to the value of the earnings and/or insurances so assigned by it and where, in the case of a Vessel owned by a relevant member of the Stena AB Group, such owner has executed a mortgage on the Vessel as security for such financing or refinancing. 10.21 Asset coverage calculation (A) Asset coverage covenant Stena AB and the Borrower will procure that the ratio of Available Asset Value to Unsecured Debt shall be not less than 2.5:1. (B) Testing of covenant The requirements contained in this Clause 10.21 as to the ratio of Available Asset Value to Unsecured Debt shall be tested as at 31 December 2001 and each of the dates falling six (6) monthly thereafter or (if so requested in writing by the Agent (acting on the instructions of the Majority Banks)) as at the end of any other calendar quarter (each such date a "REFERENCE DATE" for the purposes of this Clause 10.21), in each case by reference to the Audited Stena AB Financial Statements and unaudited consolidated management accounts of the Stena AB Group and the Asset Coverage Compliance Certificate delivered to the Agent pursuant to Clause 10.2 provided however that no breach shall be deemed to have arisen under this Clause 10.21 if a shortfall has occurred under this Clause 10.21 but the Borrower is able to satisfy the Agent within ten (10) Banking Days of the Agent's receipt of the Asset Coverage Certificate evidencing that such shortfall has been eliminated. -93- (C) Defined terms For the purposes of this Clause 10.21 and Clause 10.2(F), accounting terms are used and shall be construed in accordance with Swedish GAAP but so that as at any Reference Date:- "APPRAISED VALUE OF RESTRICTED GROUP ASSETS" means the value, determined in accordance with this Clause 10.21, of the following assets of the Restricted Group, on a consolidated basis:- (i) completed vessels owned by or, pursuant to a Capitalised Lease Obligation, chartered to any member of the Restricted Group; (ii) ongoing newbuilding and other projects; (iii) machinery and equipment; (iv) ports and other real estate owned by or, pursuant to a Capitalised Lease Obligation, leased to members of the Restricted Group; (v) all other assets and properties of the Restricted Group but excluding Strategic Investments, Cash and Marketable Securities, Net Market Value of the Unrestricted Group and Other Assets and Working Capital; "AVAILABLE ASSET VALUE" means the amount which is the sum, determined on a consolidated basis of:- (i) the Appraised Value of Restricted Group Assets; minus (ii) Secured Debt; plus (iii) Strategic Investments; plus (iv) Cash and Marketable Securities; plus (v) Net Market Value of the Unrestricted Group; plus (vi) Other Assets and Working Capital; "CASH AND MARKETABLE SECURITIES" means the aggregate value determined on a consolidated basis, of all:- (i) cash and cash equivalents; (ii) shares or other marketable equities; (iii) bonds, floating rate notes and other marketable debt securities owned by members of the Restricted Group less the amount of any Debt owing by any member of the Restricted Group in relation to the property referred to in paragraphs (ii) and (iii) of this definition; -94- "NET MARKET VALUE OF THE UNRESTRICTED GROUP" means the amount, determined on a consolidated basis, which is the sum of:- (vii) the capital stock, reserves, any convertible subordinated debentures and deferred income taxes of the Unrestricted Group plus the amount by which the aggregate value of the assets of the Unrestricted Group determined on a consolidated basis and in accordance with this Clause 10.21 exceeds the aggregate book value of such assets or minus the amount by which such aggregate value as so determined is less than such aggregate book value; plus (viii) the value of any Debt owed to members of the Restricted Group by members of the Unrestricted Group; "OTHER ASSETS AND WORKING CAPITAL" means the value determined on a consolidated basis of all current and other assets of the Restricted Group (excluding the Appraised Value of Restricted Group Assets, Strategic Investments, Cash and Marketable Securities and Net Market Value of the Unrestricted Group) less the amount of the current liabilities of the Restricted Group and less deferred tax as shown in the balance sheet; "RESTRICTED GROUP" means all members of the Stena AB Group which are not Unrestricted Subsidiaries; "SECURED DEBT" means the aggregate of all outstanding Debt of the Restricted Group on a consolidated basis which is at such time owed to parties who are not members of the Stena AB Group and is secured by a Lien in respect of any asset of the Restricted Group or, in the case of Debt in respect of a Capitalised Lease Obligation, the Debt outstanding under the relevant lease but excluding Debt owing by any member of the Restricted Group in relation to the property referred to in paragraphs (ii) and (iii) of the definition of "Cash and Marketable Securities"; "STRATEGIC INVESTMENT" means the value, determined on a consolidated basis, of all Investments owned by members of the Restricted Group which Stena AB considers to be of a strategic nature (which, as at the date of this Agreement presently comprises the P&O Stena Shares and the P&O Stena Loan Stock); "UNRESTRICTED GROUP" means all members of the Stena AB Group which are Unrestricted Subsidiaries; "UNSECURED DEBT" means the aggregate of all outstanding Debt of the Restricted Group on a consolidated basis which is at such time owed to parties who are not members of the Stena AB Group and is not secured by a Lien in respect of any asset of the Restricted Group but excluding Debt owing by any member of the Restricted Group in relation to the property referred in paragraphs (ii) and (iii) of the definition of "Cash and Marketable Securities", each as at the relevant Reference Date and so that the value of any assets or property is determined in accordance with the following provisions of this -95- Clause 10.21 and the amount of any liability shall be determined in the same manner in which it is determined for the purpose of the balance sheet of the relevant member of the Stena AB Group as at the Reference Date in accordance with Swedish GAAP. (D) Valuation of vessels and linkspans Every completed vessel owned by or, pursuant to a Capitalised Lease Obligation, chartered to any member of the Stena AB Group (for the purposes of this Clause 10.21, a "RELEVANT VESSEL") shall be valued in the manner and at the times specified below. The value of each Relevant Vessel shall be determined as being the mortgage free value thereof. For these purposes, the mortgage free value of each such Relevant Vessel shall be assessed:- (i) annually on the dates falling at twelve (12) monthly intervals from 31 December 2001 as being the mean of the valuations of the charter-free market value thereof on a willing buyer/willing seller basis as assessed as at the relevant date by, in the case of any ro-ro or ferry, three leading European shipbrokers active in the ro-ro/ferry market appointed by the Borrower from the following list of brokers:- Barry Rogliano Salles Brax Shipping HB Simsonship AB Maersk Sales Parimar Francharte S.A. English White Shipping Ltd. Nor Ocean in the case of any drilling rig, by three leading shipbrokers active in the offshore market appointed by the Borrower from the following list of brokers:- Fearnleys A/S Kennedy Marr Bassoe Offshore A/S Barry Rogliano Salles Seascope Offshore -96- in the case of any crude oil or other products tanker, by three leading shipbrokers active in the tanker market appointed by the Borrower from the following list of brokers:- Mallory Jones Lynch Flynn & Associates H Clarkson & Co. Ltd. Bassoe A/S Fearnleys A/S Simpson Spence & Young Shipbrokers Brostrom Tankers AB or any other brokers nominated by the Borrower and approved by the Agent; (ii) annually on the dates falling at twelve (12) monthly intervals from 30 June 2002 as being the market value thereof as approved as at the relevant date by the Board of Directors. For this purpose, any current valuation of a Mortgaged Ship provided pursuant to Clause 5.3(G) shall satisfy the Borrower's obligation to provide a broker valuation for such Mortgaged Ship pursuant to Clause 10.21(D)(i). The value of any linkspan owned by any member of the Stena AB Group shall be its book value (as determined in accordance with Swedish GAAP). (E) Valuation of newbuilding contracts Any vessel under construction owned by, or contracted for delivery on completion to, any member of the Stena AB Group (whether as owner or pursuant to a Capitalised Lease Obligation) and any contract entered into for the construction of such a vessel shall be valued at its book value (as determined in accordance with Swedish GAAP). (F) Valuation of Ports The value of any port shall be the amount (expressed in Swedish kronor by reference to exchange rates prevailing on the Reference Date) determined as the earnings before interest, taxes, depreciation and amortisation in respect of the relevant port as shown in the then latest audited accounts of the owner of the relevant port multiplied by six and one half (6.5). For this purpose, any current valuation of Holyhead Port and Stranraer Port provided pursuant to Clause 5.3(H) shall satisfy the Borrower's obligation to provide a valuation for such Port pursuant to this Clause 10.21(F). (G) Valuation of other real estate -97- The value of any real estate (other than ports) owned by any member of the Stena AB Group shall be the value thereof as determined by the management of the relevant owning company as being its market value. (H) Valuation of P&O Stena Shares The value of the P&O Stena Shares held by any member of the Stena AB Group shall be the amount (expressed in Swedish kronor by reference to exchange rates prevailing on the day of computation) which is the Stena percentage of the sum of:- (i) the earnings before interest, taxes, depreciation and amortisation of P&O Stena for the twelve month period as shown in the then latest audited accounts of P&O Stena multiplied by six point five (6.5); plus (ii) the cash and working capital (being, for this purpose, the current assets minus current liabilities but excluding interest bearing debt, pension liabilities and other similar provisions) of P&O Stena as shown in its then latest audited accounts; minus (iii) interest bearing debt and leases as shown in its then latest audited accounts; minus (iv) (without double counting) the amount of any outstanding loans stock of P&O Stena as shown in its then latest audited accounts and, for this purpose, "STENA PERCENTAGE" means share capital in P&O Stena owned by members of the Stena AB Group at the relevant time (currently 40%). (I) Value of other Strategic Investments The value of any Strategic Investment other than P&O Stena Shares held or owned by any member of the Stena AB Group shall be:- (i) in the case of P&O Stena Loan Stock, its book value as determined in accordance with Swedish GAAP and the accounting policies of the Stena AB Group; (ii) in the case of any listed securities or shares, their market value; and (iii) in the case of any other Strategic Investment, its book value as determined in accordance with Swedish GAAP and the accounting policies of the Stena AB Group or otherwise as determined by such method of valuation as shall from time to time be agreed between the Agent (acting on the instructions of the Majority Banks) and the Borrower having regard to the nature of the relevant Strategic Investment. (J) Valuation of other assets The value of any other assets not referred to in (D) to (I) above owned by any -98- member of the Stena AB Group shall be the book value thereof as determined in accordance with Swedish GAAP and the accounting policies of the Stena AB Group. 11. SHIP AND LINKSPAN COVENANTS : INSURANCE 11.1 Duration Stena AB and the Borrower undertake to the Agent, the Security Agent, the Co-Arrangers and the Banks that throughout the Security Period they will procure that in relation to each Mortgaged Ship and each Mortgaged Linkspan:- (A) during any period for which the Ship or Linkspan is in service under a bareboat charter to a charterer which is not a member of the Stena AB Group, the Shipowner and each Stena Charterer of the relevant Ship or Linkspan will use its reasonable endeavours to procure that:- (i) the covenants as to insurance of the relevant Ship or Linkspan in such bareboat charter are complied with by such charterer so that the insurances are maintained in force in accordance with the requirements of the Commercial Documents; (ii) the rights of the Security Agent are protected by the endorsement of loss payable clauses on the Insurances (other than any Insurances for the benefit of such charterer and which are not for the benefit of the Shipowner or are effected in excess of the amount of cover required to be effected by the charterer under the terms of the relevant charterer) which will provide for payment to the Security Agent of all moneys in respect of Total Loss proceeds and, in the case of a Mortgaged Ship or Mortgaged Linkspan (but only on terms that such claims shall be paid to the relevant charterer insofar as the relevant moneys belong to the charterer and may not be applied by the relevant Shipowner or any Stena Charterer in or towards payment of any amounts owing to them by such charterer pursuant to the relevant charter and shall not otherwise be applied in or towards payment of amounts owing under any of the Security Documents) Major Casualty claims; and (iii) in the case of a Mortgaged Ship or Mortgaged Linkspan which is let on bareboat charter hereafter, the relevant bareboat charter includes obligations on the charterer not materially less favourable to the Shipowner or Stena Charterer as disponent owner than those set out in Schedule 20; provided that following the occurrence of an Event of Default and for so long as such Event of Default is continuing the Borrower shall procure that the Shipowners and each Stena Charterer will comply with the directions of the Security Agent in relation to the exercise of its rights in relation to the Insurances relating to each Mortgaged Ship and Mortgaged Linkspan; (B) during any period for which the Ship or Linkspan is not employed on such a bareboat charter, the Shipowner will comply and/or procure that any Stena -99- Charterer who is chartering the Ship or Linkspan under a bareboat charterer will comply with the covenants set out in Clauses 11.2 through 11.19 and will execute and deliver in favour of the Security Agent or, in the case of m.v. "STENA GERMANICA" (as long as she remains owned by Scandlines subject to the Stena Germanica Mortgage), the Borrower a Charterer's Subordination Undertaking and a Charterer's Insurance Assignment on or before delivery of the Ship and/or Linkspan to the relevant Stena Charterer under the charter; and (C) the aggregate value of the Insurances placed in respect of Total Loss and which, subject to the relevant Ship Mortgage and/or Insurance Assignment and/or Charterer's Insurance Assignment are receivable and which may be retained pursuant to the Commercial Documents by the Shipowners in respect of the Mortgaged Ships and by the sellers of any Transferred Ships from time to time (when aggregated to the value of the insurances taken out in respect of the Ports pursuant to Clause 13.2) is at all times during the Security Period not less than 120% of the total of the Commitments. 11.2 Risks insured and amount of cover Each Shipowner shall insure its Mortgaged Ship and Mortgaged Linkspans (if any) and keep them insured in the name of the Shipowner and any other persons with an insurable interest therein against:- (A) in the case of a Mortgaged Ship, fire and insurance marine risks (including excess risks) and war risks on an agreed value basis for not less than the market value of the Ship (for which purpose the Ship shall be assessed with the benefit of any charterparty being or to be performed by the Ship unless the value would be greater if that charterparty were not taken into account in which case the Ship shall be valued without the benefit of any such charterparty); (B) in the case of a Mortgaged Ship, protection and indemnity risks for the full value and tonnage of the Ship which, in respect of all risks within the protection and indemnity insurances other than oil pollution risks, shall be in an unlimited amount or (if unlimited cover ceases to be available from any member of the "International Group" of protection and indemnity associations or any successor association or body of such associations) in the maximum amount available to the Shipowner for the Ship from any member of the International Group or such successor association or body as may be selected by the relevant Shipowner or Stena Charterer and which, in respect of oil pollution liability risks included within the protection and indemnity insurances, shall be in the maximum amount available to the Shipowner for the Ship from time to time through its ordinary basic entry with its protection and indemnity association; (C) in the case of a Mortgaged Ship, all other risks whatsoever which are customarily insured against by leading operators of vessels of the same age and type as in accordance with then current industry practice and taking account of the areas in which the Ships may trade from time to time; (D) in the case of a Mortgaged Linkspan, loss or damage by fire, theft, storm or -100- accident and such other risks and matters in respect of which the Linkspan is for the time being required by statute or otherwise to be insured against and generally in accordance with any relevant good shipping industry practice, for not less than the original cost of the Linkspan; (E) in the case of a Mortgaged Linkspan, third party claims arising in respect of damage to and loss of property or death or injury to third parties arising directly or indirectly out of the ownership, management, use or operation of the Linkspan or the chartering thereof; and (F) in the case of a Mortgaged Linkspan, all other risks whatsoever which are customarily insured against by leading operators of linkspans of the same age and type as the Linkspan in accordance with then current industry practice and taking account of the area in which the Linkspan is from time to time located. 11.3 Port risk cover While a Mortgaged Ship is laid up, port risk insurance may be taken out on such Ship by the relevant Shipowner instead of hull insurance, on normal market terms. 11.4 Terms of cover Each Shipowner shall procure that the Insurances for its Mortgaged Ship and Mortgaged Linkspans (if any) shall:- (A) be effected through the Approved Brokers and reputable independent insurance companies and/or underwriters in Europe, North America, the Far East and other established insurance markets in OECD countries except that the insurances against protection and indemnity risks and war risks may be effected by the entry of the Ship with such protection and indemnity and war risks associations which are members of the International Group or successor association or body or other leading protection and indemnity and war risks associations; (B) provide that all amounts payable thereunder shall be payable in Dollars, Sterling, Euro or any other currency approved by the Security Agent (such approval not to be unreasonably withheld); (C) in all other respects be in a form and on terms customary in the insurance markets in which the cover is placed and/or as otherwise approved by the Security Agent (such approval not to be unreasonably withheld or delayed). 11.5 Notice of assignment of insurances and endorsement of the Security Agent's interests Each Shipowner and Stena Charterer (as the case may be) shall forthwith upon execution by it of the relevant Insurance Assignment or Deed of Covenants or Charterer's Insurance Assignment to be entered into by it in respect of any Mortgaged Ship or Mortgaged Linkspan:- (A) execute a Notice of Assignment of Insurances in respect of the relevant Ship or Linkspan in the form required by the terms of such Insurance Assignment or Deed of Covenant or Charterer's Insurance Assignment and in accordance -101- with normal market practice serve the same on all brokers, insurance companies, underwriters, protection and indemnity and/or war risks associations through whom any of the policies or entries relating to the Insurances of such Ship or Linkspan are effected; and (B) procure that the interests of the Security Agent in the Insurances of such Ship or Linkspan shall be endorsed upon all slips, cover notes, policies, certificates of entry and other instruments of insurance issued or to be issued in connection with the Insurances by means of the incorporation therein of the relevant Loss Payable Clause required by the terms of such Insurance Assignment or Deed of Covenant or Charterer's Insurance Assignment and the attachment thereto of the relevant Notice of Assignment of Insurances referred to in paragraph 11.5(A) above and/or by such other means and/or in such other form as is customary or appropriate in the insurance market in which the cover is placed and/or as the Security Agent shall otherwise reasonably require and, in the event that any further Mortgaged Ship or Mortgaged Linkspan is delivered to any Stena Charterer under a demise charter after the date of the relevant Charterer's Insurance Assignment entered into by it, such Stena Charterer shall perform its obligations under paragraphs (A) and (B) above in respect of such Mortgaged Ship or Mortgaged Linkspan forthwith upon its delivery to such Stena Charterer. 11.6 Letters of undertaking Each Shipowner shall procure that the Approved Brokers and any protection and indemnity or war risks association in which its Ship may from time to time be entered shall deliver to the Security Agent a letter or letters of undertaking in such form as the Security Agent may reasonably require having regard to the then current market practice and the practices prescribed by the International Group or successor association or body and/or the Lloyds Insurance Brokers' Committees and/or any other professional association of which the Approved Brokers are members. 11.7 Deposit and production of insurance documents Each Shipowner shall procure in respect of its Mortgaged Ship and Mortgaged Linkspans (if any):- (A) that all original slips, cover notes, policies, certificates of entry and other instruments of insurance issued from time to time in respect of those of the Insurances in respect of its Ship and Linkspans (if any) which are effected through Approved Brokers shall forthwith be deposited with such Approved Brokers and thereafter be held by the Approved Brokers to the order of the Security Agent upon and subject to such terms as the Security Agent shall reasonably require having regard to the then current market practice and subject to the rights of any prior assignee thereof; (B) that, as soon as reasonably practicable upon the Security Agent's request therefor, certified copies of the instruments of insurance referred to in paragraph (A) above shall be produced to the Security Agent by the Approved Brokers; -102- (C) that, forthwith upon the Security Agent's request therefor, certified copies of all certificates of entry and policies relating to the Ship's entry with any protection and indemnity association or war risks association shall be produced to the Security Agent by such protection and indemnity and/or war risks association (as appropriate). 