EXECUTION VERSION

Exhibit 4.3
 
EXECUTION VERSION
Fourth Supplemental Agreement to Secured Loan Agreement dated 10 April 2014, as supplemented by a side letter dated 10 April 2014 and as amended pursuant to amendment letters dated 30 April 2014, 12 June 2014, 18 June 2014, 29 May 2015 and 19 February 2016 and as amended and restated pursuant to a first supplemental agreement dated 30 September 2015, a second supplemental agreement dated 30 December 2015 and a third supplemental agreement dated 29 November 2016
Dated 20 September 2017
Between
(1)
TORM A/S
(as Borrower A)
(2)
TORM PLC
(as Borrower B)
(3)
TORM PLC
(as Guarantor A)
(4)
TORM A/S
(as Guarantor B)
(5)
VesselCo 8 Pte. Ltd.
(as Owner A)
(6)
VesselCo 11 Pte. Ltd.
(as Owner B)
(7)
TORM A/S
(as Manager and Bareboat Charterer)
(8)
TORM PLC
(as HeadBareboat Charterer)
(9)
The Financial Institutions listed in Schedule 1
(as Original Lenders)
(10)
Danmarks Skibskredit A/S (formerly known as Danish Ship Finance A/S)
(as Agent)
(11)
Danmarks Skibskredit A/S (formerly known as Danish Ship Finance A/S)
(as Security Agent)
and from the date of its accession to this Supplemental Agreement
(12)
VesselCo 5 K/S


(as Owner C)


Contents
Page
1
Interpretation
 
 3
2
Conditions to the Effective Date
 
 5
3
Amendments to the Loan Agreement on the Effective Date
 
 7
4
Representations and warranties
 
 7
5
Confirmation and undertaking
 
 7
6
Miscellaneous
 
 8
7
Communications, counterparts, governing law and enforcement
 
 8
Schedule 1
The Original Lenders
 
9
Schedule 2
Effective Date Confirmation
 
10
Schedule 3
Amended and Restated Loan Agreement
 
11



Supplemental Agreement
Dated 20 September 2017
Between:
(1)
TORM A/S a company incorporated under the laws of Denmark with its registered office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark and CVR number 22460218 (in that capacity, "Borrower A"); and
(2)
TORM PLC, a company incorporated under the laws of England and Wales with company number 09818726 with its registered office at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom (in that capacity, "Borrower B" and together with Borrower A, the "Borrowers"); and
(3)
TORM PLC, a company incorporated under the laws of England and Wales with company number 09818726 with its registered office at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom (in that capacity, "Guarantor A"); and
(4)
TORM A/S a company incorporated under the laws of Denmark with its registered office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark and CVR number 22460218 (in that capacity, "Guarantor B" and together with Guarantor A, the "Guarantors"); and
(5)
VesselCo 8 Pte. Ltd., a company incorporated under the laws of Singapore with its registered office at 6 Battery Road, #27-02, Singapore 049909 ("Owner A"); and
(6)
VesselCo 11 Pte. Ltd., a company incorporated under the laws of Singapore with its registered office at 6 Battery Road, #27-02, Singapore 049909 ("Owner B" and together with Owner A, the "Existing Owners"); and
(7)
TORM A/S a company incorporated under the laws of Denmark with its registered office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark with CVR number 22460218 (in that capacity, the "Bareboat Charterer" and the "Manager"); and
(8)
TORM PLC, a company incorporated under the laws of England and Wales with company number 09818726 with its registered office at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom (in that capacity, the "Head Bareboat Charterer"); and
(9)
The Financial Institutions listed in Schedule 1 (The Original Lenders), each acting through its Facility Office (together the "Original Lenders" and each an "Original Lender"); and
(10)
Danmarks Skibskredit A/S (formerly known as Danish Ship Finance A/S), acting as agent through its office at Sankt Annae Plads 3, DK-1250 Copenhagen K, Denmark with CVR number 27492649 (in that capacity, the "Agent"); and
(11)
Danmarks Skibskredit A/S (formerly known as Danish Ship Finance A/S), acting as security agent through its office at Sankt Annae Plads 3, DK-1250. Copenhagen K, Denmark with CVR number 27492649 (in that capacity, the "Security Agent");
Page 2


and from the date of its accession to this Supplemental Agreement:
(12)
VesselCo 5 K/S, a company incorporated under the laws of Denmark with its registered office at c/o TORM A/S, Tuborg Havnevej 18, DK-2900 Hellerup, Denmark and CVR number 38911538 ("Owner C" and together with the Existing Owners, the "Owners")
Supplemental to a secured loan agreement dated 10 April 2014, as supplemented by a side letter dated 10 April 2014 and as amended pursuant to amendment letters dated 30 April 2014, 12 June 2014, 18 June 2014, 29 May 2015 and 19 February 2016 and as amended and restated pursuant to a first supplemental agreement dated 30 September 2015, a second supplemental agreement dated 30 December 2015 and a third supplemental agreement dated 29 November 2016 (the "Loan Agreement") made between the Borrowers as borrowers, the Guarantors as guarantors, the Lenders, the Agent and the Security Agent on the terms and subject to the conditions of which each of the Lenders agreed to advance to the Borrowers its respective Commitment of an aggregate amount not exceeding USD165,933,763.87.
Whereas:
(A)
The Borrowers have requested an increase to the Maximum Loan Amount to two hundred and forty six million five hundred and thirty three thousand seven hundred and sixty three dollars 87/100 (USD246,533,763.87) to be split into (i) Existing Tranche A, Existing Tranche B and Existing Tranche C to assist the Borrowers to finance the Existing Vessels and (ii) the New Tranche which shall be advanced to Borrower B, in order to assist Owner C to finance the New Vessels (the "Request").
(B)
The Finance Parties have agreed to give their consent to the Request, subject to and upon the terms and conditions contained in this Supplemental Agreement.
(C)
The parties to this Supplemental Agreement have agreed to amend and restate the Loan Agreement on the terms and subject to the conditions set out in this Supplemental Agreement.
It is agreed that:
1
Interpretation
1.1
In this Supplemental Agreement:
"Building Contracts" means the 4 shipbuilding contracts each dated 24 July 2017 and entered into between Borrower A as buyer and China Shipbuilding Trading Company Limited and Guangzhou Shipyard International Company Limited as sellers, each for the construction of a New Vessel.
"Chargor C" means DK VESSEL HOLDCO K/S acting in its capacity as chargor of the limited partnership shares in Owner C and Borrower A in its capacity as chargor of the shares in VesselCo E ApS, the general partner of Owner C.
"Effective Date" means the date and time at which the Agent confirms in writing that all of the conditions referred to in Clause 2 have been satisfied, which confirmation the Agent shall be under no obligation to give if an Event of Default shall have occurred.
Page 3


"Existing Tranche" means the aggregate of Existing Tranche A, Existing Tranche B and Existing Tranche C.
"Existing Tranche A" means an amount made available to the Borrower A of which seventy nine million three hundred and fifty five thousand six hundred and thirty six 35/100 dollars (US$79,355,636.35) remains outstanding.
"Existing Tranche B" means an amount made available to Borrower A of which fifty eight million five hundred and fifty six thousand and sixty five 26/100 Dollars (US$58,556,065.26) remains outstanding.
"Existing Tranche C" means an amount made available to Borrower B of which twenty eight million twenty two thousand and sixty two 26/100 Dollars (US$28,022,062.26) remains outstanding.
"Deeds of Confirmation" means the deeds of in respect of the existing Security Documents which will be creating second priority security over the relevant secured asstes.
"New Guarantee" means the guarantee and indemnity given by Owner C pursuant to clause 18 of the Loan Agreement.
"New Mortgages" means new second priority mortgages over each of the Existing Vessels together with the collateral deed of covenants.
"New Security Documents" means the New Guarantee, the New Share Charge, the Deeds of Confirmation and the New Mortgages.
"New Share Charge" means the charge of the issued limited partnership shares of Owner C and its general partner VesselCo 5 ApS to be granted by the New Chargor in favour of the Security Agent.
"New Tranche" means an amount made or to be made available to Borrower B of up to eighty million and six hundred thousand Dollars (US$ 80,600,000).
"New Vessels" means:
a)
hull No. 15121034 under the construction at Guangzhou Shipyard International Company Limited;
b)
hull No. 15121035 under the construction at Guangzhou Shipyard International Company Limited;
c)
hull No. 15121036 under the construction at Guangzhou Shipyard International Company Limited; and
d)
hull No. 15121037 under the construction at Guangzhou Shipyard International Company Limited
pursuant to the Building Contracts.
"Security Parties" means all parties to this Supplemental Agreement other than the Finance Parties and "Security Party" means any one of them.
Page 4


"Upfront Fee" means the non-refundable upfront fee of 0.90% of the New Tranche.
1.2
All words and expressions defined in the Amended and Restated Loan Agreement shall have the same meaning when used in this Supplemental Agreement as if it is set out in full.
1.3
All obligations, representations, warranties, covenants and undertakings of the Security Parties under or pursuant to this Supplemental Agreement shall, unless otherwise expressly provided, be entered into, made or given by them jointly and severally.
1.4
Any reference to an amount outstanding under any of the Existing Tranches are references to the amounts outstanding on 14 September 2017 and do not account for the instalments paid after such date.
2
Conditions to the Effective Date
As conditions to the effectiveness of Clause 3, the Security Parties shall deliver or cause to be delivered to or to the order of the Agent the following documents and evidence no later than 60 days after the date of this Supplemental Agreement:
2.1
Corporate Documentation
2.1.1
a copy, certified by the relevant Security Party as true, complete, accurate and unamended, of the constitutional documents of that Security Party;
2.1.2
a copy, certified by the relevant Security Party as true, complete and accurate and neither amended nor revoked, of a resolution of the directors and (if applicable) a resolution of the shareholders of that Security Party (together, where appropriate, with signed waivers of notice of any directors' or (if applicable) shareholders' meetings) approving, and authorising or ratifying the execution of, this Supplemental Agreement and any document to be executed by that Security Party pursuant to this Supplemental Agreement;
2.1.3
a power of attorney of each Security Party under which this Supplemental Agreement and any documents required pursuant to it are to be executed by that Security Party;
2.1.4
an original certificate of a duly authorised officer of each Security Party:
(a)
certifying that each copy document relating to it specified in Clauses 2.1.1 to 2.1.3 is correct, complete and in full force and effect;
(b)
setting out the names of the directors, officers and shareholders of that Security Party and the proportion of shares held by each shareholder; and
(c)
confirming that borrowing or guaranteeing or securing, as appropriate, the Loan would not cause any borrowing, guarantee, security or similar limit binding on that Security Party to be exceeded.
Page 5


2.2
Finance Documents
2.2.1
This Supplemental Agreement;
2.2.2
the New Security Documents duly executed and perfected, together with all documents required ancillary to each New Security Document;
2.2.3
transcripts from the Singapore ship registry and transcripts from relevant business authorities showing the registration the New Mortgages over the Existing Vessels and the amendments to the existing Security Documents; and
2.2.4
an accession letter from Owner C in a form acceptable to the Agent, whereby Owner C accedes to this Supplemental Agreement and the Amended and Restated Loan Agreement as Owner and Guarantor.
2.3
Vessel Documents
2.3.1
The Building Contracts.
2.4
Legal Opinions
2.4.1
the following legal opinions, each addressed to the Agent, the Security Agent and the Lenders and capable of being relied upon by any persons who become Lenders pursuant to the primary syndication of the Loan or confirmation satisfactory to the Agent that such opinions will be given:
(a)
a legal opinion of Kromann Reumert as to Danish law,
(b)
a legal opinion of Kromann Reumert as to English law, and
(c)
a legal opinion of Allen & Gledhill as to Singapore law,
each substantially in the form distributed to the Lenders prior to the Effective Date.
2.5
Other documents and evidence
2.5.1
Evidence that the Upfront Fee has been paid.
2.5.2
Confirmation that no event or circumstance has occurred which would or is reasonably likely to affect the ability of any Security Party to perform its payment obligations under any Finance Document as they fall due.
2.5.3
Such information and documentation as the Agent may deem to be necessary or advisable in order to comply with applicable "know your customer" rules and regulations (including any law/or regulation regarding money laundering and/or financing of terrorist activities) and including, without limitation, disclosure of the corporate structure of the Security Parties, disclosure of the addresses and civil registration numbers, if applicable, of, and copies of passports of, all persons signing any of this Supplemental Agreement or the New Security Documents for and on behalf of the each of the Security Parties, together with a duly completed form
Page 6


entitled "Documentation Requests" from each person acting as agent or attorney-in-fact of any party.
2.5.4
A copy of any other Authorisation or other document, opinion or assurance which the Agent, acting reasonably, considers to be necessary or desirable (if it has notified the Borrowers accordingly) in connection with the entry into and performance of the transactions contemplated by this Supplemental Agreement or any documents required pursuant to it or for the validity and enforceability of this Supplemental Agreement or any documents required pursuant to it.
3
Amendments to the Loan Agreement on the Effective Date
3.1
With effect from the Effective Date the Loan Agreement shall be amended and restated in the form set out in Schedule 3 (Amended and Restated Loan Agreement) (the "Amended and Restated Loan Agreement") and each party shall be bound by the terms thereof.
3.2
In the event that the Effective Date does not occur within 60 days after the date of this Supplemental Agreement Clause 3.1 shall not apply provided, however, that the Borrower shall in such event on the date falling 60 days after the date of this Supplemental Agreement pay to the Agent a Commitment Fee calculated in accordance with clause 11.1 (Commitment Fee) of the Amended and Restated Loan Agreement.
3.3
The Borrower shall pay the Upfront Fee to the Agent no later than 22 September 2017.
4
Representations and warranties
4.1
Each of the representations and warranties contained in clause 19 of the Loan Agreement:
4.1.1
shall be deemed repeated by the Borrowers and Guarantors respectively at the date of this Supplemental Agreement; and
4.1.2
shall be deemed made at the Effective Date by each Security Party,
by reference to the facts and circumstances then pertaining, as if references to the Finance Documents included this Supplemental Agreement.
5
Confirmation and undertaking
5.1
Each of the Security Parties confirms that all of its respective obligations under or pursuant to each of the Finance Documents (other than the Loan Agreement) to which it is a party remain in full force and effect, despite the amendments to the Loan Agreement made in this Supplemental Agreement, as if all references in any of the Finance Documents to the Loan Agreement were references to the Loan Agreement as amended and restated by this Supplemental Agreement.
5.2
The definition of any term defined in any of the Finance Documents shall, to the extent necessary, be modified to reflect the amendments to the Loan Agreement made in or pursuant to this Supplemental Agreement.
Page 7


5.3
Each of the Security Parties confirms and agrees that the security created by each of the Security Parties under the Security Documents shall extend to and secure the liabilities and obligations of the Security Parties under the Loan Agreement as amended by this Supplemental Agreement.
6
Miscellaneous
All documents and evidence delivered to the Agent pursuant to this Supplemental Agreement shall:
6.1
be in form and substance reasonably acceptable to the Agent;
6.2
be accompanied, if required by the Agent, by translations into the English language, certified in a manner acceptable to the Agent; and
6.3
if required for registration purposes or by law, be certified, notarised, legalised or attested in a manner acceptable to the Agent.
7
Communications, counterparts, governing law and enforcement
The provisions of clauses 31 (Notices), 38 (Counterparts), 40 (Governing Law) and 41 (Enforcement) of the Loan Agreement shall apply to this Supplemental Agreement as if they were set out in full and as if references to the Loan Agreement were references to this Supplemental Agreement.
Page 8


Schedule 1
The Original Lenders

Name of Original Lender
Danmarks Skibskredit A/S

Page 9


Schedule 2
Effective Date Confirmation
To:
TORM A/S
TORM PLC
VesselCo 11 Pte. Ltd.
VesselCo 8 Pte. Ltd.
VesselCo 5 K/S
We, Danmarks Skibskredit A/S, refer to the supplemental agreement dated                                       2017 (the "Supplemental Agreement") relating to a secured loan agreement dated 10 April 2014, as supplemented by a side letter dated 10 April 2014 and as amended pursuant to amendment letters dated 30 April 2014, 12 June 2014, 18 June 2014, 29 May 2015 and 19 February 2016 and as amended and restated pursuant to a first supplemental agreement dated 30 September 2015, a second supplemental agreement dated 30 December 2015 and a third supplemental agreement dated 29 November 2016 (the "Loan Agreement") made between you, the banks listed in it as the original lenders, ourselves as the agent and ourselves as the security agent.
We hereby confirm that all conditions precedent referred to in clauses [2.1] to [2.5] of the Supplemental Agreement have been satisfied.  In accordance with clauses 1.1 and 3 of the Supplemental Agreement the Effective Date (as defined in the Supplemental Agreement) is [    :     ][a.m][p.m.][CET][GMT] on the date of this confirmation and the amendments to the Loan Agreement are now effective.
Dated                                                2017
   
Signed:
   
 
For and on behalf of
Danmarks Skibskredit A/S
(as agent)
 

Page 10


Schedule 3
Amended and Restated Loan Agreement
Page 11


In witness of which the parties to this Supplemental Agreement have executed this Supplemental Agreement as a deed the day and year first before written.
As Borrower A, Gurantor B, Manager and Bareboat Charterer
TORM A/S
(CVR number 22460218)
acting by Christian Gorrissen
the duly authorised
in the presence of:
Witness signature:  /s/ Christian Mens
Name:
Address:
 
)
)
)
)
)
)
)
 
/s/ Christian Gorrissen
 
 
 
 
Christian Mens
Vice President
Head of Group Treasury
TORM A/S
Tuborg Havnevej 18
2900 Hellerup, Denmark

As Borrower B, Guarantor A and HeadBareboat Charterer TORM PLC
company number 09818726
acting by Jacob Meldgaard
the duly authorised
in the presence of:
Witness signature:  /s/ Christian Mens
Name:
Address:
)
)
)
)
)
)
)
 
/s/ Jacob Meldgaard
 
 
 
Christian Mens
Vice President
Head of Group Treasury
TORM A/S
Tuborg Havnevej 18
2900 Hellerup, Denmark

Page 12


As Owner A and Guarantor
Signed sealed and delivered
as a Deed
by VesselCo 8 Pte. Ltd
acting by Christian Gorrissen
the duly authorised
attorney
 
in the presence of:
Witness signature:  /s/ Christian Mens
Name:
Address:
)
)
)
)
)
)
)
 
 
/s/ Christian Gorrissen
 
 
 
 
 
Christian Mens
Vice President
Head of Group Treasury
TORM A/S
Tuborg Havnevej 18
2900 Hellerup, Denmark


As Owner B and Guarantor
Signed sealed and delivered
as a Deed
by VesselCo 11 Pte. Ltd
acting by Christian Gorrissen
the duly authorised
attorney
 
in the presence of:
Witness signature:  /s/ Christian Mens
Name:
Address:
)
)
)
)
)
)
)
 
 
/s/ Christian Gorrissen
 
 
 
 
 
Christian Mens
Vice President
Head of Group Treasury
TORM A/S
Tuborg Havnevej 18
2900 Hellerup, Denmark

Page 13


As Original Lenders, Agent and Security Agent
Danmarks Skibskredit A/S
(CVR no. 27492649)
acting by
the duly authorised
in the presence of:
Witness signature:  …………………
Name:
Address:
)
)
)
)
)
)
)
 
/s/ Peter Hauskov
Peter Hauskov
 
/s/ Per Schnack
Per Schnack
 
 

Page 14

 

EXECUTION VERSION
 
SECURED LOAN AGREEMENT
 
Dated 10 April 2014 as supplemented by a side letter dated 10 April 2014 and as amended pursuant to amendment letters dated 30 April 2014, 12 June 2014, 18 June 2014 , 29 May 2015 and 19 February 2016 as amended and restated by a first Supplemental agreement dated 30 September 2015 and a second supplemental agreement dated 30 December 2015, a third supplemental agreement dated 29 November 2016 and a fourth supplemental agreement dated 20 September 2017



(1)
 
TORM A/S
 
(as Borrowers)
 