11.8 Payment of premiums and calls Each Shipowner shall punctually pay all premiums, calls, contributions or other sums payable in respect of the Insurances and shall produce to the Security Agent all relevant receipts or other evidence of payment when so required by the Security Agent. 11.9 Waiver of broker's lien Where any of the insurances effected through Approved Brokers form part of a fleet cover and such Approved Brokers are or would be entitled to exercise rights of set-off or cancellation in relation to claims under such Insurances relating to a Mortgaged Ship or Mortgaged Linkspan for non-payment of premiums in respect of other vessels or linkspans covered by the same Insurances, such Shipowner shall use its reasonable endeavours (having regard to then current market practice including the practice prescribed by the Lloyds Insurance Brokers' Committee and/or any other professional association of which the Approved Brokers are members) to procure that the Approved Brokers shall undertake to the Security Agent:- (A) not to exercise against the policy or against any claims in respect of the Ship or Linkspan (as the case may be) any lien or right of set off for unpaid premiums in respect of vessels or linkspans other than the Ship or Linkspan covered under such fleet cover or for unpaid premiums in respect of any other such policies of insurance; (B) not to cancel the insurances for the Ship or Linkspan or by reason of the non-payment of premiums for vessels or linkspans (other than any Mortgaged Ships or Mortgaged Linkspans) covered by such fleet cover; or, in lieu of the undertakings referred to in paragraphs (A) and (B) to issue a separate policy of insurance in respect of the Ship or Linkspan (as the case may be) as and when the Security Agent may reasonably so require. 11.10 Renewal of Insurances Each Shipowner shall renew the Insurances (or relevant part thereof) in respect of its Mortgaged Ship and Mortgaged Linkspans (if any) before the relevant policies, contracts or entries expire and shall procure that the Approved Brokers and/or the relevant protection and indemnity association or war risks association or relevant Approved Manager shall promptly confirm in writing to the Security Agent as and when each such renewal has been effected. 11.11 Execution of guarantees Each Shipowner shall promptly arrange for the execution and delivery of such guarantees in respect of its Mortgaged Ship as may from time to time be required by -103- any protection and indemnity or war risks association in accordance with its rules or the terms of entry of the Ship. 11.12 Information from brokers Each Shipowner shall procure that the Approved Brokers and the managers of any protection and indemnity and/or war risks association with which its Ship is entered shall give to the Security Agent such information as to the Insurances relating thereto as the Security Agent may reasonably request. 11.13 Restriction on amendments to cover No Shipowner shall without the prior consent of the Security Agent (such consent not to be unreasonably withheld or delayed), make any alteration to the terms of any of the Insurances of a Mortgaged Ship or Mortgaged Linkspan which would or could reasonably be expected to have a material adverse effect on the rights or interests of the Security Agent nor shall any Shipowner take any action or omit to take any action or suffer any act or omission which would or would be likely to render any of the Insurances invalid, void, voidable, suspended, defeated or unenforceable or render any sum payable thereunder repayable in whole or in part (save and to the extent that replacement cover has been effected in accordance with this Clause 11). 11.14 Major Casualties relating to Mortgaged Ships In the event of a Major Casualty relating to any Mortgaged Ship the proceeds of insurance claims in respect of such Major Casualty shall, subject to the rights of any charterer (other than a Stena Charterer), be paid to the Security Agent in accordance with the relevant Loss Payable Clauses and:- (A) if no Event of Default has occurred and is continuing, such proceeds shall be applied by the Security Agent in or towards payment on behalf of the relevant Shipowner or bareboat charterer to the relevant repairer, salvor or other relevant creditor in respect of the cost of repairs, salvage or other charges unless the Shipowner or bareboat charterer has first fully repaired the damage or secured complete discharge of the liability insured against or otherwise made good the loss in which case the Security Agent shall reimburse the Shipowner or bareboat charterer therefor up to the amount received by the Security Agent provided however that the insurers with whom the fire and usual marine risks insurances are effected may, in the case of a Major Casualty, make payment on account of repairs in the course of being effected; or (B) if an Event of Default has occurred and is continuing, and the Agent has given notice in accordance with Clause 15.2 the Security Agent shall be entitled to apply such proceeds in the manner specified in Clause 7.10. 11.15 Minor casualties relating to Mortgaged Ships; casualties relating to Mortgaged Linkspans Each Shipowner or relevant Stena Charterer shall apply all sums receivable under the Insurances in respect of its Mortgaged Ship or Mortgaged Linkspans (as the case may -104- be) as are paid to it in accordance with the relevant Loss Payable Clauses for the purpose of fully repairing the damage or securing complete discharge of the liability insured against or otherwise making good the loss in respect of which such sums shall have been received and/or reimbursing itself for the expense of having previously carried out such repairs, discharging such liability or making good such loss. 11.16 Total Losses relating to Mortgaged Linkspans In the event of a Total Loss relating to any Mortgaged Linkspan the proceeds of insurance claims in respect of such Total Loss shall be paid to the Security Agent in accordance with the relevant Loss Payable Clauses and:- (A) if no Event of Default has occurred and is continuing, such proceeds shall be applied by the Security Agent in or towards payment on behalf of the relevant Shipowner for the purchase of a replacement Linkspan (it being a condition of such payment that the relevant Shipowner execute a Linkspan Mortgage in favour of the Security Agent immediately upon its acquisition of title to such replacement Linkspan and that, to the extent that to do so is consistent with market practice, the Shipowner assign to the Security Agent the benefit of the relevant building contract and any refund guarantee (or provide other security acceptable to the Majority Banks) where any proceeds of the Total Loss are paid over to the manufacturer or supplier of the replacement Linkspan before the relevant Shipowner acquires title thereto); and (B) if an Event of Default has occurred and is continuing, and the Agent has given notice in accordance with Clause 15.2 the Security Agent shall be entitled to apply such proceeds in the manner specified in Clause 7.10. 11.17 Receipt of proceeds by the Shipowner If, despite the provisions of the relevant Loss Payable Clauses, any Shipowner or relevant Stena Charterer receives any proceeds of an insurance claim in respect of a Major Casualty relating to its Mortgaged Ship or Total Loss relating to its Mortgaged Linkspan before having repaired the damage or discharged the liability or otherwise made good the loss in respect of which the moneys are paid, such Shipowner shall, subject to the rights of any prior assignee thereof, immediately pay such proceeds to the Security Agent who shall apply them in accordance with the relevant provisions of Clause 11.14 or Clause 11.16 and until payment thereof to the Security Agent the relevant Shipowner or relevant Stena Charterer shall hold the proceeds on trust for the Security Agent. 11.18 Restriction on settlement of claims Subject to the rights of any charterer (other than a Stena Charterer), no Shipowner shall without the prior written consent of the Security Agent settle, compromise or abandon any claim under the Insurances for a Total Loss or Major Casualty relating to its Mortgaged Ship or Mortgaged Linkspan (if any). 11.19 Assistance by the Shipowner -104- Subject to the rights of any prior assignee of the Insurances each Shipowner undertakes to do all things and provide all documents, evidence and information as may be necessary to enable the Security Agent to collect or recover any moneys which at any time become due in respect of the Insurances relating to its Mortgaged Ship or Mortgaged Linkspans (if any) and for such purpose (but without limitation) such Shipowner shall permit the Security Agent if necessary to sue in that Shipowner's name. 11.20 Employment in conformity with insurance cover No Shipowner will at any time employ its Mortgaged Ship or Mortgaged Linkspans (if any) or suffer them to be employed except in conformity with the terms of the Insurances (including any express or implied warranties) without first obtaining the consent to such employment of the insurers and complying with such requirements as to extra premium or otherwise as the insurers may prescribe and before allowing its Ship to enter or trade to any zone which is declared a war zone by any government or by the Ship's war risks insurers or which is rendered dangerous by reason of hostility in any part of the world (whether war be declared or not) to effect such special insurance cover so as to ensure that such Ship is fully insured against war risks in accordance with this Clause 11 while in such zone. 12. SHIP AND LINKSPAN COVENANTS : OPERATION AND MAINTENANCE 12.1 Duration Stena AB and the Borrower undertake to the Agent, the Security Agent, the Banks and the Co-Arrangers that throughout the Security Period they will procure that in relation to each Mortgaged Ship and each Mortgaged Linkspan:- (A) during any period for which the Ship or Linkspan is in service under a bareboat charter to a charterer which is not a member of the Stena AB Group, the Shipowner and each Stena Charterer of the relevant Ship or Linkspan will use its reasonable endeavours to procure that:- (i) the covenants as to registration, operation and maintenance of the relevant Ship or Linkspan are complied with by the person on whom such obligations are imposed; and (ii) in the case of a Mortgaged Ship or Mortgaged Linkspan which is let on bareboat charter hereafter, the relevant bareboat charter includes obligations on the charterer not materially less favourable to the Shipowner or Stena Charterer as disponent owner than those set out in Schedule 20; provided that following the occurrence of an Event of Default and for so long as such Event of Default is continuing the Borrower shall procure that the Shipowners and each Stena Charterer will comply with the directions of the Security Agent in relation to the exercise of its rights under the Commercial Documents relating to its Mortgaged Ship and Mortgaged Linkspans (if any) and any charter or other contract for the employment of the Ship or Linkspans entered into hereafter; and -106- (B) during any period for which the Ship or Linkspan is not employed on a bareboat charter as described in paragraph (A) above, the Shipowner will comply and/or procure that any Stena Charterer who is chartering the Ship or Linkspan under a bareboat charter will comply with the covenants set out in Clauses 12.3 through 12.17. 12.2 Ship and Linkspan registration Each Shipowner shall:- (A) maintain the registration of its Mortgaged Ship under the registry of the Flag State at the Port of Registry; and (B) maintain the registration of its Mortgaged Linkspan under the registry of the Flag State (but only if such Linkspan is capable of registry in a ship registry or other central or public registry) and (save pursuant to and in accordance with Clause 19.5) shall not do or omit to do anything or suffer any act or omission whereby such registration may be forfeited or imperilled. 12.3 Standard of maintenance Each Shipowner shall keep its Mortgaged Ship and Mortgaged Linkspans (if any) in a good and efficient state of repair so as (in the case of each Ship) to entitle such Ship to its Classification with a Classification Society free of any requirement or recommendation affecting class which has not been complied with in accordance with its terms and (in the case of each Ship and Linkspan) so as to comply with all material legislation of the Flag State and all other legislation, regulations and requirements of any government, governmental agency or other regulatory authority (statutory or otherwise) from time to time applicable to such Ship and Linkspans. Each Shipowner shall procure that all appropriate repairs to or replacements of any damaged, worn or lost parts or equipment are carried out (both as regards workmanship and quality of materials) so as not to diminish the value or class of its Mortgaged Ship or Mortgaged Linkspans. 12.4 Removal of parts and equipment No part or item of equipment whose removal would materially reduce the value of any Mortgaged Ship or Mortgaged Linkspan shall be removed from such Ship or Linkspan unless it is replaced promptly by a suitable part or item and the replacement part or item:- (A) is in the same or better condition than that part or item removed or enhances the value and/or earning capacity of such Ship or Linkspan; (B) is (or upon its installation on board such Ship or Linkspan will become) legally and beneficially wholly owned by the relevant Shipowner; (C) is free from Liens other than Permitted Ship Liens; and (D) with effect from its installation on board such Ship or Linkspan is subject to -107- the security constituted by the Ship Mortgage or Linkspan Mortgage (as the case may be) thereon. 12.5 Restriction on modifications No Shipowner shall, without the prior consent of the Agent (such approval not to be unreasonably withheld or delayed), make any modifications to its Mortgaged Ship or any Mortgaged Linkspan or any part thereof which would or might materially and adversely alter the structure, type or performance characteristics of such Ship or Linkspan or materially reduce its value. 12.6 Equipment belonging to third parties No Shipowner shall, without the prior consent of the Agent (such approval not to be unreasonably withheld or delayed), install on its Mortgaged Ship or Mortgaged Linkspan any equipment belonging to a third party which cannot be removed without causing significant damage to the structure or fabric of such Ship or Linkspan. 12.7 Survey Each Shipowner shall submit its Mortgaged Ship to such periodical or other surveys as may be required for classification purposes and, if so required by the Agent, such Shipowner shall supply to the Security Agent copies of all survey reports in respect thereof. 12.8 Inspection Each Shipowner shall permit surveyors or other persons appointed by the Agent to board its Mortgaged Ship at all reasonable times (but so as not to interfere with the ordinary operation of the Ship) for the purpose of inspecting her condition and her class or other records or satisfying themselves as to repairs proposed or already carried out subject to such persons and the Security Agent signing an indemnity and/or waiver letter reasonably required by the relevant shipyard or the Shipowner or relevant bareboat charterer. Each Shipowner shall afford all proper and reasonable facilities for such inspections and also for inspections of the Mortgaged Linkspans if reasonably required by the Agent. 12.9 Employment of Ships No Shipowner shall knowingly or recklessly employ its Mortgaged Ship or suffer her employment in any trade or business which is forbidden by any applicable law or is otherwise illicit or in carrying illicit or prohibited goods or in any manner whatsoever which may render her liable to condemnation in a prize court or to destruction, seizure or confiscation or that may expose such Ship to penalties or sanctions. 12.10 Information Each Shipowner shall promptly provide the Agent with all such information which the Agent may periodically and reasonably require regarding its Mortgaged Ship and its Mortgaged Linkspans (if any), their employment, position and engagements, particulars of all towages and salvages and copies of all charters and other contracts for her employment or otherwise concerning such Ship or Linkspans. -108- 12.11 Payment of trading expenses and wages Each Shipowner shall promptly pay all tolls, dues and other outgoings whatsoever in respect of its Mortgaged Ship, its Mortgaged Linkspans (if any) and their Insurances and keep accounts in respect thereof in accordance with its current practice. As and when the Agent may so reasonably require each Shipowner shall make such accounts available for inspection on behalf of the Agent and shall provide evidence satisfactory to the Security Agent that the wages and allotments and the insurance and pension contributions of the master and crew are being regularly paid, that all deductions from crew's wages in respect of any tax and/or social security liability are being properly accounted for and that the master has no claim for disbursements other than those incurred in the ordinary course of trading on the voyage (if any) then in progress or completed prior to such inspection. 12.12 Avoidance and discharge of other liens Each Shipowner shall in accordance with good shipping industry practice pay and discharge or cause to be paid and discharged all debts, damages and liabilities whatsoever which have given rise, or may give rise, to maritime, statutory or possessory liens on or claims enforceable against its Mortgaged Ship or its Mortgaged Linkspans (if any) under the laws of all countries to whose jurisdiction such Ship or Linkspans may from time to time be subject. If any Mortgaged Ship or Mortgaged Linkspan is arrested pursuant to legal process or detained in exercise or purported exercise of any such lien or claim as aforesaid the relevant Shipowner shall use all reasonable endeavours to procure the release of the Ship or Linkspan from such arrest or detention as soon as reasonably practicable after receiving notice thereof by providing bail or taking such other steps as the circumstances may require (but, in the case of an arrest or detention as a consequence of claims or alleged claims against a charterer of such Ship or Linkspan which is not a member of the Stena AB Group, the relevant Shipowner or Stena Charterer may defer procuring such release if it reasonably considers it to be in the best commercial interests of the Stena AB Group and provided that, unless otherwise agreed by the Agent, and for so long as so doing does not involve any imminent likelihood of a sale of such Ship or Linkspan by order of any court of competent jurisdiction). 12.13 Notice of mortgage Each Shipowner will do everything necessary under the laws of any relevant jurisdiction for the purpose of perfecting and maintaining the Ship Mortgage in relation to its Mortgaged Ship and the Linkspan Mortgage in relation to each of its Mortgaged Linkspans (if any) as a valid and enforceable mortgage and for preserving the priority of such Ship Mortgage and Linkspan Mortgage and, in particular (but without limitation), it will keep on board its Ship each such document or record as may be required by law and cause such particulars relating to the relevant Ship Mortgage and Linkspan Mortgages to be recorded as may be required by law. 12.14 Notification of certain events Each Shipowner shall notify the Agent by telefax promptly upon the same coming to its knowledge and in reasonable detail of:- -109- (A) any casualty to its Mortgaged Ship which is or is likely to be a Major Casualty; (B) any occurrence in consequence whereof its Mortgaged Ship or any Mortgaged Linkspan has become or is likely to become a Total Loss; (C) any requirement or recommendation made by its Classification Society or by any competent authority in respect of its Mortgaged Ship which has not been complied with by the date by which it is required to be complied with (as extended by agreement with the Classification Society) other than any such requirement or recommendation the imposition of which is being contested in good faith by the relevant Shipowner; (D) any arrest or detention of its Mortgaged Ship or any Mortgaged Linkspan or the exercise or purported exercise of any lien on such Ship or Linkspan; (E) its Mortgaged Ship or, if capable of registration, its Mortgaged Linkspan ceasing to be registered under the laws of its Flag State or anything which is done or omitted to be done whereby such registration may be imperilled. 12.15 Restrictions on chartering-out Except with the prior written consent of the Agent, no Shipowner and no Stena Charterer shall let or employ a Mortgaged Ship or a Mortgaged Linkspan:- (A) on demise charter for any period; (B) on any time or consecutive voyage charter for a term which exceeds or which by virtue of any optional extensions therein contained may exceed twenty-five (25) months' duration; or (C) on terms which permit the charterer to purchase the Ship or Linkspan (save for an option price which reflects the market value of such Ship or Linkspan at the time the relevant option is exercisable or a reasonable pre-estimate of such value having regard to the other terms of the relevant charter and save for a charter which is a hire purchase or conditional sale agreement on Credit Terms); provided however that:- (i) no such consent shall be required in respect of a charter to a Stena Charterer provided that the relevant Stena Charterer has executed and delivered to the Agent a Charterer's Subordination Undertaking and (if the charter is a demise charter) a Charterer's Insurance Assignment in relation to the Mortgaged Ship and (if relevant) the Mortgaged Linkspans and the Approved Manager shall have delivered to the Security Agent a Manager's Subordination Undertaking in relation thereto; and (ii) in respect of the matters referred to in sub-paragraph (B) of this Clause 12.15 the Agent's consent shall be deemed to have been given thereto if the relevant Shipowner shall not have been informed by the Agent -110- either in writing or by word of mouth that such consent is refused within two (2) Banking Days in Gothenburg and London of the time at which the relevant Shipowner's application for such consent was received by the Agent; and (iii) the Agent shall not unreasonably withhold its consent to any charter and it shall not for this purpose be reasonable to withhold consent or to impose conditions on its consent either (a) by reason of the failure of the proposed charterer (other than a Stena Charterer) to agree to grant an assignment of its interest in the Insurances of the Ship and/or Linkspan and/or to agree to subordinate its rights in respect of the Ship and/or Linkspan and/or to agree to subordinate its rights in respect of the Ship and/or Linkspan to those of the security Agent as its mortgagee and/or assignee of its Insurances (in each case either at all or on terms required by the Agent) and/or to agree the terms of the relevant charter reflecting or containing the provisions of Clauses 11 and/or 12 or (b) by reason of the duration of the charter and/or the identity and/or creditworthiness of the charterer or (c) by reason of the relevant Shipowner and/or any charterer (including a Stena Charterer) failing to agree to assign its rights under the relevant charter and/or in respect of the Earnings of the Ship and/or Linkspan as security for the obligations of the Borrower pursuant to the Security Documents. 