(2)
TORM PLC
 
TORM A/S
 
VesselCo 8 Pte. Ltd
 
VesselCo 11 Pte. Ltd
VesselCo 5 K/S
 
(as Guarantors)
 
(3)
The Financial Institutions
 
listed in Schedule 1
 
(as Original Lenders)
 
   
(4)
Danmarks Skibskredit A/S
 
(as Agent)
 
(5)
Danmarks Skibskredit A/S
 
(as Security Agent)



Contents
 
Page
1
Definitions and Interpretation
2
2
The Loan
30
3
Purpose
30
4
Conditions of Utilisation
30
5
Advance
33
6
Repayment
35
7
Illegality, Prepayment and Cancellation
35
8
Interest
40
9
Interest Periods
40
10
Changes to the Calculation of Interest
41
11
Fees
42
12
Tax Gross Up and Indemnities
43
13
Increased Costs
48
14
Other Indemnities
49
15
Mitigation by the Lenders
52
16
Costs and Expenses
52
17
Security Documents and Application of Moneys
54
18
Guarantee and Indemnity
57
19
Representations
63
20
Information Undertakings
68
21
Financial Covenants
71
22
General Undertakings
72
23
Events of Default
81
24
Changes to the Lenders
88
25
Changes to the Security Parties
93
26
Role of the Agent and the Security Agent
94
27
Conduct of Business by the Finance Parties
105
28
Sharing among the Finance Parties
105


   
29
Payment Mechanics
108
30
Set-Off
111
31
Notices
112
32
Calculations and Certificates
113
33
Partial Invalidity
114
34
Remedies and Waivers
114
35
Amendments and Waivers
114
36
Confidentiality
119
37
Disclosure of Lender Details by Agent
123
38
Counterparts
125
39
Joint and Several Liability
125
40
Governing Law
127
41
Enforcement
127
Schedule 1
The Original Lenders
128
Schedule 2
Part I Conditions Precedent to Execution of this Agreement
129
 
Part III Conditions Subsequent
134
Part IV
Conditions Precedent to Re-flagging under an Approved Flag
135
Schedule 3
Drawdown Request
136
Schedule 4
Form of Transfer Certificate
137
Schedule 5
Form of Assignment Agreement
140
Schedule 6
Form of Compliance Certificate
143
Schedule 7
Vessels/Owners/Flags/Current Managers
144
Schedule 8
Supplementary Agreement
146
Schedule 9
Repayment Profile / Drawings
147
Schedule 10
Approved Brokers
148



Loan Agreement
Dated 10 April 2014 as supplemented by a side letter dated 10 April 2014 and as amended pursuant to amendment letters dated 30 April 2014, 12 June 2014, 18 June 2014, 29 May 2015 and 19 February 2016 as amended and restated by a first supplemental agreement dated 30 September 2015 and a second supplemental agreement dated 30 December 2015, a third supplemental agreement dated 29 November 2016 and a fourth supplemental agreement dated 20 September 2017
Between:
(1)
TORM A/S a company incorporated under the laws of Denmark with its registered office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark with CVR number 22460218 (in that capacity, "Borrower A"); and
(2)
TORM PLC a company incorporated under the laws of England and Wales with company number 09818726 with its registered office at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom (in that capacity, "Borrower B" and together with Borrower A, the "Borrowers");
(3)
TORM PLC a company incorporated under the laws of England and Wales with company number 09818726 with its registered office at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom (in that capacity, "Guarantor A");
(4)
TORM A/S a company incorporated under the laws of Denmark with its registered office at Tuborg Havnevej 18, DK-2900 Hellerup, Denmark with CVR number 22460218 (in that capacity, "Guarantor B" and together with Guarantor A and the Owners, the "Guarantors");
(5)
VesselCo 8 Pte. Ltd ("Owner A"), VesselCo 11 Pte. Ltd ("Owner B") each being a company incorporated under the laws of Singapore with its registered office at 6 Battery Road #27-02 Singapore 049909;
(6)
VesselCo 5 K/S a limited partnership organised under the laws of Denmark with its registered office at c/o TORM AS/, Tuborg Havnevej 18, DK-2900 Hellerup, Denmark, and CVR number 38911538 ("Owner C" and together with Owner A and Owner B,  the "Owners");
(7)
The Financial Institutions listed in Schedule 1 (The Original Lenders), each acting through its Facility Office (together the "Original Lenders" and each an "Original Lender"); and
(8)
Danmarks Skibskredit A/S, acting as agent through its office at Sankt Annae Plads 3, DK-1250 Copenhagen K, Denmark and with CVR number 27492649 (in that capacity, the "Agent"); and
(9)
Danmarks Skibskredit A/S, acting as security agent through its office at Sankt Annae Plads 3, DK-1250. Copenhagen K, Denmark and with CVR number 27492649 (in that capacity, the "Security Agent").
Preliminary
Page 1


Each of the Original Lenders has agreed to advance to the relevant Borrower its Commitment (aggregating, with all the other Commitments up to USD 246,533,763.87) as set out in Schedule 1 and Schedule 9 to assist each Owner with the financing of the relevant Vessels.
It is agreed as follows:
Section 1          Interpretation
1
DEFINITIONS AND INTERPRETATION
1.1
Definitions   In this Agreement:
"Acceptable Bank" means Nordea Bank AB, Danske Bank A/S or any of their Affiliates.
"Administration" has the meaning given to it in paragraph 1.1.3 of the ISM Code.
"Affiliate" means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
"Annex VI" means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).
"Appropriate Amount" means in relation to a Vessel an amount equal to the product of
(a)
the then total outstanding principal amount of the Loan (less any amount standing to the credit of the Reserve Account) multiplied by
(b)
the fraction, the numerator of which is the Market Value (as determined by the most recent valuation provided to the Agent pursuant to Clause 20.2.3) of the relevant Vessel and the denominator of which is the aggregate Market Value (as determined by the most recent valuation provided to the Agent pursuant to Clause 20.2.3) of all Vessels (including the relevant Vessel) and the value of any additional security for the time being provided to the Security Agent under Clause 17.5 (Additional Security).
"Approved Classification Society" means each of American Bureau of Shipping, Bureau Veritas, DNV- GL, Lloyds Register, Nippon Kaiji, Polish Register of Shipping and Registro Italiano Navale.
"Approved Flag" means Singapore, Denmark, Norway, the United Kingdom, Isle of Man, Bahamas, Bermuda, Panama, Malta, Marshall Islands, Cyprus, Hong Kong and Liberia.
"Approved Shipbroker" means each of the shipbrokers listed in Schedule 10 and any other shipbrokers acceptable to the Security Agent (acting reasonably) at the request of the Borrowers.
"Assignments" means all the forms of assignment referred to in Clause 17.1.2 (Security Documents).
Page 2


"Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.
"Availability Period" means for the part of the New Tranche available to finance a New Vessel as set out in Clause 2.2, a period commencing on the date of this Agreement and ending on the earlier of (i) the date falling 7 Business Days after the delivery of such New Vessel under the relevant Building Contract and (ii) 30 April 2020 or such later date as the Lenders may agree.
"Bareboat Charter" means the bareboat charter contract between an Owner and the Bareboat Charterer relating to a Vessel, in form and substance reasonably satisfactory to the Agent.
"Bareboat Charterer" means TORM A/S.
"Break Funding Costs" means, in relation to DSF, the present value as per the relevant prepayment or cancellation date (using the applicable zero coupon swap rate on the relevant prepayment or cancellation date as the discount rate, and the relevant Interest Payment Dates under the remaining relevant Interest Periods at the relevant point in time to discount the below cash flows) of any positive amount constituting:
(a)
in respect of the Existing Tranche A,
(i)
DSF's cost of funding its participation of the Loan or any relevant part thereof as of the date of the signed facility offer, being 26 February 2014, in dollars based on a spread above LIBOR, being 0.57 per cent per annum, calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount, tenor and repayment profile of the prepaid or cancelled part of the Loan;
less:
(ii)
DSF's cost of funding its participation of such prepaid or cancelled part of the Loan at the time of prepayment or cancellation on the basis of an identical tenor and repayment profile as that of the prepaid or cancelled part of the Loan as determined by DSF in its sole discretion in dollars based on a spread above LIBOR calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount and the repayment profile of the prepaid or cancelled part of the Loan; and
(b)
in respect of the Existing Tranche B,
(i)
DSF's cost of funding its participation of the Loan or any relevant part thereof, in dollars based on a spread above LIBOR, being 1.03 per cent per annum, calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount, tenor and
Page 3

repayment profile of the prepaid or cancelled part of the Loan;
less:
(ii)
DSF's cost of funding its participation of such prepaid or cancelled part of the Loan at the time of prepayment or cancellation on the basis of an identical tenor and repayment profile as that of the prepaid or cancelled part of the Loan as determined by DSF in its sole discretion in dollars based on a spread above LIBOR calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount and the repayment profile of the prepaid or cancelled part of the Loan;
(c)
in respect of the Existing Tranche C,
(i)
DSF's cost of funding its participation of the Loan or any relevant part thereof, in dollars based on a spread above LIBOR, being 1.08 per cent per annum, calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount, tenor and repayment profile of the prepaid or cancelled part of the Loan;
less:
(ii)
DSF's cost of funding its participation of such prepaid or cancelled part of the Loan at the time of prepayment or cancellation on the basis of an identical tenor and repayment profile as that of the prepaid or cancelled part of the Loan as determined by DSF in its sole discretion in dollars based on a spread above LIBOR calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount and the repayment profile of the prepaid or cancelled part of the Loan; and
(d)
in respect of the New Tranche,
(i)
DSF's cost of funding its participation of the Loan or any relevant part thereof, in dollars based on a spread above LIBOR, being 1.12 per cent per annum, calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount, tenor and repayment profile of the prepaid or cancelled part of the Loan;
less:
(ii)
DSF's cost of funding its participation of such prepaid or cancelled part of the Loan at the time of prepayment or cancellation on the basis of an identical tenor and
Page 4

repayment profile as that of the prepaid or cancelled part of the Loan as determined by DSF in its sole discretion in dollars based on a spread above LIBOR calculated for the remaining Interest Periods for the relevant part of the Loan taking into account the amount and the repayment profile of the prepaid or cancelled part of the Loan.
"Break Gains" means all gains realised by a Lender as a result of its receiving any prepayment of all or any part of a Tranche pursuant to Clause 7 (Illegality, Prepayment and Cancellation) on a day other than the last day of an Interest Period for the applicable Tranche or relevant part of that Tranche.
"Building Contracts" means the 4 shipbuilding contracts each dated 24 July 2017 and entered into between Borrower A as buyer and China Shipbuilding Trading Company Limited and Guangzhou Shipyard International Company Limited as sellers, each for the construction of a New Vessel.
"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in Denmark, New York and London.
"Cash Equivalents" means at any time:
(a)
certificates of deposit maturing within one year after the relevant date of calculation and issued by an Acceptable Bank;
(b)
any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State or any other country having a credit rating of Baa2 or higher by Standard & Poor's Rating Services or BBB or higher by Moody's Investors Service Limited or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security;
(c)
commercial paper not convertible or exchangeable to any other security:
(i)
for which a recognised trading market exists;
(ii)
issued by an issuer incorporated in the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State or any other country having a credit rating of Baa2 or higher by Standard & Poor's Rating Services or BBB or higher by Moody's Investors Service Limited;
(iii)
which matures within one year after the relevant date of calculation; and
(iv)
which has a credit rating of either Baa2 or higher by S&P or BBB or higher by Moody's, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;
Page 5


(d)
any investment in money market funds which (i) has a credit rating of either Baa2 or higher by S&P or BBB or higher by Moody's, (ii) which invest substantially all their assets in securities of the types described in paragraphs (a) to (c) above and (iii) can be turned into cash on not more than five (5) days' notice; or
(e)
any other debt security approved by the Agent (on behalf of the Majority Lenders),
in each case, to which any member of the Group is alone (or together with other members of the Group) beneficially entitled at that time and which is not issued or guaranteed by any member of the Group or subject to any Encumbrance created by or pursuant to any of the Finance Documents.
"Change of Control" means either:
(a)
any person or group of persons acting in concert gains direct or indirect control of Borrower B where:
(i)
"control" of Borrower B means:
(A)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(1)
cast, or control the casting of, more than 50 per cent (50%). of the maximum number of votes that might be cast at a general meeting of Borrower B; or
(2)
appoint or remove the chairman of the board of directors or the majority of the directors or other equivalent officers of Borrower B; or
(3)
give directions with respect to the operating and financial policies of Borrower B with which the directors or other equivalent officers of Borrower B are obliged to comply; and/or
(B)
the holding beneficially of more than 50 per cent. (50%) of the issued share capital of Borrower B (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and
(ii)
"acting in concert" means, a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition directly or indirectly of shares in Borrower B, either directly or indirectly, to obtain or consolidate control of Borrower B, provided that for the avoidance of doubt no action by the Lenders (in any capacity) shall result in those Lenders being deemed to be acting in concert for this purpose; or
Page 6


(b)
the Sponsor, directly or indirectly, either:
(i)
ceases to be able through its appointees to Borrower B's board of directors (including the chairman (who shall have the casting vote)) to control the board of directors of Borrower B; or
(ii)
ceases to own or control at least 33.34 per cent. (33.34%) of the maximum number of votes that might be cast at a general meeting of Borrower B.
"Charged Property" means all of the assets of the Security Parties which from time to time are, or are expressed to be, the subject of the Security Documents.
"Chargor A" means TORM A/S in its capacity as chargor of Owner A.
"Chargor B" means TORM PLC in its capacity as chargor of Owner B.
"Chargor C" means DK VESSEL HOLDCO K/S acting in its capacity as chargor of the limited partnership shares in Owner C and Borrower A in its capacity as chargor of the shares in VesselCo E ApS, the general partner of Owner C.
"Chargor" means each of Chargor A, Chargor B and Chargor C.
"Charters" means together the Bareboat Charters and the Time Charters and "Charter" means any one of them.
"Charterer" means the party to any Charter, other than an Owner.
"Code" means the US Internal Revenue Code of 1986.
"Commercial Manager" means, in relation to the commercial management of a Vessel:
(a)
the company whose name is set opposite the name of that Vessel under "Commercial Manager" in Schedule 7; or
(b)
such other commercial manager of any Vessel nominated by the relevant Owner from time to time, subject to the Agent's written consent (such consent not to be unreasonably withheld).
"Commitment" means:
(a)
in relation to an Original Lender, the amount set opposite its name under the heading "Commitment" in Schedule 1 (The Original Lenders) and the amount of any other Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount of any Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
"Compliance Certificate" means a certificate substantially in the form set out in Schedule 6 (Form of Compliance Certificate).
Page 7


"Confidential Information" means all information relating to any Security Party, the Finance Documents or the Loan of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or the Loan from either:
(a)
any Security Party, or any of its advisers; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any Security Party, or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 36 (Confidentiality); or
(ii)
is identified in writing at the time of delivery as non-confidential by any Security Party, or any of its advisers; or
(iii)
is known by that Finance Party before the date the information is disclosed to it in accordance with (a) or (b) or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with any Security Party and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
"Confidentiality Undertaking" means a confidentiality undertaking substantially in a recommended form of the Loan Market Association at the relevant time.
"Debt Purchase Transaction" means, in relation to a person, a transaction where such person:
(a)
purchases by way of assignment or transfer;
(b)
enters into any sub-participation in respect of; or
(c)
enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of;
any Commitment or amount outstanding under this Agreement.
"Default" means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any reasonable determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
"Defaulting Lender" means any Lender:
(a)
which has failed to make its participation in a Drawing available (or has notified the Agent or the Borrowers (which have notified the Agent) that it will not make its participation in a Drawing available) by the Drawdown Date of that Drawing in accordance with Clause 5.3 (Lenders' participation); or
Page 8


(b)
which has otherwise rescinded or repudiated a Finance Document; or
(c)
with respect to which an Insolvency Event has occurred and is continuing,
unless, in the case of (a):
(i)
its failure to pay is caused by:
(A)
administrative or technical error; or
(B)
a Disruption Event; and
payment is made within three Business Days of its due date; or
(ii)
the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.
"Delegate" means any delegate, agent, attorney or co-trustee appointed by the Security Agent.
"Delivery Date" means the date on which a New Vessel is delivered to Owner C pursuant to the relevant Building Contract.
"Disruption Event" means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Loan (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
"DOC" means, in relation to the ISM Company, a valid Document of Compliance issued for the ISM Company by the Administration under paragraph 13.2 of the ISM Code.
"Drawdown Date" means the date on which the relevant Drawing is advanced under Clause 5 (Advance).
"Drawdown Request" means a notice substantially in the form set out in Schedule 3 (Drawdown Request).
Page 9


"Drawing" means any part of the Loan advanced or to be advanced pursuant to a Drawdown Request or, where the context permits, that part of the Loan advanced and for the time being outstanding in respect of a Vessel and "Drawings" means more than one of them.
"DSF" means Danmarks Skibskredit A/S with CVR number 27492649 in its capacity as Lender.
"Earnings" means all hires, freights, pool income and other sums payable to or for the account of an Owner or the Bareboat Charterer in respect of a Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of a Vessel but excluding amounts payable by the Bareboat Charterer to an Owner pursuant to a Bareboat Charter.
"Encumbrance" means a mortgage, charge, assignment, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
"Environmental Approval" means any present or future permit, ruling, variance or other Authorisation required under Environmental Laws.
"Environmental Claim" means any claim, proceeding, formal notice or investigation by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose,  "claim" includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
"Environmental Incident" means:
(a)
any release, emission, spill or discharge into a Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from a Vessel; or
(b)
any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or
Page 10


(c)
any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Security Party and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval.
"Environmental Law" means any present or future law or regulation relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
"Environmentally Sensitive Material" means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
"Equity" means, on any date, the value of the aggregate capital and reserves of the Group (on a consolidated basis) determined in accordance with GAAP and adjusted to reflect the fair market value of the Fleet Vessels (including the Market Value of each Vessel) based on the valuations to be delivered to the Agent pursuant to Clause 20.2.1.
"Equity Ratio" means the ratio of the Group's Equity to Total Assets.
"Event of Default" means any event or circumstance specified as such in Clause 23 (Events of Default).
"Existing Tranche" means Existing Tranche A, Existing Tranche B and Existing Tranche C together.
"Existing Tranche A" means the tranche drawn to finance Vessel 1 to Vessel 13 inclusive (as set out in Schedule 7), currently in an amount of seventy nine million three hundred and fifty five thousand six hundred and thirty six 35/100 Dollars (US$79,355,636.35).
"Existing Tranche B" means the tranche drawn to finance Vessel 14 to Vessel 16 inclusive (as set out in Schedule 7), currently in an amount of fifty eight million five hundred and fifty six thousand and sixty five 26/100 Dollars (US$58,556,065.26).
"Existing Tranche C" means the tranche drawn to finance Vessel 17 and Vessel 18 (as set out in Schedule 7) currently in an amount of twenty eight million twenty two thousand and sixty two 26/100 Dollars (US$28,022,062.26).
"Existing Vessels" means Vessel 2, Vessel 3, Vessel 4, Vessel 5, Vessel 7, Vessel 8, Vessel 9, Vessel 11, Vessel 12, Vessel 14, Vessel 15, Vessel 16, Vessel 17 and Vessel 18 as set out in Schedule 7.
"Facility Office" means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less
Page 11

than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement.
"Facility Period" means the period beginning on the date of this Agreement and ending on the date when the whole of the Indebtedness has been paid in full and the Security Parties have ceased to be under any further actual or contingent liability to the Finance Parties under or in connection with the Finance Documents.
"FATCA" means:
(a)
sections 1471 to 1474 of the Code or any associated regulations or other official guidance;
(b)
any treaty, law, regulation or other official guidance enacted in any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of (a); or
(c)
any agreement pursuant to the implementation of (a) or (b) with the US Internal Revenue Service, the US government or any governmental or taxation authority in any other jurisdiction.
"FATCA Application Date" means:
(a)
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 July 2014;
(b)
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2017; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within (a) or (b), 1 January 2017,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
"FATCA Deduction" means a deduction or withholding from a payment under a Finance Document required by FATCA.
"FATCA Exempt Party" means a Party that is entitled to receive payments free from any FATCA Deduction.
"FATCA FFI" means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if any Finance Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction.
"Finance Documents" means this Agreement, the Security Documents, the Supplemental Agreement and any other document designated as such by the Agent and the Borrowers and "Finance Document" means any one of them.
Page 12


"Finance Parties" means the Agent, the Security Agent, and the Lenders and "Finance Party" means any one of them.
"Financial Indebtedness" means any indebtedness for or in respect of:
(a)
moneys borrowed and debit balances at banks or other financial institutions;
(b)
any acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);
(c)
any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)
the amount of any liability in respect of any finance or capital lease;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)
any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);
(g)
any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not a Security Party which liability would fall within one of the other sections of this definition or (ii) any liabilities of any Security Party relating to any post-retirement benefit scheme;
(h)
any amount raised by the issue of shares which are redeemable (other than at the option of the issuer) before the Termination Date or are otherwise classified as borrowings under GAAP;
(i)
any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 60 days after the date of supply;
(j)
any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under GAAP; and
(k)
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (j).
"Fleet Vessels" means each Vessel and each other vessel owned by any member of the Group.
"Free Liquidity" means the aggregate of unencumbered (other than pursuant to a Security Document) cash and Cash Equivalents to which any member of the Group
Page 13

has free, immediate and direct access without netting and set-off arrangements (other than with the Lenders) and which (for the avoidance of doubt) shall not include any additional security given or cash paid to the Security Agent pursuant to Clause 17.5 or any sums standing to the credit of the Reserve Account.
"GAAP" means International Financial Reporting Standards (as adopted by the European Union) and related interpretations as amended, supplemented, issued or adopted from time to time by the International Accounting Standards Board to the extent applicable to the relevant financial statements in respect of Borrower B and otherwise generally accepted accounting principles of the jurisdiction of incorporation of such party consistently applied.
"Group" means Borrower B and each of its Subsidiaries for the time being.
"Group Debt" means, on any date, the aggregate amount of all obligations of all members of the Group for or in respect of Financial Indebtedness but excluding any Inter-company Indebtedness.
"Guarantee" means the joint and several guarantee and indemnity of the Guarantors contained in Clause 18 (Guarantee and Indemnity) and referred to in Clause 17.1.3 (Security Documents).
"Holding Company" means, in relation to a person, any other person in respect of which it is a Subsidiary.
"IAPPC" means a valid international air pollution prevention certificate for a Vessel issued under Annex VI.
"Impaired Agent" means the Agent at any time when:
(a)
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
(b)
the Agent otherwise rescinds or repudiates a Finance Document;
(c)
(if the Agent is also a Lender) it is a Defaulting Lender under (a) or (b) of the definition of "Defaulting Lender"; or
(d)
an Insolvency Event has occurred and is continuing with respect to the Agent;
unless, in the case of (a):
(i)
its failure to pay is caused by:
(A)
administrative or technical error; or
(B)
a Disruption Event; and
payment is made within three Business Days of its due date; or
(ii)
the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.
Page 14


"Indebtedness" means the aggregate from time to time of: the amount of the Loan outstanding; all accrued and unpaid interest on the Loan; all Interest Break Costs and Break Funding Costs and all other sums of any nature (together with all accrued and unpaid interest on any of those sums) payable to any of the Finance Parties under all or any of the Finance Documents.
"Insolvency Event" in relation to an entity means that the entity:
(a)
is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b)
becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;
(c)
makes a general assignment, arrangement or composition with or for the benefit of its creditors;
(d)
institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;
(e)
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in (d) and:
(i)
results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or
(ii)
is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;
(f)
has exercised in respect of it one or more of the stabilisation powers pursuant to Part 1 of the Banking Act 2009 and/or has instituted against it a bank insolvency proceeding pursuant to Part 2 of the Banking Act 2009 or a bank administration proceeding pursuant to Part 3 of the Banking Act 2009;
(g)
has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(h)
seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets (other than, for so long as it is required by law or regulation not to be publicly disclosed, any
Page 15

 such appointment which is to be made, or is made, by a person or entity described in (d));
(i)
has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;
(j)
causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in (a) to (i); or
takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.
"Insurances" means all policies and contracts of insurance (including all entries in protection and indemnity or war risks associations) required by the terms of the Finance Documents and which are from time to time taken out or entered into in respect of or in connection with a Vessel or her increased value and (where the context permits) all benefits under such contracts and policies, including all claims of any nature and returns of premium.
"Interest Break Costs" means the amount (if any) by which:
(a)
the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Loan or an Unpaid Sum to the last day of the current Interest Period in respect of the Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;
exceeds:
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
"Interest Payment Date" means each date for the payment of interest in accordance with Clause 8.2 (Payment of interest).
"Interest Period" means each period determined in accordance with Clause 9 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 8.3 (Default interest).
"Inter-company Indebtedness" means any obligation related to Financial Indebtedness owed by one Security Party to another Security Party.
"Inter-company Indebtedness Assignment" means any deed of assignment and subordination in respect of Inter-company Indebtedness entered into pursuant to
Page 16

Clause 22.30 and referred to in Clause 17.1.7 (Security Documents) and to be in a form acceptable to the Agent.
"Interpolated Screen Rate" means, in relation to LIBOR, the rate which results from interpolating on a linear basis between:
(a)
the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the relevant Interest Period; and
(b)
the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the relevant Interest Period,
each as of 11.00 a.m. on the Quotation Day for dollars.
"ISM Code" means the International Management Code for the Safe Operation of Ships and for Pollution Prevention.
"ISM Company" means, at any given time, the company responsible for a Vessel's compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.
"ISPS Code" means the International Ship and Port Facility Security Code.
"ISSC" means a valid international ship security certificate for a Vessel issued under the ISPS Code.
"Joint Venture" means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.
"Legal Opinion" means any legal opinion delivered to the Agent under Clause 4.1 (Initial conditions precedent) or Clause 4.3 (Conditions subsequent) or under any other Finance Document
"Legal Reservations" means:
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;
(c)
similar principles, rights and defences under the laws of any Relevant Jurisdiction; and
(d)
any other matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.
"Lender" means:
(a)
any Original Lender; and
Page 17


(b)
any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 24 (Changes to the Lenders),
which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.
"LIBOR" means:
(a)
the applicable Screen Rate; or
(b)
(if no Screen Rate is available for the relevant Interest Period) the Interpolated Screen Rate; or
(c)
(if (i) no Screen Rate is available for the currency of the Loan or (ii) no Screen Rate is available for the relevant Interest Period and it is not possible to calculate the Interpolated Screen Rate) the Reference Bank Rate,
as of 11.00 a.m. on the Quotation Day for dollars and for a period equal in length to the relevant Interest Period and, if that rate is less than zero, LIBOR shall be deemed to be zero.
"Loan" means the aggregate amount advanced or to be advanced by the Lenders to each Borrower under Clause 2 (The Loan) and being the aggregate of the Existing Tranche and the New Tranche or, where the context permits, the principal amount advanced and for the time being outstanding.
"LTV Coverage" has the meaning set out in Clause 17.5.
"Majority Lenders" means a Lender or Lenders whose Commitments aggregate more than 662/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 662/3% of the Total Commitments immediately prior to the reduction).
"Management Agreements" means:
(a)
the agreements from time to time in force for the commercial management of the relevant Vessels between the relevant Owner and the relevant Commercial Manager; and
(b)
the agreements from time to time in force for the technical management of the relevant Vessels between the relevant Owner and the relevant Technical Manager.
"Managers" means:
(a)
in relation to the commercial management of a Vessel, the Commercial Manager; and
(b)
in relation to the technical management of a Vessel, the Technical Manager.
"Managers' Undertakings" means the written undertakings of the Managers (other than a Manager within the Group) whereby (to the extent that the relevant Manager is prepared so to agree following the Owner's reasonable efforts), while they are appointed by an Owner:
Page 18


(a)
they will remain the commercial or technical managers of the Vessels (as the case may be); and
(b)
they will not, without the prior written consent of the Agent, subcontract or delegate the commercial or technical management of the Vessels (as the case may be) to any third party; and
(c)
the interests of the Managers (if any) in the Insurances (other than indemnity insurances) will be assigned to the Security Agent with first priority but subject to the Managers' right to receive any indemnity moneys; and
(d)
following the occurrence of an Event of Default, all claims of the Managers against the Owners shall be coordinated with the claims of the Finance Parties under the Finance Documents and, at the request of the Agent, the Managers shall remain the commercial and technical managers of the Vessels on the terms and conditions of the relevant Management Agreements, subject to receiving payment of amounts from time to time due (including their fees) pursuant to such Management Agreements.
"Margin" means
(a)
in respect of Existing Tranche A and Existing Tranche B 2.5 per cent per annum;
(b)
in respect of Existing Tranche C, 2.6 per cent per annum; and
(c)
in respect of the New Tranche, 2.35 per cent per annum.
"Market Value" means the average value of a Vessel conclusively determined by two Approved Shipbrokers appointed by the Borrowers on the basis of a charter-free sale for prompt delivery for cash at arm's length on normal commercial terms as between a willing seller and a willing buyer and evidenced by a valuation from each such Approved Shipbroker of that Vessel certifying a value for that Vessel.
"Material Adverse Effect" means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the business, or financial condition of the Group taken as a whole; or
(b)
the ability of any Security Party to perform its obligations under any Finance Document as they fall due; or
(c)
the validity or enforceability of, or the effectiveness or ranking of any Encumbrance granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.
"Maximum Loan Amount" means two hundred and forty six million five hundred and thirty three thousand seven hundred and sixty three 87/100 Dollars (US$246,533,763.87).
"Mortgages" means the first preferred or first priority mortgages (as applicable) and the second preferred or second priority mortgages as applicable and, if applicable,
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collateral deeds of covenant, referred to in Clause 17.1.1 (Security Documents) (as amended from time to time) and "Mortgage" means any of them.
"New Lender" has the meaning given to that term in Clause 24.1 (Assignments and transfers by the Lenders).
"New Tranche" means the tranche available to finance the New Vessels in an amount of up to eighty million and six hundred thousand Dollars (US$ 80,600,000).
"New Vessels" means Vessel 19, Vessel 20, Vessel 21 and Vessel 22 as set out in Schedule 7.
"Non-Consenting Lender" has the meaning given to that term in Clause 35.4.4 (Replacement of Lender).
"Original Budget" means the detailed, forward-looking consolidated budgets of the Guarantors and the Borrowers in respect of the first twenty four months following the date of this Agreement showing profit and loss statements, balance sheets and cash flow statements, as well as written assumptions.
"Original Jurisdiction" means, in relation to a Security Party, the jurisdiction under whose laws that Security Party is incorporated as at the date of this Agreement.
"Owner" means each of Owner A, Owner B and Owner C.
"Participating Member State" means any member state of the European Community that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.
"Payment Date" means each of 15th March, 15th June, 15th September and 15th December.
"Party" means a party to this Agreement.
"Permitted Disposal" means any sale, lease, licence, transfer or other disposal which is on arm's length terms:
(a)
of trading stock or cash made by any Security Party in the ordinary course of trading of the disposing entity;
(b)
of any asset by any Security Party (the "Disposing Company") to any other Security Party (the "Acquiring Company"), but if:
(i)
the Disposing Company is a Security Party, the Acquiring Company must also be a Security Party;
(ii)
the Disposing Company had given any Encumbrance over the asset, the Acquiring Company must give an equivalent Encumbrance over that asset; and
(iii)
the Disposing Company is a Guarantor, the Acquiring Company must guarantee at all times an amount no less than that guaranteed by the Disposing Company;
Page 20


(c)
of assets in exchange for other assets comparable or superior as to type, value and quality;
(d)
of obsolete or redundant vehicles, plant and equipment for cash; and
(e)
arising as a result of any Permitted Encumbrance.
"Permitted Encumbrance" means:
(a)
any Encumbrance which has the prior written approval of the Agent;
(b)
any Encumbrance arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by a Security Party;
(c)
any quasi-security arising as a result of a disposal which is a Permitted Disposal; or
(d)
any liens for current crews' wages and salvage and liens incurred in the ordinary course of trading a Vessel up to an aggregate amount at any time not exceeding $500,000 per Owner.
"Permitted Transaction" means:
(a)
any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Encumbrance given, or other transaction arising, under the Finance Documents; or
(b)
transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of any Encumbrance or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of trading on arm's length terms and for fair market value.
"Quotation Day" means, in relation to any period for which an interest rate is to be determined two Business Days before the first day of that period unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).
"RCF Facility Agreement" means the working capital facility agreement comprising a US$75,000,000 revolving credit facility made between (inter alia) Borrower A (as borrower) and Danske Bank A/S (as agent) dated on or about 13 July 2015 and any refinancing of such agreement on similar terms and giving a minimum of 12 months availability at any relevant time.
"Receiver" means a receiver or receiver and manager or administrative receiver of the whole or any part of the Charged Property.
"Reference Bank Rate" means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Reference Banks as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in dollars and for the relevant period, were it to do so by
Page 21

asking for and then accepting interbank offers for deposits in reasonable market size in dollars and for that period.
"Reference Banks" means, in relation to LIBOR, the principal London offices of Nordea Bank AB, Danske Bank A/S and HSBC Bank plc or such other banks as may be appointed by the Agent in consultation with the Borrowers.
"Relevant Affiliate" means means, in relation to any Obligor or Group Member:
(a)
a Subsidiary of that Obligor or Group Member; or
(b)
a Holding Company of that Obligor or Group Member; or
(c)
any other Subsidiary of that Holding Company,
but in each case excluding the Sponsor and excluding any Affiliate of the Sponsor which is not a Group Member.
"Relevant Documents" means the Finance Documents, the Charters, and the Management Agreements.
"Relevant Interbank Market" means the London interbank market.
"Relevant Jurisdiction" means, in relation to a Security Party:
(a)
its Original Jurisdiction;
(b)
any jurisdiction where any asset subject to or intended to be subject to a Security Document to be executed by it is situated;
(c)
any jurisdiction where it conducts its business; and
the jurisdiction whose laws govern the perfection of any of the Security Documents entered into by it.
"Repayment Date" means the date for payment of any Repayment Instalment in accordance with Clause 6 (Repayment).
"Repayment Instalment" means any instalment of the Loan to be repaid by the Borrowers under Clause 6 (Repayment).
"Repeating Representations" means each of the representations set out in Clause 19.1.1 (Status) to Clause 19.1.6 (Governing law and enforcement), Clause 19.1.10 (No default) to Clause 19.1.19 (Pari passu ranking) and Clause 19.1.25 (Sanctions).
"Requisition Compensation" means all compensation or other money which may from time to time be payable to an Owner and/or the Charterer as a result of a Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).
"Reserve Account" means the bank account nominated in USD opened or to be opened in the name of Borrower A into which any cash deposit is made pursuant to Clause 7.11 (Vessel Substitution) or Clause 17.5 (Additional Security) with account number [               ] and IBAN number [                     ].
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"Reserve Account Pledge" means the account pledge agreement to be entered into by Borrower A in favour of the Security Agent in respect of all amounts from time to time standing to the credit of the Reserve Account.
"Restricted Party" means a person:
(a)
that is listed on any Sanctions List (whether designated by name or by reason of being included in a class of person) or otherwise is a target of Sanctions Laws;
(b)
that is domiciled, registered as located or having its main place of business in, or is incorporated under the laws of any country or territory that is the target of comprehensive, country- or territory-wide Sanctions Laws;
(c)
that is directly or indirectly owned or controlled by a person referred to in (a) and/or (b) above; or
(d)
with which any national of a Sanctions Authority is prohibited from dealing or otherwise engaging in a transaction with by any Sanctions Laws.
"Sanctions Authority" means (a) the United Nations, the European Union, the member states of the European Union, the US or any country to which any Borrower  or Guarantor, or any other member of the Group or any Relevant Affiliate or any of them is bound or (b) the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury ("OFAC"), the United States Department of State and Her Majesty's Treasury.
"Sanctions Laws" means the economic or financial sanctions laws and/or regulations, trade embargoes, prohibitions, restrictive measures, decisions, executive orders or notices from regulators implemented, adopted, imposed, administered, enacted and/or enforced by any Sanctions Authority.
"Sanctions List" means any list of persons or entities published in connection with Sanctions Laws, by or on behalf of any Sanctions Authority.
"Screen Rate" means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate) or, on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters.  If such page or the service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Borrowers.
"Secured Parties" means each Finance Party from time to time party to this Agreement and any Receiver or Delegate.
"Security Documents" means the Mortgages, the Assignments, the Guarantee, the Reserve Account Pledge, the Share Charges, the Managers' Undertakings, any Inter-company Indebtedness Assignment or (where the context permits) any one or more of them, and any other agreement or document which may at any time be executed
Page 23

by any person as security for the payment of all or any part of the Indebtedness and "Security Document" means any one of them.
"Security Parties" means each Borrower, each Guarantor, each Chargor, and any other person (other than a Manager or Charterer) who may at any time during the Facility Period be liable for, or provide security for, all or any part of the Indebtedness, and "Security Party" means any one of them.
"Share Charges" means the charges of the issued share capital of the Owners and the general partner of Owner C, VesselCo E ApS referred to in Clause 17.1.5 (Security Documents).
"SMC" means a valid safety management certificate issued for a Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.
"Sponsor" means Oaktree Capital Management L.P. and any fund or funds solely managed by Oaktree Capital Management L.P..
"Subsidiary" means a subsidiary undertaking within the meaning of section 1162 of the Companies Act 2006.
"Supplemental Agreement" means a supplemental agreement to this Agreement dated _____ September 2017 entered into between, among others, the parties to this Agreement.
"Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
"Technical Manager" means, in relation to the technical management of a Vessel:
(a)
the company whose name is set opposite the name of that Vessel under "Technical Manager" in Schedule 7; or
(b)
such other technical manager of any Vessel nominated by the Owners from time to time, subject to the Agent's written consent (such consent not to be unreasonably withheld).
"Termination Date" means
(i)
in respect of Existing Tranche A, 17 June 2019;
(ii)
in respect of Existing Tranche B, 15 December 2021;
(iii)
in respect of Existing Tranche C, 15 December 2022; and
(iv)
in respect of the New Tranche, 15 June 2026.
"Time Charters" means any time charter capable of exceeding 13 months' duration (inclusive of extensions) on the terms and subject to the conditions of which the Owners or the Bareboat Charterer respectively may time charter the Vessels to a Charterer and "Time Charter" means any one of them.
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"Total Assets" means, on any date, the value of the total assets of the Group (on a consolidated basis) determined in accordance with GAAP and adjusted to reflect the Market Value of the Fleet Vessels (including the Market Value of each Vessel) based on the valuations to be delivered to the Agent pursuant to Clause 20.2.1 on or around 30 June and 31 December.
"Total Commitments" means the aggregate of the Commitments.
"Total Loss" means:
(a)
an actual, constructive, arranged, agreed or compromised total loss of a Vessel; or
(b)
the requisition for title or compulsory acquisition of a Vessel by any government or other competent authority (other than by way of requisition for hire for a fixed period not exceeding one (1) year without any right to extension); or
"Tranche" means the Existing Tranches and the New Tranche.
"Transfer Certificate" means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Borrowers.
"Transfer Date" means, in relation to an assignment or a transfer, the later of:
(a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b)
the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.
"Treasury Transactions" means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
"Trust Property" means:
(a)
all benefits derived by the Security Agent from Clause 17 (Security and Application of Moneys); and
(b)
all benefits arising under (including, without limitation, all proceeds of the enforcement of) each of the Security Documents,
with the exception of any benefits arising solely for the benefit of the Security Agent.
"Unpaid Sum" means any sum due and payable but unpaid by any Security Party under the Finance Documents.
"US Tax Obligor" means:
(a)
a Security Party which is resident for tax purposes in the United States of America; or
Page 25