12.16 Management No Shipowner or Stena Charterer shall appoint any manager of a Mortgaged Ship or Mortgaged Linkspan other than an Approved Manager and each Approved Manager of a Mortgaged Ship or Mortgaged Linkspan so appointed by any Shipowner or Stena Charterer shall execute and deliver to the Security Agent a Manager's Subordination Undertaking in relation to each of the Mortgaged Ships and Mortgaged Linkspans from time to time managed by it. 12.17 ISM Compliance Each Shipowner shall comply, or procure that any other relevant person such as the Approved Manager or bareboat charterer who has assumed the responsibility for operation of its Mortgaged Ship for the purposes of the ISM Code will comply, with the ISM Code or any replacement thereof. 13. COVENANTS IN RESPECT OF THE PORTS 13.1 Duration Stena AB and the Borrower undertake to the Agent, the Security Agent, the Co-Arrangers and the Banks that throughout the Security Period they will procure that in relation to each Mortgaged Port the Port Owner will comply with the covenants set out in Clauses 13.2 through 13.16. 13.2 Insurance Save where the provisions of Clause 13.4 are applicable, each Port Owner shall:- -111- (A) insure and keep insured all such buildings, fixtures, fittings, plant and machinery on its Mortgaged Port as are in each case used or required in the ordinary course of the Stena AB Group's business (other than those in respect of which the Security Agent agrees that insurance is not reasonably required) with such insurer and against such risks and in such amounts (being no less than their full reinstatement value if realistically capable of being so severely damaged as to require reinstatement) and otherwise upon such terms as the Security Agent may reasonably require; (B) use its best endeavours to procure that a note of the Security Agent's interest is endorsed on all insurance policies relating thereto; and (C) (if the Security Agent so requires) produce to or deposit with the Security Agent all such insurance policies in respect of its Mortgaged Port and the receipts for all premiums and other payments necessary for effecting and keeping up such policies. 13.3 Security Agent's right to remedy breach of insurance covenants If a Port Owner fails to comply with any of its obligations under Clause 13.2 in respect of its Mortgaged Port (whether or not the Port Mortgage relating thereto shall have become enforceable) the Security Agent may, but without being under any duty to do so, itself insure and keep insured any of the buildings, fixtures, fittings, plant and machinery which the relevant Port Owner has in Clause 13.2 covenanted to insure in each case in accordance with the provisions of Clause 13.2 and the Port Owner shall be liable to the Security Agent for the expense of the Security Agent in so doing. 13.4 Leasehold property insured by lessor If the interest of any Port Owner in its Mortgaged Port or any part thereof is leasehold and the lessor (or any superior lessor) covenants to insure (or procure the insurance of) the same the relevant Port Owner shall:- (A) provide the Security Agent with details of the insurance of such Port and provide the Security Agent with a copy of the insurance policies and any subsequent endorsements if such Port Owner has the right to obtain the same from the landlord and has so obtained the same; (B) provide the Security Agent with receipts or other evidence of the payment of all premiums under such policies of insurance if such Port Owner has the right to obtain the same from the landlord and has so obtained the same; (C) insure separately (in accordance with the provisions of Clause 13.2) against such risks as are referred to in Clause 13.2 for additional sums required by the Security Agent (or failing such requirement in accordance with the practice in respect of assets of the same type from time to time current amongst prudent businessmen) not insured by the lessor but only to the extent that such Port Owner is not prohibited from doing so under the terms of the relevant lease; and (D) take all steps open to it to enforce the insurance and (unless the Security Agent -112- agrees otherwise) reinstatement covenants on the part of the lessors and any superior lessors. The Security Agent shall not unreasonably withhold its approval to a request from the relevant Port Owner that it terminate the relevant lease in lieu of enforcing the reinstatement covenants therein if, in the reasonable opinion of such Port Owner, it would be commercially advantageous to it to do so. 13.5 Notification and settlement of insurance claims The relevant Port Owner shall as soon as possible give notice to the Security Agent of all claims in respect of its Mortgaged Port made under each policy of insurance referred to in Clause 13.2 and 13.4 estimated to be in excess of $2,000,000 (or the equivalent in any other currency) and of all facts and matters relating to such claims. Subject to complying with its obligations to any lessor or tenant under any existing lease, the relevant Port Owner shall not agree to the settlement of any such claim without the prior written consent of the Security Agent. 13.6 Application of insurance proceeds Subject to the obligations of the relevant Port Owner to any tenant in respect thereof, all sums at any time payable under any policies of insurance relating to its Mortgaged Port shall be paid to the Security Agent and shall be applied in making good or recouping expenditure in respect of the loss or damage for which such moneys are received or as the Security Agent may otherwise require (and if the same is not paid directly to the Security Agent by the insurers then the relevant Port Owner shall hold the same on trust for the benefit of the Security Agent and shall account to the Security Agent accordingly) provided however that until the Security Agent otherwise requires by notice in writing to the relevant Port Owner, such Port Owner will not be required so to pay to the Security Agent any such sums in respect of any claim for $2,000,000 (or the equivalent in any other currency) or less. 13.7 Repair Each Port Owner shall keep its Mortgaged Port in good and substantial repair and condition and (when necessary) replace all such buildings, fixtures, fittings, plant and machinery thereon as are in each case used or required in the ordinary course of the Stena AB Group's business but not where the relevant Port Owner reasonably considers that repair or replacement is not necessary or desirable to enable it efficiently to carry on its business. 13.8 Security Agent's right to remedy breach of repair covenants If a Port Owner fails to comply with any of its obligations under Clause 13.7 in respect of its Mortgaged Port (whether or not the Port Mortgage relating thereto shall have become enforceable) the Security Agent may, but without being under any duty to do so, itself repair any such buildings, fixtures, fittings, plant and machinery which the relevant Port Owner has in Clause 13.7 covenanted to repair (and for such purpose the Security Agent may enter upon the Mortgaged Port or any part thereof without being deemed to have gone into possession thereof). -113- 13.9 Maintenance None of the Port Owners will, without the prior written consent of the Security Agent (such consent not to be unreasonably withheld), pull down or remove the whole or any part of any buildings on its Mortgaged Port or sever or unfix or remove any of the fixtures thereon or (except for the purpose of effecting necessary repairs thereto or of replacing the same with new or improved models or substitutes) remove any of the plant and machinery forming part of such Mortgaged Port except where:- (A) it is required to do so pursuant to any mandatory local authority or other requirement; (B) the effect of doing so will not materially reduce the value of such Mortgaged Port; (C) if there is a material reduction in the value of such Mortgaged Port following the removal of any plant or machinery therefrom, such plant or machinery is removed to another Mortgaged Port which is subject to a Port Mortgage in favour of the Security Agent and there is an increase in the value of that Mortgaged Port commensurate with the decrease in value of the first Mortgaged Port; or (D) the relevant building, fixture, plant or machinery is disposed of in accordance with Clause 5.3. 13.10 Notification of planning authority notices, etc. Each of the Port Owners will, within seven (7) days after becoming aware thereof, give to the Security Agent a copy of any notice, order, direction, designation, resolution or proposal having specific application to its Mortgaged Port or any part thereof or to the locality in which the same is situate given or made by any planning authority or other public body or authority whatsoever the compliance with which is likely to have a material adverse effect on the value of the Mortgaged Port concerned and (if the Security Agent so requires or if such Port Owner is obliged by law to do so and so decides) that it will forthwith and at the cost of such Port Owner take all reasonable and necessary steps to comply with any such notice, order, direction, designation or resolution and make or join with the Security Agent in making such objections or representations in respect of any such proposal as the Security Agent may require. 13.11 Performance of covenants Each of the Port Owners will:- (A) observe and perform all material covenants, stipulations and conditions to which its Mortgaged Port or any part thereof or the user thereof is now or may hereafter be subjected so far as the same are still subsisting and capable of being enforced and of which such Port Owner receives written notice that it is in breach thereof from the person entitled to enforce the same (including all material covenants and obligations of such Port Owner as lessor); -114- (B) (without prejudice to the generality of the foregoing) as regards any lease under which all or any part of its Mortgaged Port is held, duly and punctually pay all rents due or to become due thereunder and perform and observe all the material covenants and conditions on the part of the tenant which are therein contained; and (C) notify the Security Agent of any material claim, notice or proceedings in respect of any (alleged) breach of any of the foregoing. 13.12 Restriction on licences, tenancies and leases Except with the prior written consent of the Security Agent (which consent shall not be unreasonably withheld and which shall not be withheld at all where the relevant Port Owner is contractually obliged to any existing lessor or tenant to perform the act for which the Security Agent's consent is required), no Port Owner shall grant or agree to grant or vary or agree to vary any licence or tenancy affecting all or any part of its Mortgaged Port nor exercise the powers of leasing or agreeing to lease or of accepting or agreeing to accept surrenders conferred by Sections 99 and 100 of the Law of Property Act 1925 nor in any other way dispose or agree to dispose of or create any legal or equitable estate or interest in or otherwise part with or share possession or occupation of its Mortgaged Port or any part thereof to or with any person (other than another member of the Stena AB Group) where this would materially and adversely affect the value of the Port or the profitability of the business carried out thereat. It is agreed for the purpose of this Clause 13.12 that there will be no material and adverse effect on the value of a Mortgaged Port or the profitability of any business carried out thereat where:- (A) the relevant Port Owner grants a lease or licence of any part of the Port for a term not exceeding twenty five (25) years on proper commercial terms with rents to be reviewed at reasonable intervals of not more than five (5) years if appropriate and at either:- (i) the best rent reasonably obtainable in the open market without taking a fine or premium or other capital consideration; or (ii) at a lower rent where the relevant Port Owner is satisfied that it is in the best commercial interests of the business carried on at the Port that the lease or licence should be granted; and (B) in any case where the term of any lease is for not more than five (5) years the letting excludes the provisions of Sections 24 to 28 of the Landlord and Tenant Act 1954 and such lease or licence would have no material adverse effect on the use of the Port for the purpose of any undertaking carried on at the Port. 13.13 Land Registration Acts 1925 to 1986 Each of the Port Owners shall procure that no person shall be registered under the Land Registration Acts 1925 to 1986 as proprietor of its Mortgaged Port or any part -115- thereof who is not now or when the same is acquired by the relevant Port Owner so registered without the prior written consent of the Security Agent (provided always that this restriction shall not apply to any lease granted pursuant to Clause 13.12) and the relevant Port Owner shall be liable for the costs incurred by the Security Agent in lodging from time to time cautions against the first registration of title at H.M. Land Registry to its Mortgaged Port. 13.14 Restriction on development Each of the Port Owners undertakes in respect of its Mortgaged Port that, where this would materially and adversely affect the value of its Mortgaged Port, it will not without the prior written consent of the Security Agent:- (A) carry out or permit or suffer to be carried out any development (as defined in the Planning Acts) on such Mortgaged Port or any part thereof; or (B) materially change or permit or suffer to be materially changed the user of the such Mortgaged Port or any part thereof. 13.15 Compliance with Planning Acts None of the Port Owners will do or omit or permit or suffer to be done or omitted any act, matter or thing in, on or respecting its Mortgaged Port or any part thereof which is required to be omitted or done by the Planning Acts or any other Acts or statutory provisions whatever or which shall contravene the provisions of such Acts or any of them and each Port Owner will at all times indemnify and keep indemnified the Security Agent against all actions, proceedings, costs, expenses, claims and demands whatsoever in respect of any such matter or thing contravening the provisions of the said Acts or any of them as aforesaid. 13.16 Payment of outgoings Each of the Port Owners will pay, and indemnify the Banks against, all claims in respect of rates, taxes, duties, charges, assessments and outgoings assessed or charged upon its Mortgaged Port or payable by the owner or occupier. 13.17 Inspection Each of the Port Owners undertakes in respect of its Mortgaged Port that it will permit the Security Agent and any duly authorised agent, architect or surveyor of the Security Agent to have access to such Port or any part thereof at all reasonable times (but so as not to interfere with the ordinary conduct of business at such Port) upon prior appointment for the purpose of inspecting the same. 14. CONDITIONS 14.1 Documents and evidence The obligation of each Bank to make its Commitment available shall be subject to the condition that the Agent, or its duly authorised representative, shall have received all the documents and evidence specified in Schedule 5 in form and substance satisfactory to the Agent. -116- 14.2 General conditions precedent The obligation of each Bank to make its Commitment available shall be subject to the further conditions that, as at the Availability Date:- (A) the representations and warranties contained in Clauses 9.1 and 9.2 are true and correct on and as of the Availability Date as if each was made with respect to the facts and circumstances existing at such time; (B) no Default shall have occurred and be continuing or would result from the making of an Advance on the Availability Date; and (C) no material adverse change has occurred in the business, financial condition or prospects of the Stena AB Group or the Stena International Group as a whole from that shown in the information memorandum dated June 2001 prepared by J. P. Morgan plc and received by the Banks. 14.3 Waiver of conditions precedent The conditions specified in this Clause 14 are inserted solely for the benefit of the Banks and may be waived on their behalf in whole or in part and with or without conditions by the Agent acting on the instruction of the Banks without prejudicing the right of the Agent acting on such instructions to require fulfilment of such conditions in whole or in part in respect of any other Advance. 14.4 Notification to Banks The Agent shall notify the Banks promptly after receipt by it of the documents and evidence referred to in Clause 14.1 in form and substance satisfactory to it. 15. DEFAULT 15.1 Events of default Each of the events set out below is an Event of Default:- (A) Non-payment any Security Party does not pay within three (3) Banking Days of the due date any amount payable by it under any Security Document at the place and in the currency in which it is expressed to be payable or, in the case of amounts due on demand, within seven (7) Banking Days of receipt of the relevant demand; (B) Breach of other obligations any Security Party fails to comply with any other provision of any Security Document in a material respect and (unless in the reasonable opinion of the Agent incapable of remedy) such action as the Agent may require shall not have been taken within a period of twenty one (21) days of the Agent notifying the relevant Security Party of such default and of such required action or within two (2) Banking Days of such notification in relation to any -117- breach of any insurance covenant leading to a possible avoidance of insurance cover; (C) Misrepresentation any representation or warranty made or repeated by any Security Party in any Security Document or in any certificate, statement or opinion delivered by or on behalf of any Security Party thereunder or in connection therewith is incorrect in a material respect when made or repeated and (unless in the reasonable opinion of the Agent incapable of remedy) action has not been taken by the relevant Security Party to ensure that such representation or warranty is rendered correct within twenty one (21) days of the Agent notifying the relevant Security Party; (D) Cross-acceleration at any time the aggregate amount at such time of:- (i) the amount of any Debt of the Security Parties which is not paid when due or within any originally applicable grace period relating thereto and remains unpaid or which has been declared due and payable prior to the date when it would otherwise have become due (unless as a result of the exercise by the relevant person of a voluntary right of prepayment or upon mandatory prepayment as a result of a change of law or other circumstances not constituting an event of default under, or breach of, any agreement regulating and/or securing the relevant Debt) and such declaration has not been cancelled or withdrawn; and (ii) any amounts demanded of, but not paid when due and remaining unpaid by, the Security Parties under any guarantee in respect of Debt (other than Debt referred to in sub-paragraph (i) of this paragraph) exceeds $15,000,000; (E) Winding-up any order is made or resolution passed or other action taken without the prior written consent of the Majority Banks for the suspension of payments or resulting in the dissolution, termination of existence, liquidation, winding-up or bankruptcy of any Security Party, unless in each case such proceeding is revoked within fourteen (14) days of such order being made, resolution passed or action taken; (F) Moratorium or arrangement with creditors a moratorium in respect of all or a significant part of the debts of any Security Party, or a composition or an arrangement with creditors of any Security Party or any similar proceeding or arrangement by which the assets of any Security Party are submitted to the control of its creditors, is applied for, ordered or declared; -118- (G) Appointment of liquidators etc. a liquidator, trustee, administrator, receiver, manager or similar officer is appointed in respect of any Security Party or in respect of all or any substantial part of the respective assets of any Security Party; (H) Insolvency any Security Party becomes or is declared insolvent or suspends payment or is unable, or admits in writing its inability, to pay its debts as they fall due or becomes insolvent within the terms of any applicable law; (I) Legal process any distress, execution, attachment or other process is levied against the whole or any substantial part of the assets of any Security Party and remains undischarged for a period of thirty (30) days (except in the case of a Vessel); (J) Analogous events anything analogous to or having a substantially similar effect to any of the events specified in sub-Clauses (E) to (I) of this Clause 15.1 shall occur in relation to a Security Party under the laws of any applicable jurisdiction; (K) Unlawfulness at any time it becomes unlawful or impossible for any Security Party to perform any of its material obligations under any Security Document to which it is a party or it is unlawful or impossible for the Agent, the Security Agent or any of the Banks to exercise any of their respective material rights under any of the Security Documents and (unless in the reasonable opinion of the Agent any such impossibility or unlawfulness is incapable of rectification or remedy) the relevant Security Party (with due co-operation from the Agent, the Security Agent and the Banks) shall have failed to procure within twenty eight (28) days of notice from the Agent to do so that the foregoing is no longer impossible or unlawful; (L) Material adverse change; material adverse litigation either:- (i) any material adverse change in the consolidated financial condition of the Stena AB Group as a whole from that set forth in the Audited Stena AB Financial Statements as at 31 December 2000 occurs the effect of which is materially to imperil, delay or prevent the due fulfilment by any Security Party of all or any of their material payment obligations under any Security Documents; or (ii) any final and conclusive judgment, order or award is made by any court, arbitration board or other tribunal against any member of the Stena AB Group the effect of complying with which will materially imperil, delay or prevent the due fulfilment by any Security Party of all -119- or any of their material payment obligations under any Security Documents and in either such case such circumstances continue unremedied for a period of one hundred and twenty (120) days after notification from the Agent to the Borrower requiring the same to be remedied provided that such one hundred and twenty (120) day remedy period shall only be taken into account if the Agent certifies to the Borrower that such circumstances are in the opinion of the Majority Banks capable of remedy and the Borrower demonstrates to the satisfaction of the Agent that reasonable steps are being taken which are likely to lead to such circumstances being remedied within such one hundred and twenty (120) day period. For the purposes of the foregoing, the Borrower or Stena AB shall be deemed to have failed to perform or comply with any covenant contained in this Agreement or the other Security Documents requiring the Borrower or Stena AB to cause certain actions to be taken (or to prohibit the taking of certain actions) by any Subsidiary of the Borrower or Stena AB if such Subsidiary shall have taken (or failed to take) such actions, even where the Borrower or Stena AB lacks the corporate power and authority under Book 2 of the Netherlands Civil Code or the Swedish Companies Act (1975:1385) respectively to cause or prohibit such actions. 15.2 Termination The Agent if so requested by the Majority Banks shall, without prejudice to any other rights of the Agent, the Security Agent, the Co-Arrangers and the Banks, at any time after the happening of an Event of Default by notice to the Borrower:- (A) declare that the obligation of each Bank to make its Commitment available shall be terminated, whereupon the Commitments shall be reduced to zero forthwith; and/or (B) declare that all outstanding Advances and all interest and commitment commission accrued and all other sums payable under the Security Documents have become due and payable, whereupon the same shall, immediately or in accordance with the terms of such notice, become due and payable. 15.3 Demand basis If, pursuant to Clause 15.2(B) the Agent declares all outstanding Advances to be due and payable on demand, the Agent may (and, if so instructed by the Majority Banks, shall) by written notice to the Borrower (i) call for repayment of the Advances on such date as may be specified whereupon the Advances shall become due and payable on the date so specified together with all interest and any commitment commission accrued and all other sums payable under this Agreement or (ii) withdraw such declaration with effect from the date specified in such notice. 16. INDEMNITIES 16.1 Miscellaneous indemnities The Borrower shall on demand indemnify each Bank, the Co-Arrangers, the Security Agent and the Agent, without prejudice to any of their other rights under any of the -120- Security Documents, against any loss or expense which such Bank, the Co-Arrangers, the Security Agent or the Agent shall certify as sustained or incurred by it as a consequence of:- (A) any default in payment by the Borrower of any sum under any of the Security Documents when due; or (B) the occurrence of any other Event of Default; or (C) as a consequence of or arising in any way whatsoever in connection with the performance of its obligations hereunder; or (D) receiving or recovering all or any part of a sum unpaid otherwise than on the due date for the payment of interest in respect thereof; or (E) any prepayment of any Advance or part thereof being made under Clauses 5.3, 5.6, 5.7, 5.8, 5.9, 5.10 or 17.1, or any other repayment of any Advance or part thereof, being made otherwise than on its Maturity Date or due date for repayment; or (F) any Advance not being made for any reason (excluding any default by the Agent, the Co-Arrangers, the Security Agent or any Bank) after a Drawdown Notice or request for drawing has been given including, in any such case, but not limited to, any loss or expense sustained or incurred by any Bank, the Security Agent or the Agent in maintaining or funding its Contribution or any part thereof or its portion of any other sum to be paid by it hereunder or in liquidating or re-employing deposits from third parties acquired or contracted for to fund, effect or maintain its Contribution or any part thereof or any other amount owing to the such Bank, the Security Agent or the Agent. 16.2 Currency indemnity If any sum due from the Borrower or Stena AB under any of the Security Documents or any order or judgment given or made in relation thereto has to be converted from the currency (the "FIRST CURRENCY") in which the same is payable under the relevant Security Document or under such order or judgment into another currency (the "SECOND CURRENCY") for the purpose of (i) making or filing a claim or proof against the Borrower or Stena AB, (ii) obtaining an order or judgment in any court or other tribunal or (iii) enforcing any order or judgment given or made in relation to any of the Security Documents, the Borrower and Stena AB shall indemnify and hold harmless the Agent, the Co-Arrangers, the Security Agent and each Bank from and against any loss suffered as a result of any difference between (a) the rate of exchange used for such purpose to convert the sum in question from the first currency into the second currency and (b) the rate or rates of exchange at which the Agent, the Co-Arrangers, the Security Agent or any Bank may in the ordinary course of business purchase the first currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part, of any such order, judgment, claim or proof. Any amount due from the Borrower or Stena AB under this Clause 16.2 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any of the Security Documents and the term "RATE OF -121- EXCHANGE" includes any premium and costs of exchange payable in connection with the purchase of the first currency with the second currency. 16.3 Waiver If and insofar as the Borrower has a right to invoke the nullity of any indemnity granted by it in this Agreement on the basis of Article 2.7 Netherlands Civil Code, it hereby explicitly waives its right to invoke such nullity on the basis of Article 2.7 Netherlands Civil Code. 17. UNLAWFULNESS AND INCREASED COSTS 17.1 Unlawfulness If at any time after the date of this Agreement the introduction, imposition, variation or change of any law, regulation or regulatory requirement or any judgment, order or direction of any court, tribunal or authority binding upon a Bank in the jurisdiction in which it is formed or has its principal office or the office identified against its name in this Agreement (or in any Transfer Certificate, in the case of a Transferee Bank) or in which any action is required to be performed by it for the purposes of this Agreement (whether or not in force before the date of this Agreement) causes any Bank to believe that it has become unlawful for it to contribute to the Advances or to fund its Contribution then that Bank shall promptly inform the Agent and the Agent shall notify the Borrower whereupon:- (A) the relevant Bank (the "AFFECTED PARTY") shall, following consultation with the Borrower, use all reasonable efforts to avoid the effects of such introduction, imposition, variation or change and in particular shall consider, subject to obtaining any necessary consents, transferring at par its rights and obligations under this Agreement to another legal entity approved by the Borrower not affected by such law; (B) if the Affected Party is unable, within ninety (90) days following the date upon which the Affected Party became aware of any such introduction, imposition, variation or change, or such shorter period permitted thereby, to avoid the effect thereof, or the Borrower fails to agree to any proposal put forward by the Affected Party to avoid the effects of such introduction, imposition variation or change, then the Agent shall, at the request and on behalf of the Affected Party, give notice to the Borrower that on such date or on a future specified date, in either case not being earlier than the latest date permitted by such introduction, imposition, variation or change, the Affected Party's Commitment shall be reduced to zero and the Borrower shall be obliged to prepay the Contribution of such Bank either (a) forthwith or (b) on a future specified date not being earlier than the latest date permitted by the relevant law or regulation;. 17.2 Increased costs If the result of any change in, or in the interpretation or application of, any law or regulation (including, without limitation, those relating to Taxation, capital adequacy, liquidity, reserve assets and special deposits) after the date of this Agreement is to:- -122- (A) subject any Bank to Taxes or change the basis of Taxation of any Bank with respect to any payment under any of the Security Documents (other than Taxes or Taxation on the overall net income, profits or gains of such Bank imposed in the jurisdiction in which its principal or lending office under this Agreement is located); and/or (B) increase the cost to, or impose an additional cost on, any Bank in making or keeping its Commitment available or maintaining or funding its Contribution or otherwise in maintaining its obligations under this Agreement; and/or (C) reduce the amount payable or the effective return to any Bank under any of the Security Documents; and/or (D) reduce any Bank's rate of return on its capital by reason of a change in the manner in which it is required to allocate capital resources to its obligations under any of the Security Documents; and/or (E) require any Bank to make a payment or forgo a return on or calculated by reference to any amount received or receivable by it under any of the Security Documents, then and in each such case (but subject to Clause 17.3):- (i) such Bank shall notify the Borrower in writing of such event promptly upon its becoming aware of the same specifying reasonable details of the relevant event and of any increased cost, reduction in any rate of return or liability and its method of calculation and attribution to its obligations under this Agreement; and (ii) the Borrower shall on demand, made at any time whether or not the relevant Bank's Contribution has been repaid, pay to the Agent for the account of such Bank the amount which such Bank specifies (in a certificate setting forth the basis of the computation of such amount in reasonable detail but not including any matters which such Bank regards as confidential in relation to its funding arrangements) is required to compensate such Bank for such increased cost, reduction, payment or forgone return. 17.3 Exception Nothing in Clause 17.2 shall entitle any Bank to compensation for any such increased costs, reduction, payment or foregoing return to the extent that the same is the subject of an additional payment under Clause 7.7. 17.4 Mitigation If circumstances arise which would, or would upon the giving of notice, result in:- (A) the Borrower being required to make an increased payment to a Bank pursuant to Clause 7.7; -123- (B) the reduction of the Commitment of a Bank to zero or the Borrower being required to prepay the Contribution of a Bank pursuant to Clause 17.1; or (C) the Borrower being required to make a payment to a Bank to compensate such Bank for an increased cost, reduction, payment or forgone return pursuant to Clause 17.2 then, without in any way limiting, reducing or otherwise qualifying the obligations of the Borrower under Clauses 7.7 and 17, the relevant Bank, Co-Arranger, Agent or Security Agent (as the case may be) shall endeavour to take such reasonable steps as may be open to it to mitigate or remove such circumstances including (without limitation) the transfer of its rights and obligations under this Agreement to another bank or financial institution acceptable to the Borrower unless to do so might (in its opinion) be prejudicial to it or be in conflict with its general banking policies or involve it in expense or an unreasonable increased administrative burden. 18. SET-OFF AND PRO-RATA PAYMENTS 18.1 Set-off The Borrower and Stena AB each authorise each Bank (without prejudice to any such Bank's rights at law, in equity or otherwise), at any time when an Event of Default has occurred and is continuing and without notice to the Borrower or Stena AB:- (A) to apply any credit balance to which the Borrower or Stena AB is then entitled standing upon any account of the Borrower or Stena AB with any branch of such Bank in or towards satisfaction of any sum due and payable from the Borrower or Stena AB to such Bank under any of the Security Documents; (B) in the name of the Borrower and/or Stena AB and/or such Bank to do all such acts and to execute all such documents as may be necessary or expedient to effect such application; and (C) to combine and/or consolidate all or any accounts in the name of the Borrower and/or Stena AB with such Bank. For such purposes, each Bank is authorised to purchase with the moneys standing to the credit of such account such other currencies as may be necessary to effect such application. No Bank shall be obliged to exercise any right given to it by this Clause 18.1. Each Bank shall notify the Agent and the Borrower forthwith upon the exercise or purported exercise of any right of set-off giving full details in relation thereto and the Agent shall inform the other Banks. 18.2 Pro rata payments (A) If at any time any Bank, (the "RECOVERING BANK") receives or recovers any amount owing to it by the Borrower or Stena AB under this Agreement by direct payment, set-off or in any manner other than by payment through the Agent pursuant to Clause 7.1 or 7.10 (not being a payment received from an assignee, a Transferee Bank or a sub-participant in such Bank's Contribution or any other payment of an amount due to the Recovering Bank for its sole account pursuant to Clauses 4.5, 6, 7.7, 16.1, 16.2, 17.1 or 17.2) the -124- Recovering Bank shall, within two Banking Days of such receipt or recovery (a "RELEVANT RECEIPT") notify the Agent of the amount of the Relevant Receipt. If the Relevant Receipt exceeds the amount which the Recovering Bank would have received if the Relevant Receipt had been received by the Agent and distributed pursuant to Clause 7.1 or 7.10 as the case may be then:- (i) within two Banking Days of demand by the Agent, the Recovering Bank shall pay to the Agent an amount equal (or equivalent) to the excess; (ii) the Agent shall treat the excess amount so paid by the Recovering Bank as if it were a payment made by the Borrower and shall distribute the same to the Banks (other than the Recovering Bank) in accordance with Clause 7.10; and (iii) as between the Borrower or, as the case may be, Stena AB, and the Recovering Bank the excess amount so re-distributed shall be treated as not having been paid but the obligations of the Borrower and Stena AB to the other Banks shall, to the extent of the amount so re-distributed to them, be treated as discharged. (B) If any part of the Relevant Receipt subsequently has to be wholly or partly refunded by the Recovering Bank (whether to a liquidator or otherwise) each Bank to which any part of such Relevant Receipt was so re-distributed shall on request from the Recovering Bank repay to the Recovering Bank such Bank's pro rata share of the amount which has to be refunded by the Recovering Bank. (C) Each Bank shall on request supply to the Agent such information as the Agent may from time to time request for the purpose of this Clause 18.2. (D) Notwithstanding the foregoing provisions of this Clause 18.2 no Recovering Bank shall be obliged to share any Relevant Receipt which it receives or recovers pursuant to legal proceedings taken by it to recover any sums owing to it under this Agreement with any other party which has a legal right to, but does not, either join in such proceedings or commence and diligently pursue separate proceedings to enforce its rights in the same or another court (unless the proceedings instituted by the Recovering Bank are instituted by it without prior notice having been given to such party through the Agent). 18.3 No release For the avoidance of doubt it is hereby declared that failure by any Recovering Bank to comply with the provisions of Clause 18.2 shall not release any other Recovering Bank from any of its obligations or liabilities under Clause 18.2. 18.4 No charge The provisions of this Clause 18 shall not, and shall not be construed so as to, constitute a charge by a Bank over all or any part of a sum received or recovered by it in the circumstances mentioned in Clause 18.2. -125- 18.5 Partial realisation of security If, by reason of the transfer or purported transfer by any Bank of all or any of its rights, title and interest hereunder by means of a Transfer Certificate or otherwise, the indebtedness of the Borrower to any successor in title, assignee or transferee (including a Transferee) of such Bank constitutes, or is deemed to constitute, at the time of such transfer or purported transfer by operation of law or otherwise indebtedness ("NEW INDEBTEDNESS") separate and distinct from the indebtedness ("ORIGINAL INDEBTEDNESS") owed by the Borrower to the other Banks (including the Bank making the transfer insofar as it does not transfer all of its rights, title and interest hereunder) and if the New Indebtedness is not secured by any particular Security Document or, if so secured, if such security ranks in priority after the security constituted thereby in respect of the Original Indebtedness, the proceeds of realisation of that particular Security Document received by the Agent from the Security Agent shall be applied by the Agent:- (A) insofar as the proceeds of realisation relate to the Original Indebtedness, in distribution thereof between the Banks to whom the Original Indebtedness is owed pro rata to their respective contributions to the Original Indebtedness; and (B) insofar as the proceeds of realisation relate to the New Indebtedness, in distribution thereof to the relevant successors in title, assignees or transferees (including any Transferees) in respect of the Bank making the transfer (being the persons to whom the New Indebtedness is owed) pro rata to their respective contributions to the New Indebtedness. 19. SECURITY 19.1 Continuing security The security created under the Security Documents is a continuing security and shall remain in full force and effect until all moneys, obligations and liabilities from time to time due, owing or incurred by the Borrower under the Security Documents shall have been paid or satisfied in full, and is in addition to and not in substitution for, and shall not be prejudiced or affected by, any other security or guarantee from time to time held by the Agent, the Security Agent, the Co-Arrangers or any Bank for the payment or satisfaction of such moneys, obligations or liabilities. 19.2 Amendments The liability of the Borrower and Stena AB under the Security Documents shall not be lessened or impaired by (i) any time, indulgence or relief being given by Agent, the Security Agent, the Co-Arrangers or any Bank to any other person liable, (ii) the taking, variation, compromise, renewal or release of or refusal or neglect to perfect or enforce any rights, remedies or securities against any other person liable, (iii) any legal limitation, disability, incapacity or other circumstances relating to any other person liable, whether or not known to the Agent, the Security Agent, the Co-Arrangers or any Bank, (iv) any invalidity in or irregularity or unenforceability of the obligations of any other person liable or (v) anything done or omitted which but for -126- this provision might constitute a legal or equitable discharge or defence of the Borrower or Stena AB. 19.3 Waiver by Borrower and Stena AB The Borrower and Stena AB hereby waive all rights they may have of first requiring the Agent, the Security Agent, any Bank or the Co-Arrangers to proceed against or enforce any guarantee or security of, or claim payment from, the Borrower or Stena AB or any other person liable to make any claim or file any proof in the bankruptcy, insolvency or liquidation of the Borrower or Stena AB or any other person liable. 19.4 Settlement or discharge Any settlement or discharge between the Agent, the Security Agent, any Bank or the Co-Arrangers and the Borrower and/or Stena AB shall be conditional upon no security or payment to the Agent, the Security Agent, any Bank or the Co-Arrangers by the Borrower or any other person being avoided or set aside or ordered to be refunded or reduced by virtue of any provision or enactment relating to bankruptcy, insolvency or liquidation for the time being in force and the Agent, the Security Agent, any Bank and the Co-Arrangers shall be entitled to recover from the Borrower and/or Stena AB the value which the Agent, the Security Agent, such Bank or the Co-Arrangers have placed upon such security or the amount of any such payment as if such settlement or discharge has not occurred. 