(b)
a Security Party some or all of whose payments under the Finance Documents are from sources within the United States for US federal income tax purposes.
"VAT" means:
(a)
any tax imposed in compliance with the Council Directive of 28 November 2006 on the common system of value added tax (EC Directive 2006/112); and
(b)
any other tax of a similar nature, whether imposed in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in (a), or imposed elsewhere.
"Vessels" means the Existing Vessels and the New Vessels and any other vessels accepted by the Security Agent as additional security for the Loan and "Vessel" means any one of them, provided that a Mortgage has been registered on such vessel and that the Mortgage(s) over such Vessel has not been released.
1.2
Construction   Unless a contrary indication appears, any reference in this Agreement to:
1.2.1
any "Lender", any "Borrower", any "Guarantor", the "Agent", any "Secured Party", the "Security Agent", any "Finance Party" or any "Party" shall be construed so as to include its successors in title, permitted assignees and permitted transferees;
1.2.2
a document in "agreed form" is a document which is previously agreed in writing by or on behalf of the Borrowers and the Agent or, if not so agreed, is in the form specified by the Agent;
1.2.3
"assets" includes present and future properties, revenues and rights of every description;
1.2.4
a "Finance Document", a "Security Document", a "Relevant Document" or any other document is a reference to that Finance Document, Security Document, Relevant Document or other document as amended, novated, supplemented, extended or restated from time to time;
1.2.5
a "group of Lenders" includes all the Lenders;
1.2.6
"indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
1.2.7
a "person" includes any individual, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership or other entity (whether or not having separate legal personality);
1.2.8
a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental,
Page 26

intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;
1.2.9
a provision of law is a reference to that provision as amended or re-enacted from time to time; and
1.2.10
a time of day (unless otherwise specified) is a reference to Copenhagen time.
1.3
Headings   Section, Clause and Schedule headings are for ease of reference only.
1.4
Defined terms   Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.5
Default   A Default (other than an Event of Default) is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been waived.
1.6
Currency symbols and definitions   "$", "USD" and "dollars" denote the lawful currency of the United States of America.
1.7
Third party rights   A person who is not a Party has no right to enforce or to enjoy the benefit of any term of this Agreement.
1.8
Offer letter   This Agreement supersedes the terms and conditions contained in any correspondence relating to the subject matter of this Agreement exchanged between any Finance Party and the Borrowers or their representatives before the date of this Agreement.
1.9
Amounts   Any reference to an amount outstanding under any of the Existing Tranches are references to the amounts outstanding on 14 September 2017 and do not account for the instalments paid after such date.
1.10
Contractual recognition of bail-in
1.10.1
In this Clause 1.9:
"Bail-In Action" means the exercise of any Write-down and Conversion Powers.
"Bail-In Legislation" means:
(a)
in relation to an EEA Member Country which has implemented, or which at any time implements, Article 55 of Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, the relevant implementing law or regulation as described in the EU Bail-In Legislation Schedule from time to time; and
(b)
in relation to any other state, any analogous law or regulation from time to time which requires contractual recognition of any Write-down and Conversion Powers contained in that law or regulation.
Page 27


"EEA Member Country" means any member state of the European Union, Iceland, Liechtenstein and Norway.
"EU Bail-In Legislation Schedule" means the document described as such and published by the Loan Market Association (or any successor person) from time to time.
"Resolution Authority" means any body which has authority to exercise any Write-down and Conversion Powers.
"Write-down and Conversion Powers" means:
(a)
in relation to any Bail-In Legislation described in the EU Bail-In Legislation Schedule from time to time, the powers described as such in relation to that Bail-In Legislation in the EU Bail-In Legislation Schedule; and
(b)
in relation to any other applicable Bail-In Legislation:
(i)
any powers under that Bail-In Legislation to cancel, transfer or dilute shares issued by a person that is a bank or investment firm or other financial institution or affiliate of a bank, investment firm or other financial institution, to cancel, reduce, modify or change the form of a liability of such a person or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers; and
(ii)
any similar or analogous powers under that Bail-In Legislation.
1.10.2
Notwithstanding any other term of any Finance Document or any other agreement, arrangement or understanding between the Parties, each Party acknowledges and accepts that any liability of any Party to any other Party under or in connection with the Finance Documents may be subject to Bail-In Action by the relevant Resolution Authority and acknowledges and accepts to be bound by the effect of:
(a)
any Bail-In Action in relation to any such liability, including (without limitation):
(i)
a reduction, in full or in part, in the principal amount, or outstanding amount due (including any accrued but unpaid interest) in respect of any such liability;
Page 28


(ii)
a conversion of all, or part of, any such liability into shares or other instruments of ownership that may be issued to, or conferred on, it; and
(iii)
a cancellation of any such liability; and
(b)
a variation of any term of any Finance Document to the extent necessary to give effect to any Bail-In Action in relation to any such liability.
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Section 2          The Loan
2
THE LOAN
2.1
Amount   Subject to the terms of this Agreement, the Lenders agree to make available to:
2.1.1
Borrower A, a term loan in an aggregate amount of up to USD 137,911,701.61; and
2.1.2
Borrower B, a term loan in an aggregate amount of up to USD108,622,062.26
in accordance with the Commitments as set out in Schedule 1; and
2.2
Availablity of the New Tranche
A part of the New Tranche in the amount of Twenty million and one hundred and fifty thousand Dollars (US$ 20,150,000) shall be available for the financing of each New Vessel during the Availablity Period applicable to such part of the New Tranche.
2.3
Finance Parties' rights and obligations
2.3.1
The obligations of each Finance Party under the Finance Documents are several.  Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents.  No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
2.3.2
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from a Security Party shall be a separate and independent debt.
2.3.3
A Finance Party may with the consent of the Majority Lenders and except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
3
PURPOSE
3.1
Purpose   The Borrowers shall apply the Loan for the purposes referred to in the Preliminary.
3.2
Monitoring   No Finance Party is bound to monitor or verify the application of any amount borrowed under this Agreement.
4
CONDITIONS OF UTILISATION
4.1
Initial conditions precedent
4.1.1
The Borrowers undertake to deliver or to cause to be delivered to the Agent on the date of this Agreement the documents and evidence listed in Part I of Schedule 2 (Conditions Precedent to Execution of this Agreement) in
Page 30

form and substance satisfactory to the Agent. The Agent shall notify the Borrowers and the Lenders promptly upon being so satisfied
4.1.2
The Lenders will only be obliged to comply with Clause 5.3 (Lenders' participation) in relation to the advance of a Drawing under the New Tranche if:
(a)
three Business Days prior to the relevant Drawdown Date (including the date for any prepositioning of funds as set out in Clause 5.5 (Prepositioning of funds)), the Agent has received drafts of the documents listed as item 2a(v) and (vi), item 2(c) and item 2(e) of Schedule 2 Part II (Conditions Precedent to each Drawing); and
(b)
on or before the relevant Drawdown Date (or the release of any prepositioned funds pursuant to Clause 5.5 (Prepositioning of funds)), the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent to each Drawing) in form and substance satisfactory to the Agent, (acting reasonably)
where all references in Section 2 of that Part II to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to the New Vessel specified in the relevant Drawdown Request or to any person or document relating to that New Vessel respectively. The Agent shall notify the Borrowers and the Lenders promptly upon being so satisfied.
4.1.3
Other than to the extent that the Majority Lenders notify the Agent in writing to the contrary before the Agent gives the notification described in Clauses 4.1.1 and 4.1.2, the Lenders authorise (but do not require) the Agent to give that notification.  The Agent shall not be liable to the Lenders for any damages, costs or losses whatsoever as a result of giving any such notification.
4.2
Further conditions precedent
4.2.1
The Lenders will only be obliged to advance a Drawing (including any prepositioning of funds pursuant to Clause 5.5 (Prepositioning of funds)) if on the date of the relevant Drawdown Request and on the proposed Drawdown Date:
(a)
no Default is continuing or would result from the advance of that Drawing; and
(b)
the representations made by each Borrower and each Guarantor under Clause 19 (Representations) are true.
4.2.2
The Lenders will only be obliged to advance a Drawing if that Drawing will not increase the Loan to a sum in excess of the Maximum Loan Amount.
4.3
Conditions subsequent   Subject to any time period specifically set out in relation to a condition subsequent listed in Part III of Schedule 2 (Conditions Subsequent), the Borrowers undertake to deliver or to cause to be delivered to the Agent as soon
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as practicable after the relevant Drawdown Date the additional documents and other evidence listed in Part III of Schedule 2 (Conditions Subsequent), where the references in that Part III to "the Vessel" or to any person or document relating to a Vessel shall be deemed to relate solely to the Vessel specified in the relevant Drawdown Request or to any person or document relating to that Vessel respectively.
4.4
No waiver   If the Lenders in their sole discretion agree to advance a Drawing to the Borrowers before all of the documents and evidence required by Clause 4.1 (Initial conditions precedent) have been delivered to or to the order of the Agent, the Borrowers undertake to deliver all outstanding documents and evidence to or to the order of the Agent as soon as practicable after the relevant Drawdown Date or such other date specified by the Agent (acting on the instructions of all the Lenders).
The advance of a Drawing under this Clause 4.4 shall not be taken as a waiver of the Lenders' right to require production of all the documents and evidence required by Clause 4.1 (Initial conditions precedent).
4.5
Re-flagging conditions precedent   The Borrowers undertake to deliver or to cause to be delivered to the Agent on or before the re-flagging of a Vessel under an Approved Flag the documents and evidence listed in Part IV of Schedule 2 (Conditions Precedent to Re-flagging under an Approved Flag) in form and substance satisfactory to the Agent. The Agent shall notify the Borrowers and the Lenders promptly upon being so satisfied.
4.6
Form and content   All documents and evidence delivered to the Agent under this Clause shall:
4.6.1
be in form and substance acceptable to the Agent (acting reasonably); and
4.6.2
if required by the Agent, be certified, notarised, legalised or attested in a manner acceptable to the Agent.
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Section 3          Utilisation
5
ADVANCE
5.1
Delivery of a Drawdown Request   The Borrowers may request a Drawing to be advanced by delivery to the Agent of a duly completed Drawdown Request not more than ten and not fewer than three Business Days before the proposed Drawdown Date.
5.2
Completion of a Drawdown Request   A Drawdown Request is irrevocable and will not be regarded as having been duly completed unless:
5.2.1
it is signed by an authorised signatory of each Borrower;
5.2.2
it specifies the Vessel being financed by the relevant Drawing;
5.2.3
the proposed Drawdown Date is a Business Day within the Availability Period; and
5.2.4
the proposed Interest Period complies with Clause 9 (Interest Periods).
5.3
Lenders' participation
5.3.1
Subject to Clauses 2 (The Loan), 3 (Purpose) and 4 (Conditions of Utilisation), each Lender shall make its participation in any Drawing available by the relevant Drawdown Date through its Facility Office.
5.3.2
The amount of each Lender's participation in any Drawing will be equal to the proportion borne by its Commitment to the Total Commitments.
5.4
Cancellation of Undrawn Commitments
If the New Tranche (or a part thereof) is not fully utilised by the end of the Availability Period for the New Tranche (or the relevant part thereof), the relevant Commitments will be cancelled at the end of the Availability Period for the New Tranche (or the relevant part thereof) to the extent that they are unutilised at that time, unless otherwise agreed between the Borrowers and the Agent.
5.5
Prepositioning of funds   If requested by a Borrower in the Drawdown Request for a New Vessel, the Agent (on account of the Lenders) shall, three (3) Business Days before the Delivery Date, preposition the relevant Drawing under the New Tranche by making payment of such amounts requested in the relevant Drawdown Request:
5.5.1
to such account in such bank (the "Prepositioning Bank") as the relevant Borrower may have agreed with the Agent in advance of the Delivery Date and as specified in the Drawdown Request; and
5.5.2
on terms that:
(a)
the Prepositioning Bank is acceptable to the Agent;
(b)
such amounts shall be held to the order of the Agent until it is released to the Prepositioning Bank according to a separate SWIFT instruction agreed between the Agent and the relevant Borrower
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 (for the avoidance of doubt the Agent shall in its sole discretion decide if it finds the wording of the SWIFT instruction acceptable);
(c)
such prepositioning shall constitute the making of the Drawing and the relevant Borrower shall at that time become indebted, as principal and direct obligor, to the Lenders in an amount equal to the prepositioned funds; and
(d)
the date on which the Drawing is prepositioned shall constitute the Drawdown Date.
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Section 4          Repayment, Prepayment and Cancellation
6
REPAYMENT
6.1
Repayment of Loan
6.1.1
Borrower A agrees to repay the Existing Tranche A and the Existing Tranche B;
6.1.2
Borrower B agrees to repay the Existing Tranche C and the New Tranche,
for the account of the Lenders in the amounts set out in Schedule 9.
After each Drawing in respect of the New Tranche, Schedule 9 shall be adjusted by the Agent to reflect that (i) each Drawing under the New Tranche shall be repaid in 28 quarterly instalments of USD296,323 each and a balloon payment of the remaining outstanding amount of such Drawing which shall be paid together with the last of the 28 instalments and (ii) the first instalment in respect of a Drawing under the New Tranche shall fall due on the first Payment Date which falls at least three calendar months after the Drawdown Date of that Drawing and subsequent instalments falling due at consecutive Payment Dates thereafter and the final instalment and the balloon instalment in respect of that Drawing (as set out in Schedule 9) falling due on the Termination Date of the New Tranche.
6.1.3
Notwhitstanding Clause 6.1.2 above, each Tranche shall be repaid in full no later than on the Termination Date applicable to the relevant Tranche.
6.2
Reduction of Repayment Instalments   If the aggregate amount advanced to Borrower B is less than the Commitment in respect of the New Tranche, the amount of each Repayment Instalment in respect of the New Tranche (including the balloon instalment) shall be reduced pro rata to the amount actually advanced.
6.3
Reborrowing   The Borrowers may not reborrow any part of the Loan which is repaid or prepaid or cancelled.
7
ILLEGALITY, PREPAYMENT AND CANCELLATION
7.1
Illegality   If it becomes unlawful in any jurisdiction (including, without limitation, under applicable Sanctions Laws) for a Lender to perform any of its obligations as contemplated by this Agreement or to fund or maintain its participation in the Loan:
7.1.1
that Lender shall promptly notify the Agent upon becoming aware of that event;
7.1.2
upon the Agent notifying the Borrowers, the Commitment of that Lender will be immediately cancelled; and
7.1.3
the Borrowers shall repay that Lender's participation within ninety (90) days of demand.
7.2
Voluntary cancellation   Each Borrower may, if they give the Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of USD 1,000,000 of
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the undrawn amount of the relevant Tranche).  Any cancellation under this Clause 7.2 shall reduce the Commitments of the Lenders rateably.
7.3
Voluntary prepayment of Loan   The Borrowers may prepay the whole or any part of the Loan but, if in part, being an amount that reduces the Loan by a minimum amount of USD 1,000,000 subject as follows:
7.3.1
they give the Agent not less than 10 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice; and
7.3.2
any prepayment under this Clause 7.3 shall satisfy the obligations under Clause 6.1 (Repayment of Loan) pro-rata across maturities.
7.4
[DELIBERATELY NOT USED]
7.5
Right of cancellation and prepayment in relation to a single Lender
7.5.1
If:
(a)
any sum payable to any Lender by the Borrowers is required to be increased under Clause 12.2.2 (Tax gross-up);
(b)
any Lender claims indemnification from the Borrowers under Clause 12.3 (Tax indemnity) or Clause 13.1 (Increased costs);
the Borrowers may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues, give the Agent notice of cancellation of the Commitment(s) of that Lender and their intention to procure the repayment of that Lender's participation in the Loan.
7.5.2
On receipt of a notice referred to in Clause 7.5.1 in relation to a Lender, the Commitment(s) of that Lender shall immediately be reduced to zero.
7.5.3
On the last day of the Interest Period which ends after the Borrowers have given notice under Clause 7.5.1 in relation to a Lender (or, if earlier, the date specified by the Borrowers in that notice), the Borrowers shall repay that Lender's participation in the Loan together with all interest and other amounts accrued under the Finance Documents.
7.6
Mandatory prepayment on sale or Total Loss
7.6.1
If a Vessel is sold by an Owner, the Borrowers shall, simultaneously with any such sale, prepay the Loan with an amount equal to the Appropriate Amount for such Vessel immediately prior to completion of such sale. Any such prepayment shall be applied first against the Tranche made available to finance that Vessel (and reduce the instalments of such Tranche (including any balloon payment) on a pro rata basis) and secondly in prepayment of such other Tranche and reduce the instalments of such other Tranche (including any balloon payment) on a pro rata basis) as determined by the Borrowers. Any balance shall, unless a Default has occurred and is continuing, be at the free disposal of the Borrowers. If a Default or an Event of Default has occurred, all
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proceeds from a sale of a Vessel shall be applied towards prepayment of the Loan.
7.6.2
If a Vessel becomes a Total Loss, the Borrowers shall on the earlier of (i) 30 days after the date of the Total Loss if the Agent believes, acting reasonably, that the relevant insurer has rightfully refused to meet or rightfully disputes the claim in respect of a Total Loss; (ii) the date falling 180 days after any such Total Loss (which the Agent may extend by a further 180 days if it is satisfied, acting reasonably, that the insurers have accepted liability) and (iii) the date on which the proceeds of any such Total Loss are realised, make a prepayment of the Loan to the extent necessary in an amount equal to the Appropriate Amount for such Vessel immediately prior to such Total Loss. Any such prepayment shall be applied first against the Tranche made available to finance that Vessel (and reduce the instalments of such Tranche (including any balloon payment) on a pro rata basis) and secondly in prepayment of such other Tranche and reduce the instalments of such Tranche (including any balloon payment) on a pro rata basis) as determined by the Borrowers. Any balance shall, unless a Default has occurred and is continuing, be at the free disposal of the Borrowers. If a Default has occurred, all insurance proceeds from a Total Loss of a Vessel shall be applied towards prepayment of the Loan.
7.6.3
The Borrowers shall promptly notify the Agent in writing if a Vessel becomes a Total Loss.
7.6.4
The Borrowers shall promptly notify the Agent in writing if they are notified that the relevant insurer refuses to meet or disputes a claim in respect of a Total Loss.
7.7
Right of cancellation in relation to a Defaulting Lender   If any Lender becomes a Defaulting Lender, the Borrowers may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent 10 Business Days' notice of cancellation of the Commitment of that Lender.  On that notice becoming effective, the Commitment of the Defaulting Lender shall immediately be reduced to zero.  The Agent shall as soon as practicable after receipt of that notice notify all the Lenders.
7.8
Mandatory prepayment on Change of Control  If there is a Change of Control or Borrower B is delisted from NASDAQ OMX Copenhagen A/S:
7.8.1
the relevant Borrower shall promptly notify the Agent of such Change of Control or delisting as soon as it becomes aware of it;
7.8.2
upon the Lenders becoming aware of such Change in Control or delisting and unless the Lenders agree otherwise in writing, the Commitments will immediately be cancelled and each Borrower shall repay its relevant Tranche (to the extent already advanced prior to the Change of Control) within 7 days of notice from the Agent.
7.9
Restrictions   Any notice of prepayment or cancellation given under this Clause 7 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall
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specify the date or dates upon which the relevant prepayment or cancellation is to be made and the amount of that prepayment or cancellation.
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Interest Break Costs (in respect of which Clause 10.4 applies) and any Break Funding Costs (in respect of which Clause 7.10 applies) without premium or penalty.
The Borrowers shall not repay, prepay or cancel all or any part of the Loan except at the times and in the manner expressly provided for in this Agreement.
No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
If the Agent receives a notice under this Clause 7 it shall promptly forward a copy of that notice to the Borrowers or the affected Lender, as appropriate.
7.10
Break Funding Costs
7.10.1
The Borrowers shall, within three Business Days of demand by DSF, pay to DSF its Break Funding Costs attributable to any prepayment of the Loan.
7.10.2
The Break Funding Costs shall be determined by DSF and shall be binding on the Borrowers save for manifest errors. If the Break Funding Costs are less than zero, the Break Funding Costs shall be deemed to be zero.
7.10.3
For the avoidance of doubt, any Break Funding Costs shall be in addition to and not in substitution of any Interest Break Costs.
7.11
Vessel Substitution
7.11.1
In circumstance contemplated by Clause 7.6, and provided no Default is then in existence, the Borrowers may elect to propose a substitute vessel by the procedure set out in this Clause 7.11.
7.11.2
Instead of making the prepayment in the amount and at the time specified in Clause 7.6, the Borrowers shall place an equivalent amount in the Reserve Account on or before the date the prepayment would otherwise have fallen due (the "Deposit").
7.11.3
The Borrowers may nominate a substitute vessel which shall be a product tanker (LR1, LR2, MR or handy size) of the same age or younger than the Vessel that was sold or declared a Total Loss, and with at least an equivalent Market Value, no less than 10 Business Days prior to the proposed date of substitution.
7.11.4
The Agent, on the instruction of the Majority Lenders acting reasonably, shall give notice to the Borrowers as soon as practicable as to whether or not the nominated substitute vessel is acceptable and fulfils the requirements set out in Clause 7.11.3.
7.11.5
If such nomination is accepted, then the relevant owner shall enter into a guarantee on the same terms as the Guarantee, and other Security
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Documents relating to the substitute vessel in the same form as the equivalent documents relating to the Vessel which was sold or became a Total loss.
7.11.6
The Agent will specify other conditions precedent to the substitution (to include but not be limited to corporate authorities, legal opinions, evidence of class, evidence of adequate insurance coverage and payment of a fee of $25,000, and a pledge over the shares in the relevant owner in favour of the Security Agent and to be broadly similar to the conditions precedent relating to other drawdowns), and on satisfaction of such conditions the Deposit shall be released.
7.11.7
If the Borrowers elect not to propose a substitute vessel, they may at any time use the Deposit as a prepayment hereunder, to be applied in accordance with Clause 7.6 (Mandatory prepayment on sale or Total Loss).
7.12
Break Gains for Interest Periods in excess of six months  If:
7.12.1
the Agent (acting on the instructions of the Lenders) has agreed to an Interest Period in respect of a Tranche being for a duration of more than six (6) months in accordance with Clause 9.1.1 (Duration of Interest Periods); and
7.12.2
a Borrower prepays all or part of the relevant Tranche in accordance with this Clause 7 (Illegality, Prepayment and Cancellation),
that Borrower shall be entitled to be credited with any Break Gains resulting from such prepayment.
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Section 5          Costs of Utilisation
8
INTEREST
8.1
Calculation of interest   The rate of interest on the Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
8.1.1
the relevant Margin; and
8.1.2
LIBOR.
8.2
Payment of interest
8.2.1
Borrower A shall pay accrued interest on Existing Tranche A and Existing Tranche B; and
8.2.2
Borrower B shall pay accrued interest on Existing Tranche C and the New Tranche,
quarterly in arrears on each Payment Date for the period since the relevant Drawing or the previous due date for the period of interest.
8.3
Default interest   If either Borrower fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is two per cent higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted the Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably).  Any interest accruing under this Clause 8.3 shall be immediately payable by the Borrowers on demand by the Agent.
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
8.4
Notification of rates of interest   The Agent shall promptly notify the Borrowers of the determination of a rate of interest under this Agreement.
9
INTEREST PERIODS
9.1
Duration of Interest Periods
9.1.1
Each Interest Period relating to the Existing Tranche A shall be six (6) calendar months, each Interest Period relating to the Existing Tranche B shall be three (3) calendar months and each Interest Period relating to the Existing Tranche C or the New Tranche (save the first) shall be three (3) or six (6) calendar months (at the option of Borrower B) or in either case any other period agreed between the Borrowers and the Agent (acting on the instructions of the Lenders).
9.1.2
An Interest Period shall end on a Payment Date and shall not extend beyond the Termination Date for the relevant Tranche.
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9.1.3
The first Interest Period in respect of each Drawing shall start on the Drawdown Date of that Drawing and shall end on the following Payment Date; and each subsequent Interest Period in respect of such Drawing shall start on the last day of the preceding Interest Period and end on the Payment Date which falls six (6) calendar months (if it relates to Existing Tranche A), three (3) calendar months (if it relates to Existing Tranche B) or three (3) or six (6) calendar months (if it relates to Existing Tranche C or the New Tranche) after the last day of the preceding Interest Period.
9.1.4
If Borrower B at any time fails to select an Interest Period for Existing Tranche C or the New Tranche in accordance with Clause 9.1.1 by the date falling three (3) Business Days prior to the commencement of an Interest Period, then the interest rate applicable shall be based on an Interest Period of three (3) months.
9.2
Non-Business Days   If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
10
CHANGES TO THE CALCULATION OF INTEREST
10.1
Absence of quotations   Subject to Clause 10.2 (Market disruption), if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11.00 am on the Quotation Day, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.
10.2
Market disruption   If a Market Disruption Event occurs for any Interest Period, then, subject to Clause 11.3, the rate of interest on each Lender's share of the Loan for that Interest Period shall be the percentage rate per annum which is the sum of:
10.2.1
the Margin; and
10.2.2
the rate notified to the Agent by that Lender as soon as practicable, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in the Loan from whatever source it may reasonably select.
10.2.3
In this Agreement "Market Disruption Event" means:
(a)
at or about noon on the Quotation Day for the relevant Interest Period LIBOR is to be determined by reference to the Reference Banks and no Reference Banks supplies a rate to the Agent to determine LIBOR for dollars and the relevant Interest Period; or
(b)
before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders that the cost to it of funding its participation in the Loan from whatever source it may reasonably select would be in excess of LIBOR.
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10.3
Alternative basis of interest or funding
10.3.1
If a Market Disruption Event occurs and the Agent or the Borrowers so require, the Agent and the Borrowers shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
10.3.2
Any alternative basis agreed pursuant to Clause 10.3.1 shall, with the prior consent of all the Lenders and the Borrowers, be binding on all Parties.
10.4
Interest Break Costs   The Borrowers shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Interest Break Costs attributable to all or any part of the Loan or Unpaid Sum being paid by the Borrowers on a day other than the last day of an Interest Period for the Loan or Unpaid Sum.
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Interest Break Costs for any Interest Period in which they accrue.
11
Fees
11.1
Commitment fee
(a)
Borrower B shall pay to the Agent (for the account of the Lenders in proportion to their Commitments) a fee computed at the rate of 35 per cent of the rate specified in the definition of "Margin" on the undrawn amount of the New Tranche from 25 July 2017.
(b)
the accrued commitment fee is payable on the last day of each successive period of three months which ends during the Availability Period, on the last day of the Availability Period, on each Drawdown Date, on each Payment Date and (on the cancelled amount of the relevant Lender's Commitment) at the time the cancellation is effective.
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Section 6          Additional Payment Obligations
12
TAX GROSS UP AND INDEMNITIES
12.1
Definitions   In this Agreement:
"Protected Party" means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
"Tax Credit" means a credit against, relief or remission for, or repayment of any Tax.
"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document, other than a FATCA Deduction.
"Tax Payment" means either the increase in a payment made by a Security Party to a Finance Party under Clause 12.2 (Tax gross-up) or a payment under Clause 12.3 (Tax indemnity).
Unless a contrary indication appears, in this Clause 12 a reference to "determines" or "determined" means a determination made in the discretion of the person making the determination (acting reasonably).
12.2
Tax gross-up   Each Borrower shall (and shall procure that each other Security Party shall) make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law, subject as follows:
12.2.1
a Borrower shall promptly upon becoming aware that it or any other Security Party must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly.  Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender.  If the Agent receives such notification from a Lender it shall notify the Borrower and any such other Security Party;
12.2.2
if a Tax Deduction is required by law to be made by the Borrower or any other Security Party, the amount of the payment due from the Borrower or that other Security Party shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required;
12.2.3
if a Borrower or any other Security Party is required to make a Tax Deduction, that Borrower shall (and shall procure that such other Security Party shall) make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law;
12.2.4
within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower making that Tax Deduction shall (and shall procure that such other Security Party shall) deliver to the Agent for the Finance Party entitled to the payment
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evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority;
12.3
Tax indemnity
12.3.1
Each Borrower shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
12.3.2
Clause 12.3.1 shall not apply:
(a)
with respect to any Tax assessed on a Finance Party:
(i)
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(ii)
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(b)
to the extent a loss, liability or cost:
(i)
is compensated for by an increased payment under Clause 12.2 (Tax gross-up),; or
(ii)
relates to a FATCA Deduction required to be made by a Party.
12.3.3
A Protected Party making, or intending to make a claim under Clause 12.3.1 shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Borrowers.
12.3.4
A Protected Party shall, on receiving a payment from a Borrower under this Clause 12.3, notify the Agent.
12.4
Tax Credit   If a Borrower or any other Security Party makes a Tax Payment and the relevant Finance Party determines that:
12.4.1
a Tax Credit is attributable to an increased payment of which that Tax Payment forms part, to that Tax Payment or to a Tax Deduction in consequence of which that Tax Payment was required; and
12.4.2
that Finance Party has obtained and utilised that Tax Credit,
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that Finance Party shall pay an amount to that Borrower or to that other Security Party which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by that Borrower or that other Security Party.
12.5
Stamp taxes   The Borrowers shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.
12.6
VAT
12.6.1
All amounts expressed to be payable under a Finance Document by any Party or any Security Party to a Finance Party which (in whole or in part) constitute the consideration for any supply for VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, subject to Clause 12.6.2, if  VAT is or becomes chargeable on any supply made by any Finance Party to any Party or any Security Party under a Finance Document and such Finance Party is required to account to the relevant tax authority for the VAT, that Party or Security Party must pay to such Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (and such Finance Party must promptly provide an appropriate VAT invoice to the Borrowers).
12.6.2
If VAT is or becomes chargeable on any supply made by any Finance Party (the "Supplier") to any other Finance Party (the "Recipient") under a Finance Document, and any Party other than the Recipient (the "Relevant Party") is required by the terms of any Finance Document to pay an amount equal to the consideration for that supply to the Supplier (rather than being required to reimburse or indemnify the Recipient in respect of that consideration):
(a)
(where the Supplier is the person required to account to the relevant tax authority for the VAT) the Relevant Party must also pay to the Supplier (at the same time as paying that amount) an additional amount equal to the amount of the VAT.  The Recipient must (where this Clause 12.6.2(a) applies) promptly pay to the Relevant Party an amount equal to any credit or repayment the Recipient receives from the relevant tax authority which the Recipient reasonably determines relates to the VAT chargeable on that supply; and
(b)
(where the Recipient is the person required to account to the relevant tax authority for the VAT) the Relevant Party must promptly, following demand from the Recipient, pay to the Recipient an amount equal to the VAT chargeable on that supply but only to the extent that the Recipient reasonably determines that it is not entitled to credit or repayment from the relevant tax authority in respect of that VAT.
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12.6.3
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
12.6.4
Any reference in this Clause 12.6 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the English Value Added Tax Act 1994).
12.6.5
In relation to any supply made by a Finance Party to any Party under a Finance Document, if reasonably requested by such Finance Party, that Party must promptly provide such Finance Party with details of that Party's VAT registration and such other information as is reasonably requested in connection with such Finance Party's VAT reporting requirements in relation to such supply.
12.7
FATCA information
12.7.1
Subject to Clause 12.7.3, each Party shall, within ten Business Days of a reasonable request by another Party:
(a)
confirm to that other Party whether it is:
(i)
a FATCA Exempt Party; or
(ii)
not a FATCA Exempt Party; and
(b)
supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable "passthru payment percentage" or other information required under the US Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.
12.7.2
If a Party confirms to another Party pursuant to Clause 13.8.1(a)(i) that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
12.7.3
Clause 12.7.1 shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:
(a)
any law or regulation;
(b)
any fiduciary duty; or
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(c)
any duty of confidentiality.
12.7.4
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with Clause 12.7.1 (including, for the avoidance of doubt, where Clause 12.7.3 applies), then:
(a)
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and
(b)
if that Party failed to confirm its applicable "passthru payment percentage" then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable "passthru payment percentage" is 100%,
until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.
12.7.5
If a Borrower is a US Tax Obligor, or where the Agent reasonably believes that its obligations under FATCA require it, each Lender shall, within ten Business Days of:
(a)
where a Borrower is a US Tax Obligor and the relevant Lender is an Original Lender, the date of this Agreement;
(b)
where a Borrower is a US Tax Obligor and the relevant Lender is a New Lender, the relevant Transfer Date;
(c)
where a Borrower is not a US Tax Obligor, the date of a request from the Agent,
supply to the Agent:
(d)
a withholding certificate on Form W-8 or Form W-9 (or any successor form) (as applicable); or
(e)
any withholding statement and other documentation, authorisations and waivers as the Agent may require to certify or establish the status of such Lender under FATCA.