19.5 Reflagging (A) Reflagging Notice At any time and from time to time during the Security Period provided that no Event of Default has occurred and is continuing, the Borrower may give a notice (a "REFLAGGING NOTICE") to the Agent that the Shipowner of a Mortgaged Ship or Mortgaged Linkspan wishes:- (i) to transfer the port of registry of such Ship or Linkspan from one port of registry (the "EXISTING PORT OF REGISTRY") in the Ship's or Linkspan's Flag State to another port of registry (a "NEW PORT OF REGISTRY") in such Flag State (a "TRANSFER OF PORT OF REGISTRY"); or (ii) to redocument and reregister such Ship or Linkspan under the laws of any jurisdiction (the "NEW FLAG STATE") other than its existing Flag State (the "EXISTING FLAG STATE") (a "TRANSFER OF FLAG"); or (iii) to transfer ownership of such Ship or Linkspan to the sole ownership of another member of the Stena AB Group (the "NEW Owner") (a "TRANSFER OF OWNERSHIP"); or (iv) to suspend the use of the flag of such Ship's or Linkspan's Flag State (the "PRIMARY FLAG STATE") while such Ship or Linkspan is on bareboat charter and where it is proposed that, for the duration of such bareboat charter, such Ship or Linkspan will fly the flag of another jurisdiction (the "SECONDARY FLAG STATE") selected by such charterer (a "DUAL REGISTRATION"). -127- (B) Contents of Reflagging Notice Any Reflagging Notice delivered by the Borrower to the Agent shall contain the following particulars:- (i) the name of the Mortgaged Ship or Mortgaged Linkspan which is the subject of such Reflagging Notice; (ii) the name of the relevant Shipowner; (iii) in the case of a Transfer of Port of Registry, the proposed New Port of Registry; (iv) in the case of a Transfer of Flag, the proposed New Flag State; (v) in the case of a Transfer of Ownership, the full name, place of incorporation and principal place of business of the proposed New Owner; (vi) if applicable, any proposed new name of such Ship or Linkspan on a Transfer of Port of Registry, Transfer of Flag, Transfer of Ownership and/or Dual Registration; (vii) in the case of a Transfer of Ownership taking place in conjunction with a Transfer of Port of Registry and/or a Transfer of Flag, details of the name of the proposed New Flag State and (if applicable) proposed New Port of Registry of the Ship or Linkspan upon completion of the Transfer of Ownership; and (viii) in the case of a Dual Registration, details of the Secondary Flag State, the bareboat charter and the charterer. (C) Release of Security Documents on Transfer of Flag and/or Transfer of Ownership Subject to fulfilment of the conditions specified in Clause 19.5(F), the Agent shall instruct the Security Agent to, and the Security Agent shall, duly release and discharge the Ship Mortgage in respect of the relevant Mortgaged Ship or (as the case may be) the Linkspan Mortgage in respect of the relevant Mortgaged Linkspan, and release and re-assign the Deed of Covenant or Insurance Assignment and, if so requested by the Borrower, any Charterer's Insurance Assignment executed in respect of such Ship or Linkspan by a Stena Charterer upon reasonable notice from the Borrower to enable the Transfer of Flag of such Ship or Linkspan and/or the Transfer of Ownership of such Ship or Linkspan. (D) Consent to Transfer of Port of Registry The Agent shall give instructions to the Security Agent to, and the Security Agent shall, give any requisite consents required by any applicable ship registrar or other official to enable a Mortgaged Ship or Mortgaged Linkspan to be transferred from its Existing Port of Registry to the New Port of Registry -128- provided that the Ship Mortgage over such Ship or (as the case may be) the Linkspan Mortgage over such Linkspan will continue to be registered against such Ship or Linkspan at the New Port of Registry or in any applicable central register of ship mortgages in the Flag State. (E) Consent to Dual Registration Subject to fulfilment of the conditions specified in Clause 19.5(G), the Agent shall instruct the Security Agent to, and the Security Agent shall, give any requisite consents required by any applicable ship registrar or other official in the Primary Flag State and/or the Secondary Flag State to permit the Dual Registration of a Mortgaged Ship or Mortgaged Linkspan. (F) Conditions to Transfer of Ownership and/or Transfer of Flag Upon completion of the Transfer of Ownership and/or Transfer of Flag, the Borrower shall deliver or procure the delivery to the Agent of:- (i) a Shipowner's Guarantee and a Ship Mortgage or (in the case of a Linkspan) a Linkspan Mortgage together with a Deed of Covenant (in the case of a Designated Ship) or an Insurance Assignment (in the case of a Linkspan or any other Ship) in respect of the Mortgaged Ship or Mortgaged Linkspan executed by the relevant Shipowner or (in the case of a Transfer of Ownership) the New Owner; (ii) in the case of a Ship or Linkspan managed by another member of the Stena AB Group, a Manager's Subordination Undertaking; (iii) in the case of a Ship or Linkspan let on bareboat charter to a Stena Charterer, a Charterer's Subordination Undertaking and a Charterer's Insurance Assignment; (iv) a notice of assignment of insurances in relation to the Ship or Linkspan executed by the New Owner and any Stena Charterer; (v) evidence that the Ship or Linkspan has been insured in accordance with the requirements of the Deed of Covenant, Insurance Assignment and any Charterer's Insurance Assignment; (vi) opinions satisfactory to the Banks in relation to the registration of the Ship and the Ship Mortgage or (as the case may be) the Linkspan and the Linkspan Mortgage, the due execution and authorisation of any documents executed pursuant to paragraphs (i) to (iv) above and such other matters as the Banks may reasonably require in relation to English law and to the jurisdictions of incorporation of the Shipowner, any Stena Charterer, any other charterer and the registry or registries of the Ship or Linkspan; (vii) evidence that the New Owner of the Ship or Linkspan has acquired good marketable title to the Ship or Linkspan and that the Ship or Linkspan is unencumbered save for the new Ship Mortgage or new Linkspan Mortgage (as the case may be) and Permitted Ship Liens; -129- (viii) in the case of a Transfer of Flag, evidence that the New Flag State shall be an Approved Flag State and the obligations of the Agent and the Security Agent under Clause 19.5(D) shall be subject to the condition that the Agent has received all of such documents and evidence. (G) Conditions to Dual Registration Upon suspension of the use of the flag of the Primary Flag State and commencement of the use of the flag of the Secondary Flag State, the Borrower shall deliver or procure the delivery to the Agent of the following documents and/or evidence:- (i) evidence that the Secondary Flag State shall be an Approved Flag State; (ii) an opinion satisfactory to the Agent from lawyers qualified or accustomed to advise on the laws of the Primary Flag State and the Secondary Flag State that the Dual Registration is permitted by their respective laws for the duration of the relevant charter period or a specified part thereof and that the Ship Mortgage over the relevant Ship or (as the case may be) the Linkspan Mortgage over the relevant Linkspan and the relevant Shipowner's title thereto remain duly registered under the laws of the Primary Flag State following the Dual Registration and that on termination of the charter by virtue of which the Ship or Linkspan is registered in the Secondary Flag State or a judicial sale of the Ship or Linkspan the Dual Registration will be terminated without delay and without any discretionary consents from authorities in the Secondary Flag State; (iii) if the laws of the Secondary Flag State require that the Ship Mortgage or Linkspan Mortgage be noted or registered against the Ship or Linkspan (as the case may be) in the Secondary Flag State, evidence reasonably satisfactory to the Agent that such notation or registration will be effected upon or within an appropriate period following commencement of the Dual Registration and the obligations of the Agent and the Security Agent under Clause 19.5(E) shall be subject to the condition that the Agent has received all of such documents and evidence. (H) Combined transactions Where a combined Transfer of Ownership and/or Transfer of Flag and/or Dual Registration is proposed, Clauses 19.5(C) and (E) and Clauses 19.5(F) and (G) shall respectively be read together. (I) Approved Flag States For the purposes of this Agreement, "APPROVED FLAG STATE" means any of the following:- -130- (i) the United Kingdom, Bermuda, the Cayman Islands, any other British Dependent Territory, the Channel Islands, the Isle of Man and Hong Kong; (ii) Sweden and any other Member State of the European Union or Switzerland; (iii) Norway (including, without limitation, the Norwegian International Shipping Register) and any other member of the European Economic Area; (iv) United States of America and Canada; (v) Australia and New Zealand; (vi) the Bahamas, Cyprus, Greece, Liberia and Panama; (vii) if the European Union establishes a register of ships for the European Union as a whole (whether instead of, in addition to or as an alternative to registration in a Member State of the European Union), the European Union shall, in relation to the registration of a Mortgaged Ship in such register, be deemed to be an Approved Flag State for the purposes of this Agreement; and (viii) any other state approved by the Majority Banks which approval shall not be unreasonably withheld in the case of a state in which significant numbers of vessels owned by entities whose ultimate parent companies and/or shareholders are resident in North America or the European Union, European Economic Area or Switzerland are registered and/or where such state is proposed as the Secondary Flag State for the relevant Ship. (J) Reflagging of Transferred Ships If the purchaser of a Transferred Ship requests the relevant Shipowner to consent to a change of the flag state in which a Transferred Ship is registered, the relevant Shipowner may agree to such change of flag provided that:- (i) the requirements of this Clause 19.5 are satisfied in relation to the Ship; (ii) the Agent has received evidence satisfactory to it that the Ship is insured in accordance with the terms of the Commercial Documents; (iii) the Agent is satisfied that the obligation of the purchaser of the Transferred Ship is effectively secured by an assignment in favour of the Security Agent of a first priority mortgage over the Ship and first priority assignment in favour of the Security Agent of the purchaser's interest in the insurances of the Ship in the event of a Total Loss. -131- 19.6 Release of security Provided that no declaration has been made by the Agent under Clause 15.2 the Agent shall instruct the Security Agent to, and the Security Agent shall, release and discharge the Ship Mortgage and the Deed of Covenants or Insurance Assignment in respect of any Mortgaged Ship which is sold by the relevant Shipowner (whether on Credit Terms or otherwise) on terms that ownership of the relevant Mortgaged Ship passes from the relevant Shipowner as and when ownership of the relevant Ship is to pass to the relevant purchaser, in exchange for the purchase price, or relevant portion thereof, payable to the Shipowner by the relevant purchaser upon transfer of title to such purchaser (to be applied in accordance with the provisions of this Agreement and the other Security Documents) and provided that (in the case of a sale on Credit Terms) the relevant Shipowner has executed a Receivables Assignment in relation to the sale of such Ship in accordance with the provisions of this Agreement. 20. ASSIGNMENT, TRANSFER AND LENDING OFFICE 20.1 Benefit and burden This Agreement shall be binding upon, and enure for the benefit of, each of the Banks, the Agent, the Co-Arrangers, the Security Agent, the Borrower, Stena AB and their respective successors. 20.2 No assignment by Borrower Neither of the Borrower nor Stena AB may assign or transfer any of their rights or obligations under any of the Security Documents. 20.3 Transfers Any Bank (the "TRANSFEROR BANK") may at any time cause all or any part of its rights, benefits and/or obligations under this Agreement and the Security Documents to be transferred to its Subsidiaries, affiliates or associates or to a federal reserve bank, central bank or other monetary or regulatory authority having jurisdiction over such Bank without the consent of the Borrower or the Agent or, with the consent of the Borrower and the Agent (such consents not to be unreasonably withheld and for this purpose it shall be deemed reasonable to withhold consent on the grounds that the number of Banks would thereby exceed fifteen (15) or that the Commitment of any Bank would thereby be less than three point seven five per cent (3.75%) of the total of the Commitments), to any other bank or financial institution (a "TRANSFEREE BANK") by delivering to the Agent a Transfer Certificate duly completed and duly executed by the Transferor Bank and the Transferee Bank. Any transfer by a Bank shall be offered and effected in compliance with all applicable laws and regulations. If the Borrower or the Agent fails to respond to a request for such consent within ten days of such request being made, the Borrower or the Agent (as the case may be) shall be deemed to have given such consent. No such transfer is binding on, or effective in relation to, the Borrower, the Agent or the Security Agent unless it is effected or evidenced by a Transfer Certificate which complies with the provisions of this Clause 20.3 and is signed by or on behalf of the Transferor Bank, the Transferee Bank and the Agent (on behalf of itself, the Borrower and Stena AB, the Security Agent, the Co-Arrangers and the other Banks). Upon signature of any such Transfer Certificate -132- by the Agent, which signature shall be effected as promptly as is practicable after such Transfer Certificate has been delivered to the Agent, and subject to the terms of such Transfer Certificate, such Transfer Certificate shall have effect as set out below. The following further provisions shall have effect in relation to any Transfer Certificate:- (A) a Transfer Certificate may be in respect of a Bank's rights in respect of all or part of its Commitment and shall be in respect of the same proportion of its Contribution; (B) a Transfer Certificate shall only be in respect of rights and obligations of the Transferor Bank in its capacity as a Bank and shall not transfer its rights and obligations as Agent or Security Agent, or in any other capacity, as the case may be and such other rights and obligations may only be transferred in accordance with any applicable provisions of this Agreement; (C) a Transfer Certificate shall take effect in accordance with English law as follows:- (i) to the extent specified in the Transfer Certificate, the Transferor Bank's payment rights and all its other rights (other than those referred to in paragraph (B) above) under this Agreement are assigned to the Transferee Bank absolutely, free of any defects in the Transferor Bank's title and of any rights or equities which the Borrower had against the Transferor Bank; (ii) the Transferor Bank's Commitment is discharged to the extent specified in the Transfer Certificate; (iii) the Transferee Bank becomes a Bank with a Contribution and a Commitment of the amounts specified in the Transfer Certificate; (iv) the Transferee Bank becomes bound by all the provisions of this Agreement and the Security Documents which are applicable to the Banks generally, including those about pro rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Agent in accordance with the provisions of this Agreement and to the extent that the Transferee Bank becomes bound by those provisions, the Transferor Bank ceases to be bound by them; (v) an Advance or part of an Advance which the Transferee Bank makes after the Transfer Certificate comes into effect ranks in point of priority and security in the same way as it would have ranked had it been made by the Transferor Bank, assuming that any defects in the Transferor Bank's title and any rights or equities of any Security Party against the Transferor Bank had not existed; and (vi) the Transferee Bank becomes entitled to all the rights under this Agreement which are applicable to the Banks generally, including but not limited to those relating to the Majority Banks and those under -133- Clauses 4.5, 7 and 17, and to the extent that the Transferee Bank becomes entitled to such rights, the Transferor Bank ceases to be entitled to them; (D) the rights and equities of the Borrower or of any other Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross-claim; (E) the Borrower, the Security Agent, the Banks, Stena AB and the Co-Arrangers hereby irrevocably authorise and instruct the Agent to sign any such Transfer Certificate on its behalf (and, in the case of the Security Agent, on behalf of any Security Party which has in the relevant Security Document given a corresponding authorisation and instruction to the Security Agent) and undertake not to withdraw, revoke or qualify such authority or instruction at any time. Promptly upon its signature of any Transfer Certificate, the Agent shall notify the Borrower, the Security Agent, the Transferor Bank and the Transferee Bank. 20.4 Reliance on Transfer Certificate (A) The Agent shall be entitled to rely on any Transfer Certificate believed by it to be genuine and correct and to have been presented or signed by the persons by whom it purports to have been presented or signed, and shall not be liable to any of the parties to this Agreement and the Security Documents for the consequences of such reliance. (B) (i) The Agent shall at all times during the continuation of this Agreement maintain a register in which it shall record the name, Commitments, Contributions and administrative details (including the lending office) from time to time of each Bank holding Transfer Certificates and the date at which the transfer referred to in such Transfer Certificate held by each Bank was transferred to such Bank, and the Agent shall make the said register available for inspection by any Bank, the Security Agent, the Borrower and Stena AB during normal banking hours upon receipt by the Agent of reasonable prior notice requesting the Agent to do so. (ii) The entries on the said register shall, in the absence of manifest error, be conclusive in determining the identities of the Commitments, the Contributions and the Transfer Certificates held by the Banks from time to time and the principal amounts of such Transfer Certificates and may be relied upon by the Agent, the Security Agent and the other Security Parties for all purposes in connection with this Agreement and the Security Documents. 20.5 Transfer fees and expenses If any Bank causes the transfer of all or any part of its rights, benefits and/or obligations under the Security Documents, it shall pay to the Agent for its own account a registration fee of $1,000 for each transfer, and shall also pay to the Agent on demand all costs, fees and expenses (including, but not limited to, legal fees and -134- expenses), and all value added tax thereon, certified by the Agent as having been reasonably incurred by it in connection with such transfer. 20.6 Documenting assignments and transfers If any Bank transfers all or any part of its rights, benefits and/or obligations as provided in Clause 20.3 the Borrower and Stena AB undertake, immediately on being requested to do so by the Agent and at the cost of the Transferor Bank, to enter into, and procure that the other Security Parties shall enter into, such documents as may be necessary or desirable to transfer to the Transferee Bank all or the relevant part of such Bank's interest in the Security Documents and all relevant references in this Agreement to such Bank shall thereafter be construed as a reference to the Bank and/or its Transferee Bank (as the case may be) to the extent of their respective interests. 20.7 Sub-participation A Bank may not sub-participate all or any part of its rights and/or obligations under the Security Documents without the consent of the Borrower (such consent not to be unreasonably withheld). 20.8 Lending office Each Bank shall lend through its office at the address specified in Schedule 1 or, as the case may be, in any relevant Transfer Certificate or through any other office of such Bank selected from time to time by it through which such Bank wishes to lend for the purposes of this Agreement. If the office through which such Bank is lending is changed pursuant to this Clause 20.8, such Bank shall notify the Agent promptly of such change and the Agent shall notify the Borrower. 20.9 Disclosure of information Any Bank may disclose to a prospective assignee, substitute or transferee or to any other person who may propose entering into contractual relations with the Bank in relation to this Agreement such information about the Borrower and the Stena AB Group as such Bank shall consider appropriate if such Bank first procures that the relevant prospective assignee, substitute or transferee or other person (such person together with any prospective assignee, substitute or transferee being hereinafter described as the "PROSPECTIVE ASSIGNEE") shall undertake to the Borrower to keep secret and confidential and, not without the prior written consent of the Borrower, disclose to any third party any of the information, reports or documents supplied by such Bank provided however that the Prospective Assignee shall be entitled to disclose any such information, reports or documents in the following situations:- (A) in relation to any proceedings arising out of this Agreement or the other Security Documents to the extent considered necessary by the Prospective Assignee to protect its interest; or (B) pursuant to a court order relating to discovery or otherwise; or (C) pursuant to any law or regulation or to any fiscal, monetary, tax, governmental or other competent authority; or -135- (D) to its auditors, legal or other professional advisers. In addition, the Prospective Assignee shall be entitled to disclose or use any such information, reports or documents if the information contained therein shall have emanated, in conditions free from confidentiality, bona fide from some person other than such Bank or the Borrower or any member of the Stena AB Group. 20.10 No additional costs If at the time of, or immediately after, any transfer by a Bank of any part of the rights, benefits and/or obligations under this Agreement, or any change in the office through which it lends for the purposes of this Agreement, the Borrower would be obliged to pay to the Transferee Bank or (in the case of a change of lending office) the Bank under Clauses 7.7 (grossing up) or 17.2 (increased costs) any sum in excess of the sum (if any) which it would have been obliged to pay to the relevant Bank under the relevant Clause in the absence of such transfer or change, the Borrower shall not be obliged to pay that excess. 21. REFERENCE BANKS, CO-ARRANGERS, AGENT AND SECURITY AGENT 21.1 Reference Banks If (i) the whole of the Contribution (if any) of any Reference Bank is prepaid, (ii) the Commitments (if any) of any Reference Bank are reduced to zero in accordance with Clause 17 or any other relevant provision hereof, (iii) a Reference Bank transfers the whole of its rights and obligations (if any) as a Bank under this Agreement or (iv), where applicable, any Reference Bank ceases to provide quotations to the Agent for the purposes of determining LIBOR, the Agent may, acting on the instructions of the Majority Banks, terminate the appointment of such Reference Bank and appoint another Bank to replace such Reference Bank. 21.2 Decision making (A) Decisions requiring consent of all the Banks Save as expressly provided in Clause 21.2(B) or as otherwise expressly provided herein, any proposed course of action in connection with any matter requiring the consent of the Banks under or in connection howsoever with this Agreement or any other Security Document shall only be taken with the consent of all the Banks including, but without limitation to the generality of the foregoing:- (i) (save as required by the terms of the Security Documents) the release of any of the Security Documents or the release of any Security Party from any of its obligations hereunder or under any other Security Document; (ii) the amendment of any of the provisions of this Agreement or any other of the Security Documents; (iii) any time or other indulgence to be granted to the Borrower or any other Security Party in respect of its obligations under any of the -136- Security Documents. (B) Decisions requiring consent of the Majority Banks Proposals in connection with the following matters shall, in the absence of agreement thereon by all of the Banks or as otherwise provided in this Agreement, be determined by the Majority Banks:- (i) the making of any declaration by the Agent under Clause 15.2; (ii) the institution of any legal proceedings for the enforcement of any rights or powers whatsoever pursuant to the terms of this Agreement or any other of the Security Documents; (iii) any course of action whatsoever from time to time (other than the making of a demand for payment hereunder) whether of a legal or commercial nature or otherwise howsoever for the purpose of achieving a full or partial recovery of any principal, interest or other amount due and payable by the Borrower hereunder or otherwise in connection therewith following the making of a declaration by the Agent under Clause 15.2; (iv) any other matter in respect of which this Agreement or any other Security Document expressly provides that the consent of the Majority Banks shall be required. (C) Method of soliciting agreement Any determination of the Banks shall be ascertained by the Agent or the Security Agent (as the case may be) either:- (i) by means of a telefax sent by the Agent or the Security Agent (as the case may be) to each of the Banks in identical terms on the proposal or matter in issue; or (ii) by means of the vote of representatives of each Bank at a meeting convened by the Agent or the Security Agent (as the case may be) and held for the purpose of discussing (inter alia) such proposal or matter in issue. Furthermore, it is hereby agreed by the Banks that:- (a) where a decision of the Banks is sought by the Agent or the Security Agent by means of a telefax sent in accordance with paragraph (i) above and provided that the Agent or Security Agent (as appropriate) verifies forthwith by telephone with each relevant Bank that it has received such telefax in good order, then the Agent or Security Agent (as the case may be) may in its telefax:- (i) recommend a proposed course of action to be taken by the Banks; and -137- (ii) specify a time limit (of not less than three (3) Banking Days) within which the Banks are required to respond to the Agent's or Security Agent's recommendation so that, if any Bank fails to notify the Agent or Security Agent (as appropriate) within such time limit of its response to the recommendation, such Bank shall be deemed to have accepted and approved the course of action proposed by the Agent or the Security Agent (as the case may be); and (b) where the approval of the Majority Banks is required in respect of any matter, the approval shall be deemed to have been given as soon as the Agent or the Security Agent (as the case may be) receives the requisite number of votes in favour of the proposal so that the Agent or Security Agent may act on the basis of such votes without having to wait for the response of (or to give any notification to) any other Bank who has yet to reply to the Agent or Security Agent. 21.3 The Agent (A) Appointment of the Agent Each of the Banks, the Co-Arrangers and the Security Agent hereby appoints the Agent to act as its agent under this Agreement with such rights, powers and discretions as are expressly delegated to the Agent hereunder. (B) Obligations of the Agent The Agent shall:- (i) promptly inform the Banks of the contents of any notice or request received by it from the Borrower or any other Security Party under the Security Documents (whether such notice or request is addressed to the Agent alone or the Agent on behalf of the Banks and/or the Security Agent) and of any information delivered to it pursuant to Clause 10.2(C) and of any other matters which the Agent considers material; (ii) promptly deliver to the Banks copies of any accounts and certificates delivered to it pursuant to Clause 10.2 and, as soon as reasonably practicable after the Availability Date, copies of the documents delivered in satisfaction of the requirements of Schedule 5; (iii) promptly inform the Banks in reasonable detail of any exercise by it of any of the rights, powers and/or discretions vested in it hereunder (but without the Agent being under any obligation to give prior notice to the Banks of any such exercise); (iv) promptly notify the Banks of the occurrence of any Default or any other default by a Security Party in the due performance of or compliance with its material obligations under any of the Security Documents of which the Agent has actual knowledge or actual notice -138- and the occurrence of which the Agent has verified; (v) if directed by the Majority Banks, exercise (or refrain from exercising) any right, power or discretion vested in it hereunder in accordance with the directions (subject to Clause 21.2(A)) of the Majority Banks provided, however, that it may refrain from acting in accordance with any such directions until it has received such security as it may require (whether by way of payment in advance or otherwise) for all costs, claims, expenses (including legal fees) and liabilities which it will or may expend or incur in complying with such directions and for this purpose the Agent shall make a demand for such security addressed to all the Banks; (vi) receive from the Borrower all payments of principal, interest and other moneys expressed to be payable to the Agent hereunder on behalf of all or any of the Banks, the Co-Arrangers and/or the Security Agent and shall receive from the Security Agent the proceeds of realisation of the securities constituted by the Security Documents and shall promptly distribute the same amongst the Banks, the Co-Arrangers, the Security Agent and itself in accordance with the terms of this Agreement pending which the Agent shall hold any and all such moneys on trust for the Banks, the Co-Arrangers, the Security Agent and itself. (C) Relationship of agent and principal The relationship between the Agent on the one part and each Bank, the Co-Arrangers and the Security Agent on the other is that of agent and principal and, except in relation to any moneys referred to in Clause 21.3(B)(vi) held by the Agent pending distribution hereunder, the Agent shall not have a fiduciary relationship with or be, or be deemed to be, a trustee of or for any such party. 21.4 The Security Agent (A) Appointment of the Security Agent Each of the Banks, the Co-Arrangers and the Agent hereby appoints the Security Agent to act for and on its behalf as its trustee in connection with this Agreement and the other Security Documents and authorises the Security Agent to enter into each of the Security Documents and exercise such rights, powers and discretions as are specifically delegated to it by the terms thereof together with such rights, powers and discretions as are reasonably incidental thereto. (B) The Trust Property In this Clause 21 the expression "TRUST PROPERTY" shall mean:- (i) all rights, title and interests that may at any time be or have been granted, mortgaged, charged or assigned in favour of the Security Agent pursuant to the Security Documents (except to the extent that -139- such rights, title and/or interests are intended to be for the sole benefit or protection of the Security Agent); (ii) all moneys which are received or recovered by or on behalf of the Security Agent under or by virtue of any right, title and/or interest described in paragraph (i) above; and (iii) all moneys and other assets accrued on, or derived from, any moneys described in paragraph (ii) above but shall not include any moneys which the Security Agent has transferred to the Agent or (being entitled to do so) has retained in accordance with the provisions of Clause 21.4(D). (C) Declaration of trust The Security Agent shall hold the Trust Property for the benefit of each of the Banks, the Co-Arrangers, the Agent and itself from time to time upon the trusts and in accordance with the provisions contained in this Clause 21 and the obligations, rights and benefits vested or to be vested in the Security Agent by this Agreement, any other Security Document or any document entered into pursuant hereto or thereto shall (as well before as after enforcement) be performed and (as the case may be) exercised in accordance with the provisions of this Clause 21. (D) Application of moneys Save as expressly stated to the contrary herein or in any other Security Document, any moneys received or recovered by the Security Agent and which form part of the Trust Property shall (without prejudice to the rights of the Security Agent pursuant to any Security Document to credit any moneys received by it to any suspense account) be transferred forthwith to the Agent for distribution in accordance with the relevant provisions of this Agreement Provided however that, before transferring such moneys to the Agent, the Security Agent shall be entitled to deduct therefrom any sum then properly due and payable under this Agreement or any other Security Document to the Security Agent or any receiver, attorney, agent, delegate or other person appointed by it and retain that sum for its own account or (as the case may be) remit such sum to the other person to whom it is then due and payable. For as long as Svenska Handelsbanken AB (publ) continues to act as both Agent and Security Agent (or at any other time when any single bank shall act in both such capacities) it shall be sufficient for the purposes of complying with this Clause 21.4(D) for the moneys concerned to be credited to the account kept by the Agent for the purposes of dealing with amounts received by it under or pursuant to the Security Documents. (E) Duties of the Security Agent In addition to its obligations under Clause 21.4(D) the Security Agent shall:- (i) promptly inform the Banks of the contents of any notice or request -140- received by it from the Borrower or any other Security Party under the Security Documents and of any other matters which the Security Agent considers material; (ii) promptly inform the Banks in reasonable detail of any exercise by it of any of the rights, powers and/or discretions vested in it hereunder (but without the Security Agent being under any obligation to give prior notice to the Banks of any such exercise); (iii) promptly notify the Banks of the occurrence of any Default or any other default by a Security Party in the due performance of or compliance with its material obligations under any of the Security Documents of which the Security Agent has actual knowledge or actual notice and the occurrence of which the Security Agent has verified; (iv) if directed by the Majority Banks, exercise (or refrain from exercising) any right, power or discretion vested in it hereunder in accordance with the directions (subject to Clause 21.2(A)) of the Majority Banks provided, however, that it may refrain from acting in accordance with any such directions until it has received such security as it may require (whether by way of payment in advance or otherwise) for all costs, claims, expenses (including legal fees) and liabilities which it will or may expend or incur in complying with such directions and for this purpose the Security Agent shall make a demand for such security addressed to all the Banks. (F) Powers and discretions of the Security Agent The Security Agent shall have all the powers and discretions conferred upon a trustee by the Trustee Act 1925 and/or any other relevant legislation from time to time in force (to the extent not inconsistent herewith) and upon a receiver appointed under the Security Documents or any of them (as though the Security Agent were a receiver thereunder). (G) Delegation of powers; appointment of co-trustees The Security Agent shall be entitled:- (i) whenever it thinks fit, to delegate by power of attorney or otherwise to any person or persons all or any of the rights, trusts, powers, authorities and discretions vested in it by this Agreement or any other Security Document and such delegation may be made upon such terms and subject to such conditions and subject to such regulations as the Security Agent may think fit and the Security Agent shall not be bound to supervise the proceedings or be in any way responsible for any loss incurred by reason of any misconduct or default on the part of any such delegate or sub-delegate provided that the Security Agent shall have acted reasonably in making such delegation to such delegate and the Security Agent shall promptly give notice to each of the Banks, the Co-Arrangers and the Agent of the appointment of any delegate or -141- such delegate as aforesaid; and (ii) with the prior consent of the Majority Banks and the Borrower, to appoint (and subsequently to dismiss) such other person or persons as it thinks fit to become additional trustees hereunder (but so that there shall not be more than two trustees at any time) to assist it in carrying out its rights and duties hereunder and under the other Security Documents and each such additional trustee shall be entitled to the same rights and subject to the same obligations hereunder as the Security Agent. (H) Amendments and waivers to Security Documents Each of the Banks, the Co-Arrangers and the Agent hereby authorises the Security Agent to enter into any amendment to any Security Document or to grant any waiver of any obligation of any Security Party under any Security Document which in either case has either been approved by the Banks or is, in the unfettered opinion of the Security Agent, of a minor or technical nature and not likely to have any material effect on the obligation of the relevant Security Party under the relevant Security Document. (I) Security Agent to be creditor The parties hereto agree that for the purpose of enforcing rights established under the Security Documents in the Netherlands, to the extent Netherlands law will apply thereto, the Security Agent will be the joint creditor of each and every obligation of the Borrower towards the Banks, the Co-Arrangers and the Agent under this Agreement, so that the Security Agent will have its own independent right to demand performance by the Borrower of each such obligation but so that payment to the Security Agent will serve as payment to the Banks, the Co-Arrangers and the Agent (as appropriate) and payment to any of the Banks, the Co-Arrangers and the Agent will serve as payment to the Security Agent. (J) Winding-up of trusts If:- (i) all of the liabilities of the Borrower secured under the Security Documents have been fully and finally discharged; and (ii) no future or contingent liability remains outstanding; and (iii) the Security Agent is satisfied that there is no substantial risk of any payment or other transaction under this Agreement or any other Security Document being set aside in any liquidation or insolvency of the Borrower or any other Security Party which has previously occurred or may later occur then the trusts herein created shall be wound-up and the Security Agent shall release, without recourse or warranty, all security granted to it pursuant to the Security Documents then held by it, whereupon the Security Agent, the Banks, -142- the Co-Arrangers and the Agent shall each be released from their respective obligations under this Clause 21.4 (except those which arose prior to such winding-up). (K) Perpetuity period The perpetuity period under the rule against perpetuities if applicable to the Trust Property shall be the period of eighty (80) years from the date of this Agreement. (L) Governing law The trusts created by this Clause 21 shall be governed by and construed in accordance with English law. 21.5 The Agent and Security Agent: common provisions (A) Powers of the Agent and Security Agent generally In addition to the powers expressly given to the Agent and/or the Security Agent by this Agreement:- (i) the Banks may give the Agent and/or the Security Agent (generally or in any particular case) any powers which the Banks consider appropriate; and (ii) each of the Agent and the Security Agent has power to take any other action which it considers to be reasonably incidental or conducive to the performance of its functions under this Agreement or otherwise appropriate in the context of those functions, including the exercise of any powers given to it by the Banks. (B) Exercise of the Agent's and Security Agent's powers The rights, powers and discretions vested in the Agent and the Security Agent by this Agreement and/or the other Security Documents shall only be exercised by the Agent or the Security Agent (as the case may be) in accordance with the instructions of the Majority Banks or (if so required in accordance with the provisions of Clause 21.2(A)) the Banks provided however that the Agent and the Security Agent shall each be entitled (but not bound) to exercise or refrain from exercising any such right, power or discretion without the directions of the Majority Banks or the Banks (as the case may be) if the Agent or Security Agent (as appropriate) believes that the immediate exercise of such right, power or discretion is necessary or desirable to protect the interests of the Banks under or in respect of the Security Documents or to protect or preserve the security afforded thereby. Where any right, power or discretion is vested in the Security Agent under this Agreement or any other Security Document but is expressed as being exercisable in accordance with the directions of the Banks or the Majority Banks, such right, power or discretion shall not be exercised by the Security -143- Agent without the lawful directions of the Banks or the Majority Banks (as the case may be). (C) Limit of Agent's and Security Agent's obligations Notwithstanding anything to the contrary expressed or implied herein or in any other Security Document, neither the Agent nor the Security Agent shall:- (i) be bound to enquire as to the occurrence or otherwise of any Default or as to the performance by any Security Party of its obligations under any of the Security Documents; (ii) be bound to disclose to any other person any information relating to any Security Party if such disclosure would or might in its opinion constitute a breach of any law or regulation or be otherwise actionable at the suit of any person; (iii) have any responsibility to the Banks, the Co-Arrangers or each other for:- (a) the financial position, creditworthiness, affairs or prospects of any of the Security Parties; (b) the performance or non-performance howsoever by any of the Security Parties of any of their obligations hereunder or under any of the Security Documents; (c) the due execution, effectiveness, genuineness, validity or enforceability of any of the Security Documents or any document relating thereto or any filing or recording thereof or the taking of any other action whatsoever and howsoever in connection therewith or the collectability of any sum due thereunder; (d) any computations and/or information supplied to the Banks by the Agent or the Security Agent in reliance upon which the Banks have entered into this Agreement; (iv) be under any liability whatsoever for any consequence of relying on:- (a) any written communication or document believed by it to be genuine or correct and to have been communicated or signed by the person by whom it is purported to have been communicated or signed; or (b) the advice or opinions of any professional advisers selected by it; (v) be under any duty to account to any Bank, the Co-Arrangers or each other for any sum received by it for its own account or the profit element of any such sum; -144- (vi) be under any obligation other than those for which express provision is made herein. (D) Rights of the Agent and Security Agent Each of the Agent and Security Agent may:- (i) carry out its duties hereunder through such officers, directors, employees, consultants or independent agents as it may in its unfettered discretion think fit; (ii) assume that no Default has occurred and that none of the Security Parties is in breach of its obligations under any of the Security Documents unless the Agent or the Security Agent (as the case may be) has actual knowledge or actual notice to the contrary; (iii) engage and pay for the advice or services of any internal or external lawyers, accountants, surveyors or other experts whose advice or services may to it seem necessary, expedient or desirable and rely upon any advice so obtained; (iv) rely as to any matters of fact which might reasonably be expected to be within the knowledge of any Security Party upon a certificate signed by or on behalf of that Security Party; (v) rely upon any communication or document believed by it to be genuine. (E) Responsibilities of the Banks and the Co-Arrangers It is understood that each of the Banks and the Co-Arrangers has itself been, and will continue to be, solely responsible for making its own independent appraisal of and investigations into the financial condition, creditworthiness, condition, affairs, status and nature of each Security Party and, accordingly, each of the Banks and the Co-Arrangers warrants to both the Agent and the Security Agent that it has not relied and will not rely on the Agent or the Security Agent:- (i) to check or enquire on its behalf into the adequacy, accuracy or completeness of any information provided by any Security Party in connection with this Agreement or any other Security Document; or (ii) to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of any Security Party. (F) Administration Subject to the terms of this Agreement, this Agreement and the other Security Documents shall be serviced, supervised and administered by the Agent and the Security Agent respectively in the ordinary course of its business and in accordance with its usual practices. In performing its duties and functions -145- hereunder, the Agent or the Security Agent (as the case may be) shall exercise the same care as it normally exercises in making and administering loans for its own account, but assumes no further responsibility in respect of such performance. (G) Limitation of liability Neither the Agent nor the Security Agent shall be under any liability as a result of taking or omitting to take any action in relation to this Agreement or any other Security Document save in the case of gross negligence or wilful misconduct and neither the Banks nor the Co-Arrangers will assert or seek to assert against any director, officer or employee of the Agent or the Security Agent (as the case may be) any claim they might have against any of them in respect of the matters referred to in this Clause 21.5(G). (H) No restriction on other business Neither the Agent nor the Security Agent (nor any officer thereof) shall be precluded by reason of so acting from underwriting, guaranteeing the subscription of or subscribing for or otherwise acquiring, holding or dealing with any debentures, shares or securities whatsoever of any Security Party or from entering into any contract or financial or other transaction with or from engaging in any banking or other business with any Security Party and shall not be liable to account for any profit made or payment received by it thereby or in connection therewith. 