The Agent shall provide any withholding certificate, withholding statement, documentation, authorisations and waivers it receives from a Lender pursuant to this Clause 12.7.5 to the Borrowers and shall be entitled to rely on any such withholding certificate, withholding statement, documentation, authorisations and waivers provided without further verification.  The Agent shall not be liable for any action taken by it under or in connection with this Clause 12.7.5.
12.7.6
Each Lender agrees that if any withholding certificate, withholding statement, documentation, authorisations and waivers provided to the Agent pursuant to Clause 12.7.5 is or becomes materially inaccurate or incomplete, it shall promptly update such withholding certificate, withholding statement, documentation, authorisations and waivers or promptly notify the Agent in writing of its legal inability to do so.  The Agent shall provide any such updated withholding certificate,
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withholding statement, documentation, authorisations and waivers to the Borrowers.  The Agent shall not be liable for any action taken by it under or in connection with this Clause 12.7.6.
12.8
FATCA Deduction
12.8.1
Each Finance Party may make any FATCA Deduction it is required by FATCA to make, and any payment required in connection with that FATCA Deduction, and no Party shall be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient of the payment for that FATCA Deduction.
12.8.2
The Agent shall promptly upon becoming aware that it must make a FATCA Deduction (or that there is any change in the rate or the basis of such FATCA Deduction) notify the Party to whom it is making the payment and, in addition, shall notify the Borrowers, the Agent and the other Finance Parties.
13
INCREASED COSTS
13.1
Increased costs   Subject to Clause 13.3 (Exceptions) the Borrowers shall, within three Business Days of a demand by the Agent, pay to the Agent for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation or any request from or requirement of any central bank or other fiscal, monetary or other authority made after the date of this Agreement (including Basel III (as defined in Clause 13.3) and any other which relates to capital adequacy or liquidity controls or which affects the manner in which that Finance Party allocates capital resources to obligations under this Agreement) or (iii) any change in the risk weight allocated by that Finance Party to the Borrowers after the date of this Agreement.
In this Agreement "Increased Costs" means:
(a)
a reduction in the rate of return from the Loan or on a Finance Party's (or its Affiliate's) overall capital;
(b)
an additional or increased cost; or
(c)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into any Finance Document or funding or performing its obligations under any Finance Document.
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13.2
Increased cost claims
13.2.1
A Finance Party intending to make a claim pursuant to Clause 13.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Borrowers.
13.2.2
Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
13.3
Exceptions   Clause 13.1 (Increased costs) does not apply to the extent any Increased Cost is:
13.3.1
attributable to a FATCA Deduction required to be made by a Party;
13.3.2
compensated for by Clause 12.3 (Tax indemnity) (or would have been compensated for under Clause 12.3 but was not so compensated solely because any of the exclusions in Clause 12.3 applied);
13.3.3
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation; or
13.3.4
attributable to the implementation or application of or compliance with the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 in the form existing on the date of this Agreement (but excluding any amendment arising out of Basel III) ("Basel II") or any other law or regulation which implements Basel II (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).
In this Clause 13.3, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 12.1 (Definitions) and "Basel III" means (i) the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (ii) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011 and (iii) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".
14
OTHER INDEMNITIES
14.1
Currency indemnity   If any sum due from a Borrower or a Guarantor  under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of:
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14.1.1
making or filing a claim or proof against that Borrower or that Guarantor (as the case may be), or
14.1.2
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Borrower or that Guarantor (as the case may be) shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that Finance Party at the time of its receipt of that Sum.
That Borrower and that Guarantor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
14.2
Other indemnities
14.2.1
The Borrower shall, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by that Finance Party as a result of:
(a)
the occurrence of any Event of Default;
(b)
a failure by a Borrower to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 28 (Sharing among the Finance Parties);
(c)
funding, or making arrangements to fund, a Drawing following delivery by the Borrowers of a Drawdown Request but that Drawing not being advanced by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by a Finance Party alone); or
(d)
the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrowers.
14.2.2
The Borrowers shall promptly indemnify each Finance Party and each officer or employee of a Finance Party (each such person for the purposes of this Clause 14.2 an "Indemnified Person") against any cost, loss or liability incurred by that Indemnified Person pursuant to or in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry, in connection with or arising out of the entry into and the transactions contemplated by the Finance Documents, having the benefit of any Encumbrance constituted by the Finance Documents or which relates to the condition or operation of, or any incident occurring in relation to, a Vessel, unless such cost, loss or liability is caused by the gross negligence or wilful misconduct of that Indemnified Person.
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14.2.3
Subject to any limitations set out in Clause 14.2.2, the indemnity in that Clause shall cover any cost, loss or liability incurred by each Indemnified Person in any jurisdiction:
(a)
arising or asserted under or in connection with any law relating to safety at sea, the ISM Code, any Environmental Law or any Sanctions Laws; or
(b)
in connection with any Environmental Claim.
14.3
Indemnity to the Agent   The Borrowers shall promptly indemnify the Agent against:
14.3.1
any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:
(a)
investigating any event which it reasonably believes is a Default; or
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised; or
(c)
instructing lawyers, accountants, tax advisers, surveyors or other professional advisers or experts as permitted under this Agreement; and
14.3.2
any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent's gross negligence or wilful misconduct) in acting as Agent under the Finance Documents.
14.4
Indemnity to the Security Agent   The Borrowers and the Guarantors shall promptly indemnify the Security Agent and every Receiver and Delegate against any cost, loss or liability incurred by any of them as a result of:
14.4.1
any failure by the Borrowers to comply with their obligations under Clause 16 (Costs and Expenses);
14.4.2
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised;
14.4.3
the taking, holding, protection or enforcement of the Security Documents;
14.4.4
the exercise of any of the rights, powers, discretions, authorities and remedies vested in the Security Agent and each Receiver and Delegate by the Finance Documents or by law;
14.4.5
any default by any Security Party in the performance of any of the obligations expressed to be assumed by it in the Finance Documents; or
14.4.6
acting as Security Agent, Receiver or Delegate under the Finance Documents or which otherwise relates to any of the Charged Property
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(otherwise, in each case, than by reason of the relevant Security Agent's, Receiver's or Delegate's gross negligence or wilful misconduct).
14.5
Indemnity survival   The indemnities contained in this Agreement shall survive repayment of the Loan.
15
MITIGATION BY THE LENDERS
15.1
Mitigation   Each Finance Party shall, in consultation with the Borrowers take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to any of Clause 7.1 (Illegality), Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.  The above does not in any way limit the obligations of any Security Party under the Finance Documents.
15.2
Limitation of liability   The Borrowers shall promptly indemnify each Finance Party for all reasonable costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 15.1 (Mitigation).  A Finance Party is not obliged to take any steps under Clause 15.1 if, in its opinion (acting reasonably), to do so might be prejudicial to it.
16
COSTS AND EXPENSES
16.1
Transaction expenses   The Borrowers shall promptly on demand pay the Agent and the Security Agent the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Receiver or Delegate) in connection with:
16.1.1
the negotiation, preparation, printing, execution, syndication and perfection of this Agreement and any other documents referred to in this Agreement;
16.1.2
the negotiation, preparation, printing, execution and perfection of any other Finance Documents executed after the date of this Agreement;
16.1.3
any other document which may at any time be required by a Finance Party to give effect to any Finance Document or which a Finance Party is entitled to call for or obtain under any Finance Document (including, without limitation, any valuation of a Vessel); and
16.1.4
any discharge, release or reassignment of any of the Security Documents.
16.2
Amendment costs   If (i) a Security Party requests an amendment, waiver or consent or (ii) an amendment is required under Clause 29.11 (Change of currency), the Borrowers shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Receiver or Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.
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16.3
Enforcement and preservation costs   The Borrowers shall, within three Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all reasonable costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Security Documents or enforcing those rights including (without limitation) any losses, costs and expenses which that Finance Party or other Secured Party may from time to time sustain, incur or become liable for by reason of that Finance Party or other Secured Party being mortgagee of a Vessel and/or a lender to a Borrower, or by reason of that Finance Party or other Secured Party being deemed by any court or authority to be an operator or controller, or in any way concerned in the operation or control, of a Vessel.
16.4
Other costs   The Borrowers shall, within three Business Days of demand, pay to each Finance Party and each other Secured Party the amount of all sums which that Finance Party or other Secured Party may pay or become actually or contingently liable for on account of a Borrower in connection with a Vessel (whether alone or jointly or jointly and severally with any other person) including (without limitation) all sums which that Finance Party or other Secured Party may pay or guarantees which it may give in respect of the Insurances, any expenses reasonably incurred by that Finance Party or other Secured Party in connection with the maintenance or repair of a Vessel or in discharging any lien, bond or other claim relating in any way to a Vessel, and any sums which that Finance Party or other Secured Party may pay or guarantees which it may give to procure the release of a Vessel from arrest or detention.
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Section 7          Security and Application of Moneys
17
SECURITY DOCUMENTS AND APPLICATION OF MONEYS
17.1
Security Documents   As security for the payment of the Indebtedness, the Borrowers shall execute and deliver to the Security Agent or cause to be executed and delivered to the Security Agent the following documents in such forms and containing such terms and conditions as the Security Agent shall require:
17.1.1
first preferred or first priority and second priority mortgages over the Vessels and, if applicable, collateral deeds of covenant;
17.1.2
first priority deeds of assignment of the Insurances, Earnings, Charters and Requisition Compensation of the Vessels from the relevant Owner and the Bareboat Charterer; and the first priority assignments of Insurances (if any) from the Managers contained in the Managers' Undertakings;
17.1.3
a joint and several guarantee and indemnity from each Guarantor;
17.1.4
a first priority account security agreement in respect of all amounts from time to time standing to the credit the Reserve Account;
17.1.5
first priority and second priority charges of all the issued shares of each Owner and the general partner of Owner C, VesselCo E ApS;
17.1.6
the Managers' Undertakings; and
17.1.7
a first priority assignment and subordination of any Inter-company Indebtedness;
17.2
Application after acceleration   From and after the giving of notice to the Borrowers by the Agent under Clause 23.2 (Acceleration), the Borrowers shall procure that all sums from time to time standing to the credit of the Reserve Account are immediately transferred to the Security Agent or any Receiver or Delegate for application in accordance with Clause 17.3 (Application of moneys by Security Agent) and the Borrowers irrevocably authorise the Security Agent to instruct the Agent (as account holder) to make those transfers.
17.3
Application of moneys by Security Agent   The Borrowers and the Finance Parties irrevocably authorise the Security Agent or any Receiver or Delegate to apply all moneys which it receives and is entitled to receive:
17.3.1
pursuant to a sale or other disposition of a Vessel or any right, title or interest in a Vessel; or
17.3.2
by way of payment of any sum in respect of the Insurances, Earnings or Requisition Compensation; or
17.3.3
by way of transfer of any sum from the Reserve Account; or
17.3.4
otherwise under or in connection with any Security Document,
in or towards satisfaction of the Indebtedness in the following order:
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17.3.5
first, any unpaid fees, costs, expenses and default interest due to the Agent and the Security Agent (and, in the case of the Security Agent, to any Receiver or Delegate) under all or any of the Finance Documents, such application to be apportioned between the Agent and the Security Agent pro rata to the aggregate amount of such items due to each of them;
17.3.6
second, any unpaid fees, costs, expenses (including any sums paid by the Lenders under Clause 26.10 (Indemnity)) of the Lenders due under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such items due to each of them;
17.3.7
third, any accrued but unpaid default interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such default interest due to each of them;
17.3.8
fourth, any other accrued but unpaid interest due to the Lenders under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such interest due to each of them;
17.3.9
fifth, any principal of the Loan due and payable but unpaid under this Agreement, such application to be apportioned between the Lenders pro rata to the aggregate amount of such principal due to each of them; and
17.3.10
sixth, any other sum due and payable to any Finance Party but unpaid under all or any of the Finance Documents, such application to be apportioned between the Finance Parties pro rata to the aggregate amount of any such sum due to each of them; and
17.3.11
Seventh, the balance if any, in payment to the Borrowers,
Provided that the balance (if any) of the moneys received shall be paid to the Security Parties from whom or from whose assets those sums were received or recovered or to any other person entitled to them.
17.4
Retention on account   Moneys to be applied by the Security Agent or any Receiver or Delegate under Clause 17.3 (Application of moneys by Security Agent) shall be applied as soon as practicable after the relevant moneys are received by it, or otherwise become available to it, save that (without prejudice to any other provisions contained in any of the Security Documents) the Security Agent or any Receiver or Delegate may retain any such moneys by crediting them to a suspense account for so long and in such manner as the Security Agent or such Receiver or Delegate may from time to time determine with a view to preserving the rights of the Finance Parties or any of them to prove for the whole of the Indebtedness (or any relevant part) against the Borrowers or any other person liable.
17.5
Additional security  If at any time the aggregate of the Market Value of the Existing Vessels and the New Vessels (which shall be calculated on a semi-annual basis on or around 30 June and 31 December each year by two valuations from Approved Shipbrokers appointed by the Borrower) and the value of any additional security for the time being provided to the Security Agent under this Clause 17.5,
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such value to be the face amount of any deposit (in the case of cash), to be determined conclusively by appropriate advisors (acting reasonably) appointed by the Agent (in the case of other charged assets) and determined by the Agent in its discretion acting reasonably (in all other cases) is less than 133% of the Loan then outstanding less any amount standing to the credit of the Reserve Account and the value of any additional security for the time being provided to the Security Agent under this Clause 17.5 (the "LTV Coverage"), the Borrowers shall, within 30 days of the Agent's written request and at the Borrowers' option:
17.5.1
pay into the Reserve Account a cash deposit in such amount as when deducted from the Loan reduces the excess to zero to be secured in favour of the Security Agent as additional security for the payment of the Indebtedness; or
17.5.2
give to the Security Agent other additional security in amount and form acceptable to the Security Agent in its discretion acting reasonably to provide security for such excess, it being agreed that any LR1, LR2, MR or handy size product tanker of less than 15 years old shall be acceptable; or
17.5.3
prepay the Loan in such amount as when deducted from the Loan reduces the excess to zero.
Clauses 6.3 (Reborrowing), 7.3.2 (Voluntary prepayment of Loan) and 7.9 (Restrictions) shall apply, mutatis mutandis, to any prepayment made under this Clause 17.5 except that the minimum threshold in Clause 7.3.2 (Voluntary prepayment of Loan) shall not apply.
The Agent may, at any time during the Facility Period, test the LTV Coverage by obtaining valuations from any two Approved Shipbrokers appointed by it (in which case the average of the of the vauations shall form the basis for determining the compliance with this Clause) with any such valuations being at the cost of the Agent unless an Event of Default is continuing in which case they shall be at the cost of the Borrowers.
Any additional security granted and/or cash deposit made pursuant to this Clause 17.5 shall be discharged or released (in whole or in part) by the Security Agent (at the Borrowers' cost) in the event that the LTV Coverage (without relying on such part of the additional security granted and/or cash deposit made as is to be released) is complied with on the next day of testing, or is again complied with as evidenced by two valuations from the same Approved Shipbrokers as gave the immediately preceding valuations, appointed by the Borrowers.  This shall be without prejudice to the Agent's right to make any request under this Clause 17.5 should the value of the remaining security (as evidenced by updated valuations from the same two Approved Shipbrokers) subsequently merit it.
If and for so long as the Borrowers fails to satisfy the obligations arising from the Agent's request under this Clause 17.5 the Borrowers shall, if so demanded by the Agent, compensate the Lenders for the increased risk in relation to the Loan by paying interest on the Loan at a rate calculated in accordance with Clause 8.3 (Default interest) as if the whole of the outstanding Loan were an overdue amount.  Any such interest shall accrue
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in accordance with Clause 32.3 (Day count convention) and be payable by the Borrowers in accordance with Clause 8.2 (Payment of interest) and shall be without prejudice to any other right or remedy any Finance Party may have under Clause 13 (Increased Costs) or Clause 22.34.1 (Events of Default).
A Vessel shall not be included in the calculation of the LTV Coverage unless a Mortgage has been registered and remain registered against such Vessel.
17.6
Release of Mortgages
If:
17.6.1
the Borrowers make a voluntary prepayment in accorordance with Clause 7.3 (Voluntary Prepayment of Loan) in respect of a certain Tranche; or
17.6.2
the Borrowers make a balloon payment on the Termination Date in respect of a certain Tranche in accordance with Schedule 9,
(each a "Payment") the Borrowers may require that the Mortgage(s) over one or more of the Vessels financed by that Tranche and the other Security Documents in respect of such Vessel(s) (but not any Vessels financed by other Tranches) be released after such Payment, provided that
(a)
the Borrowers notify the Agent of such requirement no later than 10 Business Days prior to the such Payment;
(b)
the LTV Coverage after such Payment and such release does not exceed the LTV Coverage immediately prior to such payment and release;
(c)
the LTV Coverage exceeds 133% after such Payment and release;
(d)
the LTV Coverage for the purpose of this Clause shall be calculated on the basis of the Market Value of the Vessels (as determined by the most recent valuation provided to the Agent pursuant to Clause 20.2.3); and
(e)
no Default has occurred and is continuing.
18
GUARANTEE AND INDEMNITY
18.1
Guarantee and indemnity
18.1.1
Guarantor A irrevocably and unconditionally:
(a)
guarantees to each Finance Party punctual performance by each other Security Party of all that Security Party's obligations under the Finance Documents (insofar as those obligations relate to the Existing Tranche A and the Existing Tranche B);
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(b)
undertakes with each Finance Party that whenever another Security Party does not pay any amount when due under or in connection with any Finance Document (insofar as such payment relates to the Existing Tranche A and the Existing Tranche B), Guarantor A shall immediately on demand pay that amount as if it was the principal obligor; and
(c)
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal (insofar as the obligation relates to the Existing Tranche A and the Existing Tranche B), it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Security Party not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due.  The amount payable by Guarantor A under this indemnity will not exceed the amount it would have had to pay under this Clause 18 if the amount claimed had been recoverable on the basis of a guarantee.
18.1.2
Guarantor B irrevocably and unconditionally:
(a)
guarantees to each Finance Party punctual performance by each other Security Party of all that Security Party's obligations under the Finance Documents (insofar as those obligations relate to Existing Tranche C and the New Tranche);
(b)
undertakes with each Finance Party that whenever another Security Party does not pay any amount when due under or in connection with any Finance Document insofar as such payment relates to Existing Tranche C and the New Tranche), Guarantor B shall immediately on demand pay that amount as if it was the principal obligor; and
(c)
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal (insofar as the obligation relates to Existing Tranche C and the New Tranche), it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Security Party not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due.  The amount payable by Guarantor B under this indemnity will not exceed the amount it would have had to pay under this Clause 18 if the amount claimed had been recoverable on the basis of a guarantee.
18.1.3
The Owners (in their capacity as guarantors) each jointly and severally irrevocably and unconditionally:
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(a)
guarantees to each Finance Party punctual performance by each other Security Party of all that Security Party's obligations under the Finance Documents;
(b)
undertakes with each Finance Party that whenever another Security Party does not pay any amount when due under or in connection with any Finance Document, the Owners (in their capacity as guarantors) shall immediately on demand pay that amount as if it was the principal obligor; and
(c)
agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of a Security Party not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due.  The amount payable by the Owners (in their capacity as guarantors) under this indemnity will not exceed the amount it would have had to pay under this Clause 18 if the amount claimed had been recoverable on the basis of a guarantee.
18.2
Continuing Guarantee   This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Security Party under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
18.3
No limit on demands   There shall be no limit on the number of demands which a Finance Party may make against a Guarantor in accordance with Clause 18.1 (Guarantee and indemnity).
18.4
Reinstatement   If any discharge, release or arrangement (whether in respect of the obligations of any Security Party or any security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of the Guarantors under this Clause 18 will continue or be reinstated as if the discharge, release or arrangement had not occurred.
18.5
Waiver of defences   The obligations of the Guarantors under this Clause 18 will not be affected by an act, omission, matter or thing which, but for this Clause 18, would reduce, release or prejudice any of its obligations under this Clause 18 (without limitation and whether or not known to it or any Finance Party) including:
18.5.1
any time, waiver or consent granted to, or composition with, any Security Party or other person;
18.5.2
the release of any other Security Party or any other person under the terms of any composition or arrangement with any creditor of any Security Party;
18.5.3
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or
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security over assets of, any Security Party or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
18.5.4
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Security Party or any other person;
18.5.5
any amendment, novation, supplement, extension restatement (however fundamental and whether or not more onerous) or replacement of a Finance Document or any other document or security including, without limitation, any change in the purpose of, any extension of or increase in any facility or the addition of any new facility under any Finance Document or other document or security;
18.5.6
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or
18.5.7
any insolvency or similar proceedings.
18.6
Guarantors intent   Without prejudice to the generality of Clause 18.5 (Waiver of defences), the Guarantors expressly confirm that they intend that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following:  business acquisitions of any nature; increasing working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness; making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
18.7
Immediate recourse   The Guarantors waive any right they may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from the Guarantors under this Clause 18.  This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
18.8
Appropriations   Until all amounts which may be or become payable by the Security Parties under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
18.8.1
refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Guarantors shall not be entitled to the benefit of the same; and
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18.8.2
hold in an interest-bearing suspense account any moneys received from the Guarantors or on account of the Guarantors' liability under this Clause 18.
18.9
Deferral of Guarantors' rights   Until all amounts which may be or become payable by the Security Parties under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, the Guarantors will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 18:
18.9.1
to be indemnified by a Security Party;
18.9.2
to claim any contribution from any other guarantor of any Security Party's obligations under the Finance Documents;
18.9.3
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
18.9.4
to bring legal or other proceedings for an order requiring any Security Party to make any payment, or perform any obligation, in respect of which the Guarantors have given a guarantee, undertaking or indemnity under Clause 18.1 (Guarantee and indemnity);
18.9.5
to exercise any right of set-off against any Security Party; and/or
18.9.6
to claim or prove as a creditor of any Security Party in competition with any Finance Party.
If the Guarantors receive any benefit, payment or distribution in relation to such rights they shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Security Parties under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with Clause 29 (Payment mechanics).
18.10
Additional security   This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party.
18.11
Cash collateral     If an Event of Default has occurred and is continuing, the Agent (acting on the instructions of the Majority Lenders), without prejudice to any other rights or remedies available under the Finance Documents or otherwise under law, shall be entitled to call immediately an amount equal to the Indebtedness from the Guarantors and hold the proceeds in escrow as cash collateral in respect of the Borrowers' performance under the Finance Documents.
18.12
Subordination   Each Borrower and each Guarantor agrees and undertakes with the Finance Parties that all claims of whatsoever nature which it has or may have at any time against any other Security Party or any of their respective property or assets
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shall rank after and be in all respects subordinate to any and all claims, whether actual or contingent, which the Finance Parties have or may have at any time against such other Security Party or any of its property or assets and that if an Event of Default has occurred and is continuing it will not without the prior written consent of the Agent (acting on the instructions of the Majority Lenders):
18.12.1
demand or accept payment in whole or in part of any moneys owing to it by any other Security Party;
18.12.2
take any steps to enforce its rights to recover any moneys owing to it by any other Security Party and more particularly (but without limitation) take or issue any judicial or other legal proceedings against any other Security Party or any of their respective property or assets; or
18.12.3
prove in the liquidation or other dissolution of any other Security Party in competition with a Finance Party.
18.13
Guarantors incorporated in Singapore  Notwithstanding any provision of this Clause 18 or of any other Finance Document, the obligations of any Guarantor incorporated in Singapore (a "Singaporean Guarantor") under this Clause 18 and under any Finance Document, the obligations of any Singaporean Guarantor under this Guarantee shall be limited to an amount equivalent to the higher of:
18.13.1
the Equity of the Singaporean Guarantor at the date of this Guarantee;
18.13.2
the Equity of the Singaporean Guarantor at the time  Singaporean Guarantor is request to make a payment under this Guarantee; and
18.13.3
with respect to a Singaporean Guarantor which is an Owner, the aggregate fair market value at any time of the Vessels owned by such Singaporean Guarantor.
For the purposes of this Clause 18.13 only, "Equity" shall mean the equity of the Singaporean Guarantor in question calculated in accordance with GAAP at the relevant time, however, adjusted if and to the extent any book value is not equal to the market value. The calculation of Equity shall not include the guarantee obligations pursuant to this guarantee.

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Section 8          Representations, Undertakings and Events of Default
19
REPRESENTATIONS
19.1
Representations   Each Borrower and each Guarantor make the representations and warranties set out in this Clause 19 to each Finance Party.
19.1.1
Status   Each of the Security Parties:
(a)
is a limited liability corporation, duly incorporated and validly existing under the law of its Original Jurisdiction; and
(b)
has the power to own its assets and carry on its business as it is being conducted.
19.1.2
Binding obligations   Subject to the Legal Reservations:
(a)
the obligations expressed to be assumed by each of the Security Parties in each of the Relevant Documents to which it is a party are legal, valid, binding and enforceable obligations; and
(b)
(without limiting the generality of Clause 19.1.2(a)) each Security Document to which it is a party creates the security interests which that Security Document purports to create and those security interests are valid and effective.
19.1.3
Non-conflict with other obligations   The entry into and performance by each of the Security Parties of, and the transactions contemplated by, the Relevant Documents do not conflict with:
(a)
any law or regulation applicable to such Security Party;
(b)
the constitutional documents of such Security Party; or
(c)
any agreement or instrument binding upon such Security Party or any of such Security Party's assets or constitute a default or termination event (however described) under any such agreement or instrument.
19.1.4
Power and authority
(a)
Each of the Security Parties has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Relevant Documents to which it is or will be a party and the transactions contemplated by those Relevant Documents.
(b)
No limit on the powers of any Security Party will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Relevant Documents to which it is a party.
19.1.5
Validity and admissibility in evidence   All Authorisations required or desirable:
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(a)
to enable each of the Security Parties lawfully to enter into, exercise its rights and comply with its obligations in the Relevant Documents to which it is a party or to enable each Finance Party to enforce and exercise all its rights under the Relevant Documents; and
(b)
to make the Relevant Documents to which any Security Party is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect, with the exception only of the registrations referred to in Part III of Schedule 2 (Conditions Subsequent).
19.1.6
Governing law and enforcement
Subject to the Legal Reservations:
(a)
the choice of governing law of any Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party; and
(b)
any judgment obtained in relation to any Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in the Relevant Jurisdictions of each relevant Security Party, save that judgements from countries outside the European Union may not be enforceable in Denmark.
19.1.7
Insolvency   No corporate action, legal proceeding or insolvency proceedings or creditors' process described in Clause 23.1.7 (Creditors' process) has been taken or, to the knowledge of any Borrower or the Guarantor, threatened in relation to a Security Party; and none of the circumstances described in Clause 23.1.6 (Insolvency) applies to a Security Party.
19.1.8
No filing or stamp taxes   Under the laws of the Relevant Jurisdictions of each relevant Security Party it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in any of those jurisdictions or that any stamp, registration, notarial or similar tax or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except:
(a)
registration of particulars of those Finance Documents at the Companies Registry of the relevant Security Party as detailed in the legal opinions obtained by the Agent in connection with this Agreement and payment of associated fees;
(b)
registration of each Mortgage at the Ships Registry where title to a Vessel is registered in the relevant Owner and payments of associated fees; and
(c)
stamping of the share charges in relation to Owner A and Owner B,
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which registrations, filing, taxes and fees will be made and paid promptly after the date of the relevant Finance Document.
19.1.9
Deduction of Tax   None of the Security Parties is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender.
19.1.10
No default
(a)
No Event of Default and, on the date of this Agreement and each Drawdown Date, no Default is continuing or is reasonably likely to result from the advance of the Loan or the entry into, the performance of, or any transaction contemplated by, any of the Relevant Documents.
(b)
No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (howsoever described) under any other agreement or instrument which is binding on any of the Security Parties or to which its assets are subject which has or is reasonably likely to have a Material Adverse Effect.
19.1.11
No misleading information   Save as disclosed in writing to the Agent prior to the date of this Agreement:
(a)
all material information provided to a Finance Party by or on behalf of any of the Security Parties on or before the date of this Agreement and not superseded before that date is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and
(b)
all other written information provided by any of the Security Parties  (including its advisers) to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.
19.1.12
Financial statements
(a)
The most recent financial statements of the Group delivered pursuant to Clause 20.1 (Financial statements):
(i)
have been prepared in accordance with GAAP; and
(ii)
give a true and fair view of (if audited) or fairly represent (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.
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(b)
Since the date of the most recent financial statements delivered pursuant to Clause 20.1 (Financial statements) there has been no material adverse change in the business, assets or financial condition of any of the Security Parties.
19.1.13
No proceedings pending or threatened   No litigation, arbitration or administrative proceedings of or before any court, arbitral body or agency which, if adversely determined, are reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief) been started or threatened against any of the Security Parties.
19.1.14
No breach of laws   None of the Security Parties has breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
19.1.15
Environmental laws
(a)
Each of the Security Parties is in compliance with Clause 22.4 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.
(b)
No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry) is threatened against any of the Security Parties where that claim has or is reasonably likely, if determined against that Security Party to have a Material Adverse Effect.
19.1.16
Taxation
(a)
None of the Security Parties is materially overdue in the filing of any Tax returns or is overdue in the payment of any amount in respect of Tax, the consequence of which is likely to have a Material Adverse Effect.
(b)
No claims or investigations are being, or are reasonably likely to be, made or conducted against any of the Security Parties with respect to Taxes, which if adversely determined is reasonably likely to have a Material Adverse Effect.
19.1.17
Anti-corruption law   Each of the Security Parties has conducted its businesses in compliance with applicable anti-corruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
19.1.18
No Encumbrance or Financial Indebtedness
(a)
No Encumbrance exists over all or any of the present or future assets of any of the Owners, other than Permitted Encumbrances.
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(b)
None of the Owners has any Financial Indebtedness outstanding other than as permitted by this Agreement and as notified in writing to the Agent prior to the date of this Agreement.
19.1.19
Pari passu ranking   The payment obligations of each of the Security Parties under the Finance Documents to which it is a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
19.1.20
No adverse consequences
(a)
It is not necessary under the laws of the Relevant Jurisdictions of any of the Security Parties:
(i)
in order to enable any Finance Party to enforce its rights under any Finance Document; or
(ii)
by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,
that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of the Relevant Jurisdictions of any of the Security Parties.
(b)
No Finance Party is or will be deemed to be resident, domiciled or carrying on business in any of the Relevant Jurisdictions of any of the Security Parties by reason only of the execution, performance and/or enforcement of any Finance Document.
19.1.21
No Disclosure of material facts   No Borrower or Guarantor is aware of any material facts or circumstances which have not been disclosed to the Agent and which would, if disclosed, have adversely affected the decision of a person considering whether or not to make loan facilities of the nature contemplated by this Agreement available to the Borrowers.
19.1.22
Completeness of Relevant Documents   The copies of any Relevant Documents provided or to be provided by the Borrowers to the Agent in accordance with Clause 4 (Conditions of Utilisation) are, or will be, true and accurate copies of the originals and represent, or will represent, the full agreement between the parties to those Relevant Documents in relation to the subject matter of those Relevant Documents and there are no commissions, rebates, premiums or other payments due or to become due in connection with the subject matter of those Relevant Documents other than in the ordinary course of business or as disclosed to, and approved in writing by, the Agent
19.1.23
No Immunity   No Security Party or any of its assets is immune to any legal action or proceeding.
19.1.24
Money laundering   Any borrowing by a Borrower under this Agreement, and the performance of its obligations under this Agreement
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and under the other Finance Documents, will be for its own account and will not involve any breach by it of any law or regulatory measure relating to "money laundering" as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities.
19.1.25
Sanctions
(a)
Each Borrower and each Guarantor and their respective directors, officers, joint ventures and employees and, to the best knowledge of each Borrower and each Guarantor, their respective agents and representatives (each acting in the capacity as agent or, as the case may be, representative for a Borrower or a Guarantor) has been and is in compliance with Sanctions Laws applicable to it.
(b)
No Borrower and no Guarantor nor any other member of the Group or any Relevant Affiliate of any of them or their respective directors, officers, joint ventures or employees and, to the best knowledge of each Borrower and Guarantor, their respective agents and representatives (each acting in the capacity as agent or, as the case may be, representative for a Borrower or a Guarantor):
(i)
is a Restricted Party, or is involved in any transaction through which it is likely to become a Restricted Party or acts directly or indirectly on behalf of a Restricted Party; or
(ii)
is subject to or involved in any inquiry, claim, action, suit, proceeding or investigation against it with respect to Sanctions Laws by any Sanctions Authority.
19.2
Repetition   Each Repeating Representation is deemed to be repeated by each Borrower and each Guarantor by reference to the facts and circumstances then existing of each Drawdown Date and (save for those contained in Clause 19.1.11 (No Misleading Information) on each Interest Payment Date.
20
INFORMATION UNDERTAKINGS
The undertakings in this Clause 20 remain in force for the duration of the Facility Period.
20.1
Financial statements   Borrower B shall supply to the Agent in sufficient copies for all of the Lenders:
20.1.1
as soon as the same become available, but in any event within 150 days after the end of each financial year the audited consolidated financial statements of the Group for that financial year; and
20.1.2
as soon as the same become available, but in any event within 60 days after the end of each quarter during each of its financial years, the unaudited quarterly financial statements of the Group (including profit and loss statements, balance sheet and cash flow statements for that quarter; and
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20.1.3
as soon as the same become available but in any event no later than the 1st December of each financial year and each time the same are revised or amended, detailed consolidated forward-looking budgets for the next twelve (12) months (showing, without limitation, profit and loss statements, balance sheet, cash flow statements and written assumptions)  including all revisions and amendments thereto (the "Annual Budgets"); and
20.1.4
if requested by the Agent, audited annual financial statements of any Subsidiary of Borrower B; and
20.1.5
promptly, details of any defaults by an member of the Group relating to Financial Indebtedness in excess of ten million dollars (USD 10,000,000) or any material litigation relating to a member of the Group; and
20.1.6
within 7 days of demand, such other information as the Agent may reasonably require.
20.2
Compliance Certificate and valuations of the Fleet Vessels
20.2.1
Borrower B shall supply to the Agent throughout the Facility Period, with its annual financial statements delivered pursuant to Clause 20.1 (Financial statements) and its quarterly financial statements delivered pursuant to Clause 20.1 (Financial statements) or Clause 17.5 (Additional Security) for the quarters ending 30 June and 31 December, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 21 (Financial Covenants) as at the date as at which those financial statements were drawn up and attaching supporting schedules.
20.2.2
The Compliance Certificate shall be signed by:
(a)
A director of Borrower B which is a member of the top management of the Group; or
(b)
the Chief Financial Officer or the Head of Treasury of Borrower A pursuant to a power of attorney from a director of Borrower B which is a member of the top management of the Group.
20.2.3
Borrower B shall within 10 Business Days after the end of each financial quarter provide the Agent with two independent valuations of the fair market value of the Fleet Vessels as of the relevant quarter from the Approved Shipbrokers addressed to Borrower B and determined in the same manner as the Market Value of the Vessels.
20.3
Requirements as to financial statements
Each set of financial statements delivered by a Borrower or a Guarantor under Clause 20.1 (Financial statements):
20.3.1
shall be certified by the relevant company as giving a true and fair view of (in the case of annual financial statements), or fairly representing (in
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other cases), its financial condition as at the date as at which those financial statements were drawn up; and
20.3.2
shall be prepared using GAAP, accounting practices and financial reference periods unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in GAAP, the accounting practices or reference periods and its auditors deliver to the Agent:
(a)
a description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the earlier financial statements were prepared; and
(b)
sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Agent to determine whether Clause 21 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the earlier financial statements.
If Borrower B updates or changes the financial statements or the Annual Budgets in any material respect, it shall deliver to the Agent such updated or changed financial statements or Annual Budgets and a written explanation of the main changes in those financial statements or Annual Budgets, together with the next Compliance Certificate delivered pursuant to Clause 20.2.
20.4
Information: miscellaneous   Each Borrower and each Guarantor shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):
20.4.1
At the same time as they are dispatched (and only if the Agent so requests), copies of all documents dispatched by a Borrower or any other Security Party to its creditors generally (or any class of them);
20.4.2
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any Security Party and which, if adversely determined, are reasonably likely to have a Material Adverse Effect;
20.4.3
promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Security Parties with the terms of any Security Documents including without limitation cash flow analyses and details of the operating costs of any Vessel; and
20.4.4
promptly on request, such further information regarding the financial condition, assets and operations of any Security Party (including any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Security Party under this Agreement) as any Finance Party through the Agent may reasonably request.
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20.5
Notification of default
20.5.1
Each Borrower and each Guarantor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence.
20.5.2
Promptly upon a request by the Agent, each Borrower shall supply to the Agent a certificate signed by two of its directors or senior officers on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
20.6
"Know your customer" checks
20.6.1
If:
(a)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(b)
any change in the status of a Security Party or the Sponsor after the date of this Agreement; or
(c)
a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of Clause 20.6.1(c), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Borrower shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in Clause 20.6.1(c), on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in Clause 20.6.1(c), any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
20.6.2
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
21
FINANCIAL COVENANTS
21.1
Borrower B shall maintain (on a consolidated basis):
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21.1.1
Free Liquidity and, for so long as the availability period under the RCF Facility Agreement ends at least six months after any calculation date, the aggregate amount of undrawn commitments under the RCF Facility Agreement which are available for utilisation at such date, of the greater of seventy five million dollars (US$75,000,000) and 5% of Group Debt at all times provided that at all times, the Free Liquidity shall be at least the greater of forty million Dollars (US$40,000,000) and 5% of the Group Debt; and
21.1.2
an Equity Ratio of at least 25%.
21.2
If the Borrowers or any other member of the Group enter into a loan agreement or any other financial arrangement having similar effect or a guarantee, or amends, modifies or supplements an existing loan agreement, any other financial arrangement or gurarantee, which includes Financial Covenants in respect of the Borrowers that are more beneficial to that lender or credit provider than the Financial Covenants of the Borrowers set out herein (the "New Financial Covenants") then the Borrowers shall promptly deliver a notice in writing to the Agent (a "Most Favoured Notice") which shall include a reasonably detailed description of the more favourable New Financial Covenants (together with a copy of the relevant New Financial Covenant).
Following the delivery of a Most Favoured Notice, the Agreement shall if requested by the Agent be amended to include the New Financial Coveants within 15 Business Days after the Agent's request in a form acceptable to the Agent.
In this Clause 21.2:
"Financial Covenants" means any financial covenant including but not limited to minimum liquidity requirements and/or requirements as to the ratio of equity to total assets and/or limitations on dividends, in each case related to Borrower B and its Subsidiaries, save for limitations on dividends which shall only relate to Borrower B.
22
GENERAL UNDERTAKINGS
The undertakings in this Clause 22 remain in force for the duration of the Facility Period.
22.1
The Owners undertakes to comply with all undertakings contained in Schedule 11 (Vessel and Insurance Undertakings) of this Agreement.
In the event of any discrepancies between the ship covenants and the insurance covenants in the Mortgages and the undertakings set out in Schedule 11 (Vessel and Insurance Undertakings) hereto, the undertakings in Schedule 11 (Vessel and Insurance Undertakings) hereto shall take precedent.
22.2
Authorisations   Each Borrower shall promptly:
22.2.1
obtain, comply with and do all that is necessary to maintain in full force and effect; and
22.2.2
supply certified copies to the Agent of,
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any Authorisation required under any law or regulation of a Relevant Jurisdiction to:
(a)
enable any Security Party to perform its obligations under the Finance Documents to which it is a party;
(b)
ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and
(c)
enable any Security Party to carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.3
Compliance with laws
22.3.1
Each Borrower and each Guarantor shall comply in all respects with all laws to which it may be subject, if (except as regards Sanctions Laws, to which Clause 22.3.2 applies, and anti-corruption laws, to which Clause 22.6 applies) failure so to comply has or is reasonably likely to have a Material Adverse Effect.
22.3.2
Each Borrower and each Guarantor shall comply (and shall procure that each other Security Party, shall comply) in all respects with all Sanctions Laws.
22.4
Environmental compliance
Each Borrower and each Guarantor shall:
22.4.1
comply with all Environmental Laws;
22.4.2
obtain, maintain and ensure compliance with all requisite Environmental Approvals; and
22.4.3
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
22.5
Environmental Claims
Each Borrower and each Guarantor shall promptly upon becoming aware of the same, inform the Agent in writing of:
22.5.1
any Environmental Claim against any of the Security Parties which is current, pending or threatened; and
22.5.2
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any of the Security Parties.
where the claim, if determined against that Security Party has or is reasonably likely to have a Material Adverse Effect.
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22.6
Anti-corruption law
22.6.1
Each Borrower and each Guarantor shall not (and shall procure that no other Security Party will) directly or indirectly use the proceeds of the Loan for any purpose which would breach the English Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other jurisdictions.
22.6.2
Each Borrower and each Guarantor shall (and shall procure that each other Security Party shall):
(a)
conduct its businesses in compliance with applicable anti-corruption laws; and
(b)
maintain policies and procedures designed to promote and achieve compliance with such laws.
22.6.3
Sanctions
(a)
Each Borrower and each Guarantor shall ensure that none of them, nor any of their respective directors, officers or employees is or will become a Restricted Party.
(b)
Each Borrower and each Guarantor shall, and shall procure that each other member of the Group and each Relevant Affiliate of any of them shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Party in discharging any obligation due or owing to the Finance Parties, to the extent such discharge with such revenue or benefit would be prohibited by Sanctions Laws or would otherwise cause any Finance Party to be in breach of Sanctions Laws.
(c)
Each Borrower and each Guarantor shall procure that no proceeds from any activity or dealing with a Restricted Party are credited to any bank account held with any Finance Party in its name or in the name of any other member of the Group or any Relevant Affiliate of any of them, to the extent such provision of proceeds would be prohibited by Sanctions Laws or would otherwise cause any Finance Party to be in breach of Sanctions Laws.
(d)
Each Borrower and each Guarantor shall, and shall procure that each other member of the  Group shall, to the extent permitted by law promptly upon becoming aware of them supply to the Agent details of any claim, action, suit, proceedings or investigation against it with respect to Sanctions Laws by any Sanctions Authority.
(e)
No Borrower or Guarantor shall permit or authorise and each Borrower and each Guarantor shall prevent any Vessel being used directly or indirectly:
(i)
by or for the benefit of any Restricted Party in violation of Sanctions Laws or in any manner which would otherwise
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cause any Finance Party to be in breach of Sanctions Laws; and/or
(ii)
in any trade which is reasonably likely to expose the Vessel, any Finance Party, any manager, crew or insurers to enforcement proceedings or any other consequences whatsoever arising from Sanctions Laws.
22.7
Taxation
22.7.1
Each Borrower and each Guarantor shall (and shall procure that each other Security Party shall) generally pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(a)
such payment is being contested in good faith;
(b)
adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Agent under Clause 20.1 (Financial statements); and
(c)
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.
22.7.2
Neither any Borrower nor any Guarantor may change its residence for Tax purposes without the consent of the Security Agent (such consent not to be unreasonably withheld).
22.8
Evidence of good standing   Each Borrower will from time to time if requested by the Agent provide the Agent with evidence in form and substance satisfactory to the Agent that the Security Parties and all corporate shareholders of any of the Security Parties remain in good standing.
22.9
Pari passu ranking   Each Borrower and each Guarantor shall ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
22.10
Negative pledge
The Borrowers and the Guarantors shall not (and shall procure that no other Security Party will) create nor permit to subsist any Encumbrance or other third party rights over the Vessels, or other Charged Property during the Facility Period, save for Permitted Encumbrances.
22.11
Disposals
22.11.1
Except as permitted under Clause 22.11.2, no Owner shall enter into a
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single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.
22.11.2
Clause 22.11.1 does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal or a Permitted Transaction.  Clause 22.11.1 shall not apply to any sale or other disposal of a Vessel for market value in circumstances where the relevant repayment (as provided in Clause 7.6) shall be made on completion of such sale.
22.12
Arm's length basis
22.12.1
Any transactions or agreements entered into between (i) any Borrower or any Guarantor and (ii) any Guarantor or the Sponsor or the Managers or any of their respective Affiliates shall be on arm's length terms and for fair market value and shall be subject to full disclosure to the Agent.
22.12.2
The following transactions shall not be a breach of this Clause 22.12:
(a)
fees, costs and expenses payable under the Relevant Documents in the amounts set out in the Relevant Documents delivered to the Agent under Clause 4.1 (Initial conditions precedent) or agreed by the Agent; and
(b)
any Permitted Transaction.
22.13
Merger   Neither any Borrower nor any Guarantor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction without the prior written consent of the Agent.
22.14
Change of business   Neither any Borrower nor any Guarantor shall make any change to the general nature of its business from that carried on at the date of this Agreement it being agreed that Borrower A may discontinue its dry bulk business and Borrower B may dispose of all of its vessels and continue business as a holding company without breaching this covenant.
22.15
No other business   No Owner shall engage in any business other than the ownership, operation, chartering and management of the relevant Vessel.
22.16
No acquisitions   No Owner shall acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or incorporate a company, without the prior consent of the Agent.