21.6 Retirement and replacement of the Agent and the Security Agent -------------------------------------------------------------- (A) Either or both of the Agent and the Security Agent may retire at any time without assigning any reason by giving to the Borrower, the Banks and the Security Agent or Agent (as the case may be) not less than thirty (30) days notice of its intention to do so. Unless the Agent or Security Agent (as appropriate) in its notice of retirement nominates any of its associated companies to be its successor, the successor Agent or Security Agent may be appointed by the Majority Banks (with the prior written consent of the Borrower, such consent not to be unreasonably withheld or delayed) during such thirty (30) day period provided that, should they fail to do so, the Agent or the Security Agent (as the case may be) may then appoint as its successor a reputable and experienced bank with an office in London. (B) If any Bank is dissatisfied with the Agent and/or the Security Agent and wants it to be replaced, such Bank shall consult with the other relevant Banks and the Borrower for a period of up to thirty (30) days to decide whether the Agent and/or the Security Agent should be replaced and, if so, by whom (such replacement being one of the relevant Banks or an associated company thereof). If at the end of such period the relevant Banks unanimously agree that the Agent and/or the Security Agent (as the case may be) should be replaced by a particular Bank or one of its associated companies, and if the Borrower consents in writing to the identity of the proposed replacement (such consent (i) not to be unreasonably withheld and (ii) not to be required if an Event of Default has occurred and is continuing), then notice shall be given -146- by the relevant Banks to the Agent and/or the Security Agent (as the case may be) specifying the date, being not fewer than five (5) Banking Days after the date of such notice, on which the appointment of the successor Agent and/or Security Agent is, subject to Clause 21.6(D), to take effect. (C) For the purposes of this Clause 21.6(A):- (i) an "ASSOCIATED COMPANY" of the Agent or Security Agent or any Bank shall mean any company which is a holding company of the Agent or Security Agent or such Bank (as the case may be) or a wholly-owned subsidiary of it or its parent company; and (ii) "RELEVANT BANKS" means all of the Banks other than that Bank which acts as Agent or (as the case may be) Security Agent or whose associated company acts in such capacity. (D) Any appointment of a successor Agent or Security Agent under Clause 21.6(A) or (B) shall take effect upon:- (i) the successor confirming in writing its agreement to be bound by the provisions of this Agreement; and (ii) notice thereof by the Agent or Security Agent and its successor (which notice, in the case of a new Agent, shall specify the bank in New York to which payments to the new Agent shall be made thereafter) being given to each of the other parties to this Agreement and/or the other Security Documents; and (iii) in the case of a new Security Agent, the outgoing Security Agent has transferred to its successor all of its rights and obligations under the Security Documents. (E) If a successor to the Agent or Security Agent is appointed under the provisions of this Clause 21.6:- (i) the outgoing Agent or Security Agent (as the case may be) shall be discharged from any further obligation under this Agreement; (ii) its successor and each of the other parties hereto shall have the same rights and obligations amongst themselves as they would have had if such successor had been a party hereto in place of the outgoing Agent or Security Agent (as the case may be); (iii) Clause 21 and the other provisions of this Agreement shall remain in effect for the benefit and protection of the outgoing Agent or Security Agent (as the case may be) in relation to any claim or loss which may be brought against or incurred by it in connection with or as a result of any act, omission, breach, neglect or other occurrence or matter relating to or arising out of this Agreement which took place before its resignation. -147- 22. NOTICES AND OTHER MATTERS 22.1 Notices Every notice, request, demand or other communication under this Agreement or (unless otherwise provided therein) under any of the other Security Documents shall:- (A) be in writing delivered personally or by first-class prepaid letter (airmail if available) or facsimile transmission or other means of telecommunication in permanent written form provided that any communication by facsimile transmission shall be confirmed forthwith by letter; (B) be deemed to have been received, subject as otherwise provided in the relevant Security Document, in the case of a letter, when delivered personally or 5 days after it has been put in to the post and, in the case of a facsimile transmission or other means of telecommunication in permanent written form, at the time of despatch (provided that if the date of despatch is not a business day in the country of the addressee or if the time of despatch is after the close of business in the country of the addressee it shall be deemed to have been received at the opening of business on the next such business day); and (C) be sent:- (i) to the Borrower at:- Aegeristrasse 52 CH-6300 Zug Switzerland Fax: 41 41 728 8139 Marked for attention: Jan Larsson with a copy to the Borrower at:- World Trade Centre Amsterdam Airport Schipol Boulevard 237 1118 BH Schipol Airport The Netherlands Fax: 31 20 653 1960 Marked for attention: Deputy General Manager -148- (ii) to Stena AB at:- Masthuggskajen SE-405 19 Goteborg Sweden Fax: 46 31 243947 Marked for attention: Finance Manager to the Agent and the Security Agent at:- Svenska Handelsbanken AB (publ) Regional Bank of Western Sweden SE-405 40 Goteborg Sweden Fax: 46 31 774 8308 Marked for attention: RVIC STBNL 647 (iii) to each Bank or Co-Arranger at its address and fax number specified in Schedule 1 or in any relevant Transfer Certificate, or to such other address and/or numbers as is notified by one party to the other party under this Agreement; (D) be sent by the Borrower or Stena AB to the Banks or the Co-Arrangers by sending the same to the Agent and by the Banks and the Co-Arrangers to the Borrower and Stena AB by forwarding the same through the Agent. 22.2 No implied waivers, remedies cumulative No failure or delay on the part of the Agent, the Co-Arrangers, the Security Agent, the Banks or any of them to exercise any power, right or remedy under any of the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise by the Agent, the Co-Arrangers, the Security Agent, the Banks or any of them of any power, right or remedy preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The remedies provided in the Security Documents are cumulative and are not exclusive of any remedies provided by law. 22.3 Further assurance The Borrower and Stena AB undertake that the Security Documents shall, both at the date of execution and delivery thereof and so long as any moneys are owing under any of the Security Documents, be valid and binding obligations of the respective parties thereto and the rights of the Agent, the Security Agent, the Banks and the Co-Arrangers thereunder enforceable in accordance with their respective terms and that they will, at their expense, execute, sign, perfect and do, and will procure the execution, signing, perfecting and doing by each of the other Security Parties of, any -149- and every such further assurance, document, act or thing as in the reasonable opinion of the Agent may be necessary or desirable for perfecting the security contemplated or constituted by the Security Documents. 22.4 English language All certificates, instruments and other documents to be delivered under or supplied in connection with any of the Security Documents shall be in the English language or shall be accompanied by a certified English translation upon which the Agent shall be entitled to rely. 22.5 Third Party Rights A person (including any body of persons) who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act. 23. GOVERNING LAW AND JURISDICTION 23.1 Law This Agreement is governed by and shall be construed in accordance with English law. 23.2 Submission to jurisdiction The Borrower and Stena AB each agree, for the benefit of the Agent, the Co-Arrangers, the Security Agent and the Banks, that any legal action or proceedings arising out of or in connection with this Agreement against the Borrower or Stena AB or any of its assets may be brought in the English courts. The Borrower and Stena AB each hereby irrevocably and unconditionally submits to the jurisdiction of such courts and irrevocably designates, appoints and empowers Stena (UK) Limited at present of 4/5 Arlington Street, London SW1 1RA to receive for it and on its behalf, service of process issued out of the English courts in any such legal action or proceedings. The submission to such jurisdiction shall not (and shall not be construed so as to) limit the right of the Agent, the Co-Arrangers, the Security Agent or the Banks to take proceedings against the Borrower and Stena AB in the courts of any other competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not. The parties further agree that only the courts of England or Sweden and not those of any other State shall have jurisdiction to determine any claim which the Borrower or Stena AB may have against the Agent, the Co-Arrangers, the Security Agent or any Bank arising out of or in connection with this Agreement. IN WITNESS whereof the parties to this Agreement have caused this Agreement to be duly executed as a Deed on the date first above written. -150- SCHEDULE 1 ---------- The Banks and their Commitments -------------------------------
---------------------------------- -------------------------------------- --------------------- ------------------ NAME ADDRESS AND FAX NUMBER COMMITMENT PERCENTAGE ---- ---------------------- ---------- ---------- $ % ---------------------------------- -------------------------------------- --------------------- ------------------ The Chase Manhattan Bank (or 125 London Wall 22,000,000.00 8.000000 successor or nominated affiliate) London EC2Y 5AJ England Fax: 44 20 7777 0217 Attention: Morten Knudsen/ Isaac Xenitides ---------------------------------- -------------------------------------- --------------------- ------------------ Svenska Handelsbanken AB (publ) Ostra Hamngatan 23 SE-405 40 Goteborg 44,750,000.00 16.272727 Sweden Fax: 46 31 774 8308 Attention: RVIC STBNL 647 ---------------------------------- -------------------------------------- --------------------- ------------------ Nordbanken AB Ostra Hamngatan 16 (publ) SE-405 09 Goteborg 44,750,000.00 16.272727 Sweden Fax: 46 31 771 6470 Attention: NORDEA Shipping Offshore and Oil Services ---------------------------------- -------------------------------------- --------------------- ------------------ HSBC Bank plc Transport Industries Corporate & Industrial Banking 22,000,000.00 8.000000 3rd Floor, 27-32 Poultry London EC2P 2BX England Fax: 44 20 7260 4495 Attention: Simon Deefholts ---------------------------------- -------------------------------------- --------------------- ------------------ Landesbank Schleswig-Holstein Martensdamm 6 Girozentrale D-24103 Kiel 22,000,000.00 8.000000 Germany Fax: 49 431 900 1130 Attention: Shipping Department- Matthias Happich ---------------------------------- -------------------------------------- --------------------- ------------------ The Governor and Company of the 2nd Floor, New Uberior House Bank of Scotland 11 Earl Grey Street 22,000,000.00 8.000000 Edinburgh EH3 9BN Scotland Fax: 44 131 343 7080 Attention: Loans Management Group ---------------------------------- -------------------------------------- --------------------- ------------------
-151-
---------------------------------- -------------------------------------- --------------------- ------------------ NAME ADDRESS AND FAX NUMBER COMMITMENT PERCENTAGE ---- ---------------------- ---------- ---------- $ % ---------------------------------- -------------------------------------- --------------------- ------------------ Den norske Bank ASA Stranden 21 N-0021 Oslo 22,000,000.00 8.000000 Norway Fax: 47 22 48 28 94 Attention: Credit Administration Shipping ---------------------------------- -------------------------------------- --------------------- ------------------ Scotiabank Europe plc Scotia House 33 Finsbury Square 16,500,000.00 6.000000 London EC2A 1BB England Fax: 44 20 7826 5617 Attention: Barry Hodges ---------------------------------- -------------------------------------- --------------------- ------------------ Skandinaviska Enskilda Banken AB Ostra Hamngatan 24 (publ) S-405 04 Goteborg 22,000,000.00 8.000000 Sweden Fax: 46 31 15 14 50 Attention: PSF/Shipping ---------------------------------- -------------------------------------- --------------------- ------------------ ABN AMRO Bank N.V. P.O. Box 949 3000 DD Rotterdam 15,000,000.00 5.454545 The Netherlands Fax: 31 10 402 5580 Attention: Mr E J van Mastrigt and Fax: 31 10 402 4109 Attention: Mr P van der Have ---------------------------------- -------------------------------------- --------------------- ------------------ Nedship Bank (Nordic) P.O. Box 701, 5501 Bergen 22,000,000 8.000000 Norway Fax: 47 55 30 94 50 Attention: Mr Jan Hjellestad ---------------------------------- -------------------------------------- --------------------- ------------------ TOTAL 275,000,000 100 ---------------------------------- -------------------------------------- --------------------- ------------------
-152- SCHEDULE 2 ---------- The Ships ---------
----------------------------- ------------------------------ -------------------------------- -------------------------------------- OWNER(S) ON NAME CURRENT OWNER(S) AVAILABILITY DATE CLASSIFICATION ---- ---------------- ----------------- -------------- ----------------------------- ------------------------------ -------------------------------- -------------------------------------- KONINGIN BEATRIX Stena Line B.V. Stena Line B.V. DNV+1A1 R280 Car Ferry A EO ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA CARISMA Stena Line AB Stena Line Scandinavia AB DNV+1A1 HSLC RI Car Ferry A EO ICS ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA CARRIER Stena Line Shipholding B.V. Stena Line Shipholding B.V. LR+100 A1 Ice Class 1A+LMC+ UMS ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA DANICA Stena Line AB Stena Line Scandinavia AB DNV+1A1 Car Ferry A EO ICE-1B ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA EUROPE 33 shares - Stena Line 33 shares - Stena Line DNV+1A1 Car Ferry A MCDK ICE- 1C Shipholding B.V. Shipholding B.V. 31 shares - Stena Line AB 31 shares - Stena Line Scandinavia AB ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA FREIGHTER Stena Line AB Stena Line Scandinavia AB LR+100 A1 Ice Class 1A +LMC+UMS ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA GERMANICA Scandlines AB Scandlines AB LR+100 A1 Car Ferry, Ice Class 2+LMC and UMS ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA GOTHICA Stena Line Shipholding B.V. Stena Line Shipholding B.V. DNV+1A1 MCDK EO ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA SCANDINAVICA Stena Line AB Stena Line Scandinavia AB LR+100 A1 Car Ferry, Ice Class 2+LMC and UMS ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA SCANRAIL Stena Line AB Stena Line Scandinavia AB BV 1 3/3 E Roll On Roll Off Deepsea ICE III ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA SEARIDER Stena Line AB Stena Line Scandinavia AB DNV+1A1 Car and Train Ferry A EO ICE -1B ----------------------------- ------------------------------ -------------------------------- -------------------------------------- STENA SEATRADER Stena Line B.V. Stena Line B.V. DNV+1A1 ICE- A ----------------------------- ------------------------------ -------------------------------- -------------------------------------- ----------------------------- ----------------------------- ------------- ------------ CLASSIFICATION OFFICIAL NAME SOCIETY NO./CALL FLAG ---- ------- --------- ---- SIGN ----------------------------- ----------------------------- ------------- ------------ KONINGIN BEATRIX Det norske Veritas 900301 British ----------------------------- ----------------------------- ------------- ------------ STENA CARISMA Det norske Veritas SGFV Swedish ----------------------------- ----------------------------- ------------- ------------ STENA CARRIER Lloyd's Register of Shipping SLUY Swedish ----------------------------- ----------------------------- ------------- ------------ STENA DANICA Det norske Veritas SKFH Swedish ----------------------------- ----------------------------- ------------- ------------ STENA EUROPE Det norske Veritas 730536 Bahamian ----------------------------- ----------------------------- ------------- ------------ STENA FREIGHTER Lloyd's Register of Shipping SEPG Swedish ----------------------------- ----------------------------- ------------- ------------ STENA GERMANICA Lloyd's Register of Shipping SKPZ Swedish ----------------------------- ----------------------------- ------------- ------------ STENA GOTHICA Det norske Veritas SCQO Swedish ----------------------------- ----------------------------- ------------- ------------ STENA SCANDINAVICA Lloyd's Register of Shipping SLYH Swedish ----------------------------- ----------------------------- ------------- ------------ STENA SCANRAIL Bureau Veritas SLBM Swedish ----------------------------- ----------------------------- ------------- ------------ STENA SEARIDER Det norske Veritas 900102 British ----------------------------- ----------------------------- ------------- ------------ STENA SEATRADER Det norske Veritas 904247 British ----------------------------- ----------------------------- ------------- ------------
-153- SCHEDULE 3 ---------- Commercial Documents --------------------
STENA GERMANICA LOAN DOCUMENTS 1. The Stena Germanica Loan Agreement. MANAGEMENT AGREEMENTS IN RESPECT OF THE SHIPS 1. m.v. "STENA SEARIDER" A SHIPMAN 98 Management Agreement dated 28 August 2001 made between Stena Line B.V. (formerly Stena Line Holland B.V.) ("SLBV") as disponent owner and Northern Marine Management Limited ("NMML") as manager. 2. m.v. "STENA SEATRADER" A SHIPMAN 98 Ship Management Agreement dated 1 March 2001 made between (1) SLBV as owner and (2) NMML as manager. CHARTER DOCUMENTS IN RESPECT OF THE SHIPS 1. m.v. "STENA SEARIDER" A BARECON 89 bareboat charter dated 25 September 2000 made between (1) Stena Line as owner and (2) SLBV as charterer to be amended and novated on or about the Availability Date by an addendum no. 1 to be made between (1) Stena Line, (2) SLBV and (3) Stena Line Scandinavia (so as to constitute a charter between (1) Stena Line Scandinavia as owner and (2) SLBV as charterer). 2. m.v. "STENA CARRIER" A BARECON 89 bareboat charter dated 1 January 1992 made between (1) Stena Carrier Ltd ("SCL") as owner and (2) Stena Line as charterer as amended and novated by addendum no. 1 dated 31 March 1995 made between (1) SCL, (2) Stena Empress Ltd ("SEL") and (3) Stena Line (so as to constitute a charter between (1) SEL as owner and (2) Stena Line as charterer) as further amended and novated by an addendum no. 2 dated 20 December 1996 made between (1) SEL, (2) Stena Line Shipholding B.V. ("SLSHBV") and (3) Stena Line (so as to constitute a charter between (1) SLSHBV as owner and (2) Stena Line as charterer) as further amended by an addendum no. 3 dated 15 January 1997 made between (1) SLSHBV and (2) Stena Line and as further amended by an addendum no. 4 dated 15 January 1999, an addendum no. 5 dated 15 January 2000, an addendum no. 6 dated 5 February 2001, each between (1) SLSHBV and (2) Stena Line, and to be further amended and novated on or about the Availability -154- Date by an addendum no. 7 to be made between (1) SLSHBV, (2) Stena Line and (3) Stena Line Scandinavia (so as constitute a charter between (1) SLSHBV as owner and (2) Stena Line Scandinavia as charterer). 3. m.v. "STENA GOTHICA" A BARECON 89 bareboat charter dated 15 October 1994 made between 4 (1) Scandinavica Ltd as owner and (2) Stena Line Scandinavia AB (formerly known as Stena Line Service AB and subsequently merged into Stena Line on 1 January 1999) as charterer as amended and novated by an addendum no. 1 dated 31 March 1995 made between (1) Scandinavica Ltd (2) SEL and (3) Stena Line Scandinavia AB (so as to constitute a charter between (1) SEL as owner and (2) Stena Line Scandinavia AB as charterer) as further amended by an addendum no. 2 dated 9 January 1996 between (1) SEL and (2) Stena Line Scandinavia AB as further amended and novated by an addendum no. 3 dated 16 December 1996 made between (1) SEL, (2) SLSHBV and (3) Stena Line Scandinavia AB (so as to constitute a charter between (1) SLSHBV as owner and (2) Stena Line Scandinavia AB as charterer) as further amended by an addendum no. 4 dated 15 January 1997 and an addendum no. 5 dated 31 August 1998 each between (1) SLSHBV and (2) Stena Line Scandinavia AB and as further amended by an addendum no. 6 dated 15 January 1999, an addendum no. 7 dated 17 January 2000, an addendum no. 8 dated 31 August 2000, an addendum no. 9 dated 5 February 2001 each between (1) SLSHBV and (2) Stena Line (as successor to Stena Line Scandinavia AB) an addendum no. 10 dated 17 September 2001 and to be further amended and novated on or about the Availability Date by an addendum no. 11 to be made between (1) SLSHBV, (2) Stena Line and (3) Stena Line Scandinavia (so as to constitute a charter between (1) SLSHBV as owner and (2) Stena Line Scandinavia as charterer). 4. m.v. "STENA GERMANICA" A BARECON 89 bareboat charter dated 20 December 2000 between (1) 5 Scandlines AB as owner and (2) Stena Line as charterer to be amended and novated on or about the Availability Date by an addendum no. 1 to be made between (1) Scandlines AB, (2) Stena Line and (3) Stena Line Scandinavia (so as to constitute a charter between (1) Scandlines AB as owner and (2) Stena Line Scandinavia as charterer). -155- 5. m.v. "STENA EUROPE" A BARECON 89 bareboat charter dated 26 May 1997 between (1) SLSHBV as 33/64th owner and Stena Line as 31/64th owner and (2) Stena Line as charterer as amended by an addendum no. 1 dated 25 June 2001 and to be further amended and novated on or about the Availability Date by an addendum no. 2 to be made between (1) SLSHBV, (2) Stena Line and (3) Stena Line Scandinavia (as so to constitute as charter between (1) SLSHBV as 33/64th owner and Stena Line Scandinavia as 31/64th owner and (2) Stena Line Scandinavia as charterer). 6. m.v. "KONINGIN BEATRIX" A BARECON 89 bareboat charter dated 9 June 1997 between (1) SLBV 7 as owner and (2) Stena Line Limited ("SLL") as charterer as amended by an addendum no. 1 dated 1 June 1999, an addendum no. 2 dated 5 February 2001 and to be amended on or about the Availability Date by an addendum no. 3 each between (1) SLBV and (2) SLL.
-156- SCHEDULE 4 ---------- Form of Drawdown Notice ----------------------- To: SVENSKA HANDELSBANKEN AB (PUBL) SE-405 40 GOTEBORG SWEDEN Attention: RVIC STBNL 647 o 20 o U.S.$275,000,000 Facility Agreement dated o 2001 ------------------------------- We refer to the above Facility Agreement and hereby give you notice that we wish to draw an Advance of $o on o 20o [and select a Term in respect thereof of o months]. The funds should be credited to [NAME AND NUMBER OF ACCOUNT] with [NEW YORK CITY]. We confirm that the borrowing to be effected by such Advance will be within our corporate powers, has been validly authorised by appropriate corporate action and will not cause any limit on our borrowings (whether imposed by statute, regulation, agreement or otherwise) to be exceeded. Words and expressions defined in the Facility Agreement shall have the same meanings where used herein. For and on behalf of STENA INTERNATIONAL B.V. ...................... -157- SCHEDULE 5 ---------- Conditions Precedent -------------------- (referred to in Clause 14.1) 1. Facility Agreement and Guarantees 1.1 Originals of this Agreement executed by all of the parties hereto (in sufficient copies so that each Bank will be able to retain one original for itself). 1.2 Original Shipowner's Guarantees executed by each of the Shipowners (other than Scandlines). 1.3 An original Port Owner's Guarantee executed by Stena Line Ports. 2. The Ships and Linkspans 2.1 Such evidence as the Agent may require in respect of each Ship that such Ship (and, where appropriate, each of its associated Linkspans) is:- (A) registered in the sole name of the relevant Shipowner shown in Schedule 2 free from all Liens except for Permitted Ship Liens; (B) classified 1A1 with its Classification Society; (C) technically managed by its Approved Manager (if any); and (D) (together with its operator) compliant with the requirements of the ISM Code. 2.2 Written confirmation from the insurance brokers and the managers of any protection and indemnity or war risks association through whom any Insurances of a Ship or Linkspan have been placed that they will each issue a letter of undertaking in a form acceptable to the Agent upon receipt of the Notice(s) of Assignment of Insurances relating to such Ship or Linkspan. 2.3 Originals of the Security Documents to be entered into in respect of each Ship and Linkspan duly executed by the Security Parties which are party thereto together with all relevant notices, acknowledgements and other ancillary documents to be executed thereunder or pursuant thereto, namely:- (A) in the case of m.v.'s "STENA DANICA", "STENA SCANDINAVICA", "STENA FREIGHTER", "STENA SCANRAIL", "STENA CARRIER", "STENA CARISMA", "LINKSPAN I", "LINKSPAN II" and "STENA GOTHICA":- (i) first priority instruments of pledge in the form set out in Schedule 8 executed by the relevant Shipowner in respect of the Swedish law ship mortgages thereon registered or to be registered against each of the above Ships and Linkspans in the following amounts:- -158-
Ship Amount ---- ------- "STENA DANICA" $57,000,000 "STENA SCANDINAVICA" $115,000,000 "STENA FREIGHTER" $12,570,000 "STENA SCANRAIL" $8,000,000 "STENA CARISMA" $62,500,000 "LINKSPAN I" $4,000,000 "LINKSPAN II" $3,000,000 "STENA CARRIER" $8,500,000 "STENA GOTHICA" $14,437,500
(ii) the original mortgage deeds as referred to in (i) above in respect of each of the above Ships and Linkspans; and (iii) a Deed of Covenant and Notices of Assignment of Insurances in the form of Schedule 1 thereto each executed by the relevant Shipowner in respect thereof; (B) in the case of m.v.'s "STENA EUROPE", "STENA SEARIDER", "STENA SEATRADER" and "KONINGIN BEATRIX":- (i) a first priority statutory ship mortgage thereon incorporating the text set out in Schedule 10 executed by the relevant Shipowner; (ii) a Deed of Covenant and Notices of Assignment of Insurances in the form of Schedule 1 thereto executed by the relevant Shipowner in respect thereof; (C) in the case of m.v. "STENA GERMANICA":- (i) the Stena Germanica Assignment; (ii) the notice of assignment in the form of Schedule 1 to the Stena Germanica Assignment executed by the Borrower and the acknowledgement thereof in the form of Schedule 2 to the Stena Germanica Assignment executed by Scandlines; (iii) the notice of assignment in the form of Schedule 3 to the Stena Germanica Assignment executed by the Borrower and the acknowledgement thereof in the form of Schedule 4 to the Stena Germanica Assignment executed by Stena Line Scandinavia; (iv) the Notice of Assignment of Insurances in the form of Schedule 5 to the Stena Germanica Assignment executed by the Borrower; (D) in the case of each of the Mortgaged Ships and Mortgaged Linkspans:- (i) the Charterer's Insurance Assignment (if any) executed by any Stena Charterer of such Ship or Linkspan; -159- (ii) the Charterer's Subordination Undertaking (if any) executed by any Stena Charterer of such Ship or Linkspan; (iii) the Manager's Subordination Undertaking (if any) executed by any Approved Manager of such Ship or Linkspan. 2.4 In the case of each Ship and Linkspan, evidence that the relevant mortgage in favour of the Security Agent on such Ship or Linkspan has been registered against such Ship or Linkspan with first priority at the appropriate ship registry. 3. Holyhead Port 3.1 A clear H.M. Land Registry search in favour of the Security Agent against such part of Holyhead Port as is registered or is in the course of registration, with priority expiring no earlier than twenty eight (28) days after the Availability Date. 3.2 An original of the Holyhead Charge executed by Stena Line Ports. 3.3 A certificate of title in respect of Holyhead Port (including details of the insurances of the relevant port) in form and substance acceptable to the Agent. 4. Stranraer Port 4.1 A clear search in the property register and in the computerised presentment book in respect of Stranraer Port to be continued to a date twenty two (22) days after the date of recording of the Stranraer Charge and a clear search in the personal register in respect of Stena Line Ports. 4.2 An original of the Stranraer Charge executed by Stena Line Ports. 4.3 A certificate of title in respect of Stranraer Port (including details of the insurances of the relevant port) in form and substance acceptable to the Agent. 5. Constitutional documents Certified copies of the Certificate of Incorporation and Memorandum and Articles of Association or equivalent constitutive documents of the Borrower and each other Security Party. 6. Corporate authorisations 6.1 Certified copies of resolutions of each Security Party approving the Security Documents to which such Security Party is a party and approving the transactions contemplated thereby and authorising the execution of such documents by an officer or attorney of the relevant Security Party. 6.2 Original or certified copies of the powers of attorney, if any, issued pursuant to the resolutions referred to above. -160- 7. Certificate of incumbency Certified copies of a certificate of incumbency or extract from the commercial register in respect of the Borrower and each other Security Party. 8. Consents and approvals Such evidence as the Agent may require that all such consents have been obtained as may be required from any authority by each of the Borrower and each other Security Party for the execution of and performance by them of their respective obligations under those of the Security Documents to which they are respectively a party. 9. Fees 9.1 The agency fee letter agreement referred to in Clause 6.1 executed by the Borrower, Stena AB and Svenska Handelsbanken AB (publ). 9.2 The arrangement fee letter agreement referred to in Clause 6.3 executed by the Borrower and the Agent. 9.3 Evidence that such fees referred to in Clause 6 as are payable on or before the Availability Date have been received by the Agent. 10. Insurance opinion An opinion on the Insurances by HSBC Insurance Brokers Limited dated not more than thirty (30) days before the Availability Date, such report to be in form and substance acceptable to the Agent. 11. Legal opinions Legal opinions in form and substance acceptable to the Agent (or confirmation satisfactory to the Agent that such legal opinions will be issued in form and substance acceptable to it) from:- (A) Messrs. Sinclair Roche & Temperley concerning such matters of English law as the Agent may reasonably require; (B) Messrs. Mannheimer Swartling concerning such matters of Swedish law as the Agent may reasonably require; (C) Messrs. Loyens & Loeff concerning such matters of Netherlands law as the Agent may reasonably require; and (D) Messrs. Wright, Johnston & Mackenzie concerning such matters of Scottish law as the Agent may reasonably require. 12. Valuations Valuations of the Mortgaged Ships, such valuations to be determined in accordance with Clause 5.3(G). -161- 13. Financial condition Evidence that there is no breach of the asset coverage test contained in Clause 10.21. 14. Process agent Written confirmation from Stena (UK) Limited that it will act as the process agent for service of process in England of the Borrower and each other Security Party. 15. Commercial Documents 15.1 A certified copy of the Stena Germanica Loan Agreement as amended and transferred out of the name of Stena Line into the name of the Borrower as lender to Scandlines thereunder, such agreement to be on terms whereby the principal loan amount outstanding thereunder is $52,000,000 and the repayment date thereof falls after the Termination Date hereunder. 15.2 Certified copies of the Stena Germanica Mortgage and the Stena Germanica Deed of Covenants together with certified copies of the agreement or agreements by which such documents have been assigned from Stena Line to the Borrower (including all appropriate notices and acknowledges of assignment given to and/or by Scandlines and Stena Line Scandinavia), all such documents to be in form and substance acceptable to the Agent. 15.3 Certified copies of the Stena Germanica Charterer's Insurance Assignment and the Stena Germanica Charterer's Subordination Undertaking. 15.4 Certified copy of the Stena Line Asset Purchase Agreement. 15.5 Certified copies of the other Commercial Documents. 16. Cancellation of Stena Line Revolving Credit Facility Evidence that simultaneously with drawdown of the first Advance all outstandings in respect of the Stena Line Revolving Credit Facility will be repaid in full and such facility finally and irrevocably cancelled. -162- SCHEDULE 6 ---------- Form of Transfer Certificate ---------------------------- (referred to in Clause 20.3) Transfer Certificate -------------------- Banks are advised not to employ Transfer Certificates or otherwise to assign or transfer interests in the Facility Agreement without further ensuring that the transaction complies with all applicable laws and regulations, including the Financial Services Act 1986 and regulations made thereunder and similar statutes which may be in force in other jurisdictions To: Svenska Handelsbanken AB (publ), as agent on its own behalf and for and on behalf of the Borrower, the Security Agent, the Banks, the Co-Arrangers and Stena AB defined in the Facility Agreement referred to below. o 20 o Attention: RVIC STBNL 647 This certificate ("TRANSFER CERTIFICATE") relates to a US$275,000,000 facility agreement dated 2001 (as amended, novated and/or restated from time to time the "FACILITY AGREEMENT") and made between (1) Stena International B.V. (the "BORROWER"), (2) the banks and financial institutions defined therein as banks (the "BANKS"), (3) J. P. Morgan plc, Nordbanken AB (publ) and Svenska Handelsbanken AB (publ) as Co-Arrangers, (4) Svenska Handelsbanken AB (publ) as Agent, (5) Svenska Handelsbanken AB (publ) as Security Agent and (6) Stena AB as guarantor for a facility of up to $275,000,000. Terms defined in the Facility Agreement shall, unless otherwise defined herein, have the same meanings herein as therein. In this Certificate: the "TRANSFEROR" means [FULL NAME] of [LENDING OFFICE]; and the "TRANSFEREE" means [FULL NAME] of [LENDING OFFICE]. 1. The Transferor as beneficial owner assigns to the Transferee absolutely all rights and interests (present, future or contingent) which the Transferor has as Bank under or by virtue of the Facility Agreement and all the Security Documents in relation to [ ] per centum ([ ]%) of the Contribution of the Transferor (or its predecessors in title) which are set out below:- Date of Contribution Amount Maturity Date -------------------- ------ ------------- 2. By virtue of this Transfer Certificate and Clause 20 of the Facility Agreement, the Transferor is discharged [entirely from its Available Commitment which amounts to $[ ]][from [ per centum ( [ ]%) of its Available Commitment, which percentage represents $[ ]]. -163- 3. [The Transferee acknowledges that the Contribution of the Transferor referred to in Clause 1 above relates to Advances having Maturity Dates which fall after the date hereof which have been funded as to its relevant portion by the Transferor and in respect of which the Transferor has incurred and continues to incur funding costs at an annual rate of interest per annum approximate to the relevant rate of LIBOR for each such Advance as determined by the Agent prior to the drawdown thereof. In consider of the Transferor agreeing to execute this Transfer Certificate in favour of the Transferee, the Transferee undertakes that upon the Maturity Date of each such Advance, the Transferee will pay to the Transferor a sum in Dollars for value on such Maturity Date equal to the aggregate of:- (A) the amount of principal repaid to the Transferee under the Facility Agreement in respect of the relevant portion of such Advance transferred by the Transferor to the Transferee hereunder; (B) the amount of all interest earned and received by the Transferee under the Facility Agreement in respect of the relevant portion of such Advance transferred by the Transferor to the Transferee hereunder which is attributable to LIBOR (i.e. so that it excludes that part of such interest which is attributable to the Margin); and (C) the amount of all interest earned and received by the Transferee under the Facility Agreement in respect of the relevant portion of such Advance transferred by the Transferor to the Transferee hereunder which is earned during the period from its drawdown date up to (but not including) the date of this Transfer Certificate and which is attributable to the Margin. By its execution and delivery of this Transfer Certificate the Transferee hereby irrevocably and unconditionally authorises and instructs the Agent to effect on its behalf the payments to be made to the Transferor as referred to in this Clause from the corresponding payments of interest and repayment of principal received by it on behalf of the Banks under the Facility Agreement.] 4. The Transferee hereby requests the Borrower, the Agent, the Security Agent, the Banks and Stena AB to accept the executed copies of this Transfer Certificate as being delivered pursuant to and for the purposes of Clause 20.3 of the Facility Agreement so as to take effect in accordance with the terms thereof on [DATE OF TRANSFER]. 5. The Transferee:- (A) confirms that it has received a copy of the Facility Agreement and the Security Documents together with such other documents and information as it has required in connection with the transaction contemplated thereby; (B) confirms that it has not relied and will not hereafter rely on the Transferor, the Agent or the Security Agent to check or enquire on its behalf into the legality, validity, effectiveness, adequacy, accuracy or completeness of the Facility Agreement, any of the Security Documents or any such documents or information; -164- (C) agrees that it has not relied and will not rely on the Transferor, the Agent, the Security Agent, the Co-Arrangers or the Banks to assess or keep under review on its behalf the financial condition, creditworthiness, condition, affairs, status or nature of the Borrower or any other Security Party (save as otherwise expressly provided therein); (D) warrants that it has power and authority to become a party to the Facility Agreement and has taken all necessary action to authorise execution of this Transfer Certificate and to obtain all necessary approvals and consents to the assumption of its obligations under the Facility Agreement and the Security Documents; and (E) if not already a Bank, appoints the Agent to act as its agent and the Security Agent to act as its trustee as provided in the Facility Agreement and the Security Documents and agrees to be bound by the terms of the Facility Agreement. 6. The Transferor:- (A) warrants to the Transferee that it has full power to enter into this Transfer Certificate and has taken all corporate action necessary to authorise it to do so; (B) warrants to the Transferee that this Transfer Certificate is binding on the Transferor under the laws of England, the country in which the Transferor is incorporated and the country in which its lending office is located; and (C) agrees that it will, at its own expense, execute any documents which the Transferee reasonably requests for perfecting in any relevant jurisdiction the Transferee's title under this Transfer Certificate or for a similar purpose. 7. The Transferee hereby undertakes with the Transferor and each of the other parties to the Facility Agreement and the other Security Documents that it will perform in accordance with its terms all those obligations which by the terms of the Facility Agreement and the other Security Documents will be assumed by it after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. 8. By execution of this Transfer Certificate on their behalf by the Agent and in reliance upon the representations and warranties of the Transferee, the Borrower, Stena AB, the Agent, the Security Agent, the Co-Arrangers and the Banks accept the Transferee as a party to the Facility Agreement and the Security Documents with respect to all those rights and/or obligations which by the terms of the Facility Agreement and the Security Documents will be assumed by the Transferee (including those about pro-rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent, the Co-Arrangers, the Security Agent and the Banks as provided by the Agreement) after delivery of the executed copies of this Transfer Certificate to the Agent and satisfaction of the conditions (if any) subject to which this Transfer Certificate is expressed to take effect. -165- 9. None of the Transferor, the Agent, the Security Agent, the Co-Arrangers or the Banks:- (A) makes any representation or warranty nor assumes any responsibility with respect to the legality, validity, effectiveness, adequacy or enforceability of the Facility Agreement or any of the Security Documents or any document relating thereto; (B) assumes any responsibility for the financial condition of the Borrower or any other Security Party or any party to any such other document or for the performance and observance by the Borrower or any other Security Party or any party to any such other document (save as otherwise expressly provided therein) and any and all such conditions and warranties, whether express or implied by law or otherwise, are hereby excluded (except as aforesaid). 10. The Transferor and the Transferee each undertake that they will on demand fully indemnify the Agent and the Security Agent in respect of any claim, proceeding, liability or expense which relates to or results from this Transfer Certificate or any matter concerned with or arising out of it unless caused by the Agent's or Security Agent's gross negligence or wilful misconduct, as the case may be. 11. The agreements and undertakings of the Transferee in this Transfer Certificate are given to and for the benefit of and made with each of the other parties to the Facility Agreement and the Security Documents. 12. This Transfer Certificate shall be governed by, and construed in accordance with, English law. Transferor Transferee [INSERT TRANSFEROR'S NAME] [INSERT TRANSFEREE'S NAME] By: By: Dated: Dated: Agent Agreed for and on behalf of itself as Agent, the Co-Arrangers, the Security Agent, the Banks, the Borrower, Stena AB and each other Security Party. SVENSKA HANDELSBANKEN AB (PUBL) By: Dated: -166- NOTE: The execution of this Transfer Certificate alone may not transfer a proportionate share of the Transferor's interest in the security constituted by the Security Documents in the Transferor's or Transferee's jurisdiction. It is the responsibility of each individual Bank to ascertain whether any other documents are required to perfect a transfer of such a share in the Transferor's interest in such security in any such jurisdiction and, if so, to seek appropriate advice and arrange for execution of the same. -167- THE SCHEDULE ------------ Outstanding Contributions of Transferor : $[ ] --------------------------------------- Available Commitment of Transferor : $[ ] ---------------------------------- Portion Transferred : [ ]% ------------------- ADMINISTRATIVE DETAILS OF TRANSFEREE ------------------------------------ Name of Transferee: Lending Office: Contact person (Loan Administration Department): Telephone: Fax: Contact person (Credit Administration Department): Telephone: Fax: Account for payments: -168- SCHEDULE 7.1 ------------ Form of Shipowner's Guarantee ----------------------------- -169- SCHEDULE 7.2 ------------ Form of Port Owner's Guarantee ------------------------------ -170- SCHEDULE 8 ---------- Form of Swedish Mortgage ------------------------ -171 SCHEDULE 9 ---------- Form of Insurance Assignment ---------------------------- -172- SCHEDULE 10 ----------- Form of Statutory Mortgage Narrative ------------------------------------ -173- SCHEDULE 11.1 ------------- Form of Deed of Covenant ------------------------ -174- SCHEDULE 11.2 ------------- Form of Deed of Covenant (m.v. "STENA CARISMA" AND HER RELATED LINKSPANS) ------------------------------------------------------------------------- -175- SCHEDULE 12 ----------- Form of Charterer's Insurance Assignment ---------------------------------------- -176- SCHEDULE 13 ----------- Form of Charterer's Subordination Undertaking --------------------------------------------- -177- SCHEDULE 14 ----------- Form of Holyhead Charge ----------------------- -178- SCHEDULE 15 ----------- Form of Stranraer Charge ------------------------ -179- SCHEDULE 16 ----------- Form of Receivables Assignment (Credit Sale) -------------------------------------------- -180- SCHEDULE 17 ----------- Form of Receivables Assignment (Hire Purchase) ---------------------------------------------- -181- SCHEDULE 18 ----------- Form of Manager's Subordination Undertaking ------------------------------------------- -182- SCHEDULE 19 ----------- Form of Stena Germanica Assignment ---------------------------------- -183- SCHEDULE 20 ----------- Specimen Charter Covenants and Loss Payable Clauses --------------------------------------------------- -184- SCHEDULE 21 ----------- Form of Asset Coverage Compliance Certificate --------------------------------------------- OFFICER'S CERTIFICATE ISSUED PURSUANT TO A $275,000,000 FACILITY AGREEMENT DATED [O] 2001 (THE "FACILITY AGREEMENT") I, [o], the [Chief Financial Officer/DESCRIBE OFFICE] of Stena AB, hereby certify that:- 1. Attached hereto is a statement of the respective amounts of:- o Appraised Value of Restricted Group Assets o Secured Debt o Strategic Investments o Cash and Marketable Securities o Net Market Value of the Unrestricted Group o Other Assets and Working Capital o Available Asset Value o Unsecured Debt as at [30 June/31 December/OTHER [YEAR]] (the "REFERENCE DATE"), determined in accordance with Clause 10.21 of the Facility Agreement. 2. As at the Reference Date, the ratio of Available Asset Value to Unsecured Debt was [INSERT]:1. 3. Attached hereto is a statement of the amounts of the values of the assets of the Stena AB Group determined in accordance with Clause 10.21 of the Facility Agreement for the purpose of calculating the Available Asset Value as at the Reference Date. Terms used herein and not otherwise defined herein shall have the meanings set forth in the Facility Agreement. This certificate is rendered pursuant to Clause 10.2(F) of the Facility Agreement. IN WITNESS WHEREOF, the undersigned has set his hand this o day of o 20o. STENA AB By: ............................ [Chief Financial Officer/INSERT OFFICE] -185- The Borrower ------------ SIGNED AND DELIVERED AS A DEED by /s/ John Shelton attorney-in-fact for and on behalf of STENA INTERNATIONAL B.V. in the presence of: /s/ Jiang Lin Trainee Solicitor London EC2V 7LE The Agent and Security Agent ---------------------------- SIGNED AND DELIVERED AS A DEED by /s/ Sten - Olof Hagman attorney-in-fact for and on behalf of SVENSKA HANDELSBANKEN AB (PUBL) in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE The Banks and Co-Arrangers -------------------------- SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat for and on behalf of THE CHASE MANHATTAN BANK (or successor or nominated affiliate thereof) by its authorised signatory in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of NORDBANKEN AB (PUBL) in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Sten - Olof Hagman attorney-in-fact for and on behalf of SVENSKA HANDELSBANKEN AB (PUBL) in the presence of:- /s/ Jiang Lin -186- Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat for and on behalf of J.P. MORGAN PLC in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Adam Byrne for and on behalf of HSBC BANK PLC in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by ) /s/ Ruth Allcoat ) attorney-in-fact for and on behalf of ) LANDESBANK SCHLESWIG-HOLSTEIN ) GIROZENTRALE ) in the presence of:- ) /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of DEN NORSKE BANK ASA in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE -187- SIGNED AND DELIVERED AS A DEED by /s/ David Sparkes for and on behalf of SCOTIABANK EUROPE PLC in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of SKANDINAVISKA ENSKILDA BANKEN AB (PUBL) in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of ABN AMRO BANK N.V. in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE SIGNED AND DELIVERED AS A DEED by /s/ Ruth Allcoat attorney-in-fact for and on behalf of NEDSHIP BANK (NORDIC) in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE Stena AB -------- SIGNED AND DELIVERED AS A DEED by /s/ Rolf Mahlkvist attorney-in-fact for and on behalf of STENA AB in the presence of:- /s/ Jiang Lin Trainee Solicitor London EC2V 7LE