22.17
No Joint Ventures   No Owner shall:
22.17.1
enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
22.17.2
transfer any assets or lend to or guarantee or give an indemnity for or give security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).
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22.18
No borrowings   No Owner shall incur or allow to remain outstanding any Financial Indebtedness (except for the Loan) other than the Inter-company Indebtedness which is subject to the Inter-company Indebtedness Assignment.
22.19
No substantial liabilities   Except in the ordinary course of business, no Owner shall incur any liability to any third party which is in the Agent's opinion (acting reasonably) of a substantial nature other than the Inter-company Indebtedness which is subject to the Inter-company Indebtedness Assignment.
22.20
No loans or credit   No Owner shall be a creditor in respect of any Financial Indebtedness unless it is a loan made in the ordinary course of business in connection with the chartering, operation or repair of the relevant Vessel or a Permitted Transaction.
22.21
No guarantees or indemnities   No Owner shall incur or allow to remain outstanding any guarantee in respect of any obligation of any person unless it is a Permitted Transaction.
22.22
Dividend Payment
22.22.1
Except as permitted under Clause 22.22.2 below, Borrower B shall not:
(a)
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or kind) on or in respect of its share capital (or any class of its share capital);
(b)
repay or distribute any dividend or share premium reserve;
(c)
pay or allow the payment by any other member of the Group of any management, advisory or other fee to or to the order of any of the shareholders of Borrower B;
(d)
redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so; or
(e)
make any payment or repayment or allow any other member of the Group to make a payment or repayment under any Financial Indebtedness owed to a shareholder of Borrower B or a member of the Group which is not a Borrower or a Guarantor;
each of the above being referred to herein as a "Distribution".
22.22.2
Clause 22.22.1 above does not apply to any direct or indirect Distributions by Borrower B after the expiry of each half of each of its financial years, of up to 75% of its Net Income (as defined below) for that half year period; provided that:
(a)
any such Distributions are declared and made when no Default is continuing or would occur immediately after the declaration or making of such payments; and
(b)
after giving effect to any such payments, Borrower B is not in breach of any of the provisions of Clause 21 (Financial Covenants).
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For this purpose, "Net Income" shall mean the net income determined based on Borrower B's financial statements as at 30 June or its annual audited financial statements, as the case may be. Any amount available for distribution based on Net Income for a financial year and that is not distributed shall not be carried forward.
22.22.3
This Clause 22.22 shall cease to apply at any time:
(a)
at which the Group LTV is equal to or less than fifty per cent. (50%) and would continue to be equal to or less than fifty per cent. (50%) following the Distribution; or
(b)
the Borrower is listed on the New York Stock Exchange or Nasdaq New York.
22.22.4
For this purpose "Group LTV" means the ratio of (y) the sum of the Group's Financial Indebtedness less cash and Cash Equivalents to (z) the aggregate Market Value of the Fleet Vessels determined in the same manner as Market Value in respect of the Vessels as evidenced by the valuations to be provided by Borrower B to the Agent pursuant to Clause 20.2.1.
22.23
Inspection of records Each Borrower and each Guarantor will permit the inspection of its financial records and accounts from time to time by the Agent or its nominee.
22.24
Further assurance
22.24.1
Each Borrower and each Guarantor shall (and shall procure that each other Security Party shall) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):
(a)
to perfect any Encumbrance created or intended to be created under or evidenced by the Security Documents (which may include the execution of a mortgage, charge, assignment or other Encumbrance over all or any of the assets which are, or are intended to be, the subject of the Security Documents) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;
(b)
to confer on the Security Agent or confer on the Finance Parties an Encumbrance over any property and assets of that Security Party located in any jurisdiction equivalent or similar to the Encumbrance intended to be conferred by or pursuant to the Security Documents; and/or
(c)
to facilitate the realisation of the assets which are, or are intended to be, the subject of the Security Documents.
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22.24.2
Each Borrower and each Guarantor shall (and shall procure that each other Security Party shall) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Encumbrance conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.
22.25
Change of Manager
22.25.1
The Borrowers shall procure that:
(a)
if a Management Agreement is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date, such Management Agreement is replaced by a similar agreement in form and substance satisfactory to the Majority Lenders (acting reasonably); and
(b)
any new Manager provides the Agent with a Manager's Undertaking immediately upon of its appointment on terms acceptable to the Agent (acting reasonably); and
(c)
if a Bareboat Charter is terminated, cancelled or otherwise ceases to remain in full force and effect, Borrower A (acting as Manager) and the relevant Owner shall, unless otherwise agreed by the Agent, execute a management agreement in respect of the commercial and technical management of the relevant Vessel.
22.25.2
Each Borrower and each relevant Owner shall procure that each vessel owned by the Group shall be managed commercially by Borrower A or another company approved by the Agent (acting reasonably).
22.26
Building Contracts  The Owners undertake not to agree or to permit any changes to the Building Contracts which are likely have an adverse effect on the Market Value of the New Vessels or otherwise materially alter the Vessels, including any change in class notation.
22.27
Change of flag or classification society
22.27.1
The Owners shall maintain the registration of their respective Vessels under an Approved Flag for the duration of the Facility Period. Re-flagging of a Vessel under an Approved Flag is permitted, subject always to (i) the provisions of Clauses 4.5 (Conditions Precedent to Re-flagging under an Approved Flag) and (ii) provision of prior written notice to the Agent by the relevant Owner (setting out in full the relevant details in respect of the proposed re-flagging) at least 15 Business Days before the proposed re-flagging, provided always that the Agent (acting in its reasonable discretion) may at any time withdraw its approval in respect of an Approved Flag.
22.27.2
The Owners shall maintain their respective Vessels under an Approved Classification Society for the duration of the Facility Period provided always that the Agent (acting in its reasonable discretion) may at any
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time withdraw its approval in respect of an Approved Classification Society.
22.28
No change of control in respect of the Guarantors
22.28.1
Borrower B shall retain throughout the Facility Period the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(a)
cast, or control the casting of 100% of the votes that might be cast at a general meeting of Guarantor B and of each Owner;
(b)
appoint or remove all of the directors or other equivalent officers of Guarantor B and of each Owner; and
(c)
give directions with respect to the management policies of Guarantor B and of each Owner; and
22.28.2
Borrower B shall retain throughout the Facility Period the legal and beneficial ownership (directly or indirectly) of 100% of the issued share capital of Guarantor B and of each Owner.
22.29
Chartering
22.29.1
Neither the Borrowers nor any Owner nor the Bareboat Charterer shall enter into any Charter for a Vessel (except for a Bareboat Charter) which is a bareboat or demise charter or passes possession and operational control of such Vessel to another person.
22.29.2
All Charters of the Vessels shall be on terms as to payment or amount of hire which are not materially less beneficial to the Borrowers or any Owner than the terms which at that time could reasonably be expected to be obtained on the open market for vessels of the same age and type as such Vessel under charter commitments of a similar type and period.
22.29.3
The Borrowers shall promptly notify the Agent of any Charter made for a period which is longer than thirteen (13) months (including any optional or automatic extension periods) and shall deliver to the Agent, upon the Agent's reasonable request, a summary of all Charters to which the Vessels are subject, including the identity of the charterers.
22.29.4
The Borrowers and/or the relevant Owner shall give notice of the assignments contained in the Assignments for each Vessel to the charterer under any Charter for such Vessel longer than thirteen (13) months (including any optional or automatic extension periods) immediately upon entry into the  Assignment (or, if later, the date of entry into such Charter) and shall ensure that the Agent receives a copy of that notice, provided  that, prior to the occurrence and continuance of an Event of Default, no notice shall be required to be given if that Borrower demonstrates sound commercial reasons to refrain from giving such notice.
22.29.5
The Bareboat Charterer shall not do anything which would or might prevent the Borrowers complying with this Clause 22 or the operation
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and insurance provisions contained in any Mortgage or collateral deed of covenants, or fail to do anything required by the Bareboat Charter where failure to do so would or might have such an effect.
22.29.6
No Owner shall charter-in any vessels.
22.30
Assignment and Subordination   Any Inter-company Indebtedness shall be unsecured and shall be (i) assigned to the Security Agent pursuant to an Inter-company Indebtedness Assignment and (ii) subordinated to the Loan on terms acceptable to the Agent.
22.31
[DELIBERATELY NOT USED]
22.32
Delivery of Vessels   The Owners undertake to use all reasonable endeavours to take delivery of all Vessels within the Availability Period.
22.33
[DELIBERATELY NOT USED]
22.34
Subordination
22.34.1
Borrower A (in its capacity as Bareboat Charterer) acknowledges that each of the Security Agent's rights and powers arising out of or pursuant to the relevant Mortgage shall in all respects and at all times have precedence and priority over the rights and powers of the Bareboat Charterer arising out of or pursuant to the Bareboat Charter.
22.34.2
Borrower A (in its capacity as Bareboat Charterer) undertakes for the duration of the Bareboat Charter not to create, or permit to subsist, any Encumbrance (other than pursuant to the Security Documents) over all or any part of the relevant Vessel other than a Permitted Encumbrance.
22.34.3
Borrower A (in its capacity as Bareboat Charterer) undertakes for the duration of the Bareboat Charter to perform all of the relevant Owner's obligations contained in Schedule 11 (Vessel and Insurance Undertakings) of this Agreement jointly and severally with the Owner.
22.34.4
Borrower A (in its capacity as Bareboat Charterer) agrees that, should an Event of Default occur and the Security Agent wish to take and enter into possession of the relevant Vessel pursuant to its rights under the relevant Mortgage, the Bareboat Charterer will immediately on the demand of the Security Agent surrender possession of the relevant Vessel to or to the order of the Security Agent free of the Bareboat Charter.
22.34.5
Borrower A (in its capacity as Bareboat Charterer) agrees that, should an Event of Default occur and be continuing unremedied and unwaived and the Security Agent wishes to sell the relevant Vessel pursuant to its rights under the relevant Mortgage, such sale may be made free of the Bareboat Charter and any claim for loss of the same shall be made against the relevant Owner or the balance (if any) of the proceeds of sale in the hands of the Security Agent after payment of the Indebtedness unless the Security Agent is obliged by law to apply such balance in favour of parties other than the Bareboat Charterer.
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22.34.6
Borrower A (in its capacity as Bareboat Charterer) agrees that, should an Event of Default occur and the Security Agent wishes to take and enter into possession of the relevant Vessel and/or to sell the relevant Vessel pursuant to its rights under the relevant Mortgage, the Bareboat Charter will immediately on the demand of the Security Agent be terminated.
23
EVENTS OF DEFAULT
23.1
Events of Default   Each of the events or circumstances set out in this Clause 23.1 is an Event of Default.
23.1.1
Non-payment   A Security Party does not pay on the due date any amount payable by it under a Finance Document at the place at and in the currency in which it is expressed to be payable unless:
(a)
its failure to pay is caused by:
(i)
administrative or technical error; or
(ii)
a Disruption Event; and
(b)
payment is made within three Business Days of its due date.
23.1.2
Other specific obligations
(a)
Any requirement of Clause 21 (Financial Covenants) is not satisfied.
(b)
A Security Party does not comply with any obligation in a Finance Document relating to the Insurances or with Clause 17.5 (Additional security).
(c)
The Borrowers do not comply with Clauses 7.6.1 or 7.6.2 (Mandatory prepayment on sale or Total Loss)
23.1.3
Other obligations
(a)
A Security Party does not comply with any provision of a Finance Document (other than those referred to in Clause 23.1.1 (Non-payment) and Clause 23.1.2 (Other specific obligations).
(b)
No Event of Default under this Clause 23.1.3 will occur if the failure to comply is capable of remedy and is remedied within ten Business Days of the earlier of (i) the Agent giving notice to the Borrowers and (ii) the Borrowers becoming aware of the failure to comply.
23.1.4
Misrepresentation   Any representation or statement made or deemed to be repeated by a Security Party in any Finance Document or any other document delivered by or on behalf of a Security Party under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.
23.1.5
Cross default
(a)
Any Financial Indebtedness of a Security Party:
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(i)
is not paid when due nor within any originally applicable grace period; or
(ii)
is declared to be, or otherwise becomes, due and payable prior to its specified maturity as a result of an event of default (however described).
(b)
Any commitment for any Financial Indebtedness of any Security Party is cancelled or suspended by a creditor of that Security Party as a result of an event of default (however described).
No Event of Default will occur under this Clause 23.1.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within (c)(f) to (c) is less than $10,000,000 (or its equivalent in any other currency or currencies).
23.1.6
Insolvency
An Insolvency Event occurs in respect of any Security Party.
23.1.7
Creditors' process   Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of a Security Party having an aggregate value of USD 10,000,000.
23.1.8
Unlawfulness and invalidity
(a)
It is or becomes unlawful for a Security Party to perform any of its obligations under the Finance Documents or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be effective.
(b)
Any obligation or obligations of any Security Party under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents.
(c)
Any Finance Document ceases to be in full force and effect or any Encumbrance created or expressed to be created or evidenced by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.
23.1.9
Cessation of business   A Security Party other than Borrower B, which may dispose of all of its vessels and continue business as a holding company, ceases, or threatens to cease, to carry on all or a substantial part of its business.
23.1.10
Change in ownership or control of a Guarantor  There is any breach of Clause 22.28.2.
23.1.11
Expropriation   The authority or ability of a Security Party to conduct its business is limited or wholly or substantially curtailed by any seizure,
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expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to a Security Party or any of its assets.
23.1.12
Repudiation and rescission of agreements
(a)
A Security Party rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.
(b)
Any of the Management Agreements is terminated, cancelled or otherwise ceases to remain in full force and effect at any time prior to its contractual expiry date and is not promptly replaced by a similar agreement in form and substance satisfactory to the Majority Lenders (acting reasonably).
23.1.13
Conditions subsequent   Any of the conditions referred to in Clause 4.3 (Conditions subsequent) is not satisfied within the time reasonably required by the Agent.
23.1.14
Revocation or modification of Authorisation   Any Authorisation of any governmental, judicial or other public body or authority which is now, or which at any time during the Facility Period becomes, necessary to enable any of the Security Parties or any other person (except a Finance Party) to comply with any of their obligations under any Relevant Document is not obtained, is revoked, suspended, withdrawn or withheld, or is modified in a manner which the Agent considers is, or may be, materially prejudicial to the interests of any Finance Party, or ceases to remain in full force and effect.
23.1.15
Reduction of capital  A Guarantor reduces its authorised or issued or subscribed capital.
23.1.16
Challenge to registration   The registration of a Vessel or a Mortgage is contested or becomes void or voidable or liable to cancellation or termination, or the validity or priority of a Mortgage is contested.
23.1.17
War   The country of registration of a Vessel becomes involved in war (whether or not declared) or civil war or is occupied by any other power and the Agent in its discretion (acting reasonably) considers that, as a result, the security conferred by any of the Security Documents is materially prejudiced.
23.1.18
Notice of determination   A Guarantor gives notice to the Security Agent to determine any obligations under the relevant Guarantee.
23.1.19
Litigation   Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened in relation to the Relevant Documents (other than the Charters or the Management Agreements) or the transactions contemplated in the Relevant Documents or against a Security Party or
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its assets which have or are reasonably likely to have a Material Adverse Effect.
23.1.20
Material Adverse Change Any event of circumstance set out in Clause 23.1.21 (Sanctions) occurs in relation to any member of the Group or an Affiliate of any of them or any member of the Group or an Affiliate of any of them acts in a way contrary to the obligations set out in Clauses 22.3 (Environmental Compliance), 22.5 (Anti-corruption law) and 22.6.1 (Taxation) and the Majority Lenders reasonably believe that such event or actions have or are reasonably likely to have a Material Adverse Effect.
23.2
Acceleration   On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders:
23.2.1
by notice to the Borrowers cancel the Total Commitments, at which time they shall immediately be cancelled;
23.2.2
by notice to the Borrowers declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents are immediately due and payable, at which time they shall become immediately due and payable;
23.2.3
by notice to the Borrowers declare that the Loan is payable on demand, at which time it shall immediately become payable on demand made by the Agent on the instructions of the Majority Lenders; and/or
23.2.4
exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.
23.2.5
by notice to the Borrowers amend or select such Interest Periods for the Loan and/or convert the Indebtedness into such other currency as the Agent may determine; and/or
23.2.6
take any other action, exercise any other right or pursue any other remedy conferred upon the Agent by this Agreement and/or by all or any of the Security Documents or by any applicable Regulation or otherwise as a consequence of such Event of Default; and/or
23.2.7
enforce any and all statutory rights under any applicable law, including the Danish Administration of Justice Act; and/or
23.2.8
recover from the Security Parties on demand all expenses incurred or paid by the Agent or the Security Agent  in connection with the exercise of the powers referred to in this Clause 23.2.
23.3
Security Agent's Powers
23.3.1
If an Event of Default shall occur, and the Agent shall demand payment of all or any part of the Indebtedness, the security constituted by each Mortgage and this Agreement shall become immediately enforceable and the Security Agent shall be entitled to exercise all or any of the rights, powers, discretions and remedies vested in the Security Agent by this Clause without any requirement for any court order or declaration that an
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Event of Default has occurred.  The Security Agent's right to exercise those rights, powers, discretions and remedies shall be in addition to and without prejudice to all other rights, powers, discretions and remedies to which it may be entitled, whether by statute or otherwise.  The Security Agent shall be entitled to exercise its rights, powers, discretions and remedies despite any rule of law or equity to the contrary, and whether or not any previous default shall have been waived, and in particular without the limitations contained in Section 103 of the English Law of Property Act 1925 or any statutory provision which the Security Agent considers analogous to that section under the law of any other relevant jurisdiction.
23.3.2
In the circumstances described in Clause 23.3.1, the Security Agent shall be entitled (but not obliged) to in respect of each Vessel:
(a)
take possession of the Vessel wherever she may be; and/or
(b)
discharge the master and crew of the Vessel and employ a new master and crew; and/or
(c)
navigate the Vessel to such places as the Security Agent may decide or detain or lay up the Vessel; and/or
(d)
in the name of the Security Agent or the name of the relevant Owner, demand, sue for, receive and give a good receipt for all sums due to the relevant Owner in connection with the Vessel and, in the name of the Security Agent or the name of the relevant Owner or the name of the Vessel, commence such legal proceedings as it may consider appropriate, or conduct the defence of any legal proceedings commenced against the Vessel or the relevant Owner in its capacity as owner of the Vessel; and/or
(e)
sell or dispose of all or any shares in the Vessel either by private treaty or auction, on such terms as the Security Agent shall think fit (including deferred payment terms and with or without the benefit of any charterparty or other contract of employment), with the power to make a loan on such terms as the Security Agent may decide to any prospective purchaser to assist in the purchase of the Vessel, and the power to postpone any sale, without being liable for any loss caused by any such sale or the postponement of any such sale; and/or
(f)
replace, maintain or repair any part of the Vessel or alter her to suit the Security Agent's requirements and put her through all appropriate surveys; and/or
(g)
employ agents, servants and others (including, without limitation, any commercial and/or technical manager in respect of the relevant Vessel) on such terms as the Security Agent may in its discretion determine; and/or
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(h)
charter or load the Vessel on such terms and for the carriage of such cargoes as the Security Agent may in its discretion determine.
23.3.3
For the avoidance of doubt, if the Security Agent takes any action or enters into or completes any transaction pursuant to Clause 23.3.2 after an Event of Default has been remedied, that action or transaction shall not be affected by the remedying of the Event of Default.
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Section 9          Changes to Parties
24
CHANGES TO THE LENDERS
24.1
Assignments and transfers by the Lenders   Subject to this Clause 24, a Lender (the "Existing Lender") may:
24.1.1
assign any of its rights; or
24.1.2
transfer by novation any of its rights and obligations; or
24.1.3
sub-participate any of its rights and obligations,
under any Finance Document to another bank or financial institution or other entity which is regularly engaged in or established for the purpose of making, purchasing, or investing in loans, securities or other financial assets (other than any hedge fund, opportunity fund or private equity investor) (the "New Lender").
24.2
Conditions of assignment or transfer
24.2.1
An Existing Lender must consult with the Borrowers for no more than 15 Business Days before it may make an assignment or transfer or sub-participation in accordance with Clause 24.1 (Assignments and transfers by the Lenders) unless the assignment or transfer is:
(a)
to another Lender or an Affiliate of a Lender (falling within the definition of a "New Lender"); or
(b)
made at a time when an Event of Default is continuing.
24.2.2
The consent of the Borrowers to an assignment or transfer or sub-participation must not be unreasonably withheld or delayed.  The Borrowers will be deemed to have given their consent 15 Business Days after the Lender has requested it unless consent is expressly refused by the Borrowers within that time.
24.2.3
An assignment will only be effective on:
(a)
receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender; and
(b)
performance by the Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender; and
(c)
it is for a minimum amount of ten million dollars (US$ 10,000,000).
24.2.4
A transfer will only be effective if the procedure set out in Clause 24.4 (Procedure for transfer) is complied with.
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24.2.5
If:
(a)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(b)
as a result of circumstances existing at the date the assignment, transfer or change occurs, a Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 12 (Tax Gross Up and Indemnities) or Clause 13 (Increased Costs),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.  This Clause 24.2.5 shall not apply in respect of an assignment or transfer made in the ordinary course of the primary syndication of the Loan.
24.2.6
Each New Lender confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.
24.3
Limitation of responsibility of Existing Lenders
24.3.1
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(a)
the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;
(b)
the financial condition of any Security Party;
(c)
the performance and observance by any Security Party of its obligations under the Relevant Documents or any other documents; or
(d)
the accuracy of any statements (whether written or oral) made in or in connection with any of the Relevant Documents or any other document,
and any representations or warranties implied by law are excluded.
24.3.2
Each New Lender confirms to the Existing Lender and the other Finance Parties that it:
(a)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Security Party and its related entities in connection with its
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participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any of the Relevant Documents; and
(b)
will continue to make its own independent appraisal of the creditworthiness of each Security Party and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
24.3.3
Nothing in any Finance Document obliges an Existing Lender to: