Dynagas LNG Partners LP (Form: 20-F, Received: 04/18/2016 16:10:59)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 20-F

[_] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ____ to ____

[_] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number: 001-36185

DYNAGAS LNG PARTNERS LP

(Exact name of Registrant as specified in its charter)

Republic of the Marshall Islands

(Jurisdiction of incorporation or organization)

23, Rue Basse, 98000 Monaco

(Address of principal executive offices)

Michael Gregos

23, Rue Basse, 98000 Monaco

Tel. +377 99996445

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person

Securities registered or to be registered pursuant to Section 12(b) of the Act:

	Common units representing limited partnership interests 6.25% Senior Notes Due 2019 9.00% Series A Cumulative Redeemable Preferred Units			New York Stock Exchange New York Stock Exchange New York Stock Exchange
		Title of class		Name of exchange on which registered

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:

20,505,000 Common Units

3,000,000 9.00% Series A Cumulative Redeemable Preferred Units

14,985,000 Subordinated Units

35,526 General Partner Units

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[_] Yes	[X] No

If this report is an annual report or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

[_] Yes	[X] No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

[X] Yes	[_] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months

[X] Yes

[_] No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [_]	Accelerated filer [X]
Non-accelerated filer [_] (Do not check if a smaller reporting company)	Smaller reporting company [_]

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:

[X] U.S. GAAP

[_] International Financial Reporting Standards as issued by the International Accounting Standards Board

[_] Other

If "Other" has been checked in response to the previous question, indicate by check mark which

financial statement item the Registrant has elected to follow.

[_] Item 17

[_] Item 18

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[_] Yes	[X] No

PRESENTATION OF INFORMATION IN THIS ANNUAL REPORT

This Annual Report on Form 20-F for the year ended December 31, 2015, or the Annual Report, should be read in conjunction with the consolidated financial statements and accompanying notes included in this Annual Report. Unless the context otherwise requires, references in this Annual Report to "Dynagas LNG Partners," the "Partnership," "we," "our" and "us" or similar terms refer to Dynagas LNG Partners LP and its wholly-owned subsidiaries, including Dynagas Operating LP. Dynagas Operating LP owns, directly or indirectly, a 100% interest in the entities that own the LNG carriers in our fleet that we refer to as our "Fleet." References in this Annual Report to "our General Partner" refer to Dynagas GP LLC, the general partner of Dynagas LNG Partners LP. References in this Annual Report to our "Sponsor" are to Dynagas Holding Ltd. and its subsidiaries other than us or our subsidiaries and references to our "Manager" refer to Dynagas Ltd., which is wholly owned by the chairman of our Board of Directors, Mr. George Prokopiou. References in this Annual Report to the "Prokopiou Family" are to our Chairman, Mr. George Prokopiou, and members of his family.

All references in this Annual Report to us for periods prior to our initial public offering, or IPO, on November 18, 2013 refer to our predecessor companies and their subsidiaries, which are former subsidiaries of our Sponsor that had interests in the Clean Energy , the Ob River and the Amur River , collectively our "Initial Fleet" or the "Sponsor Controlled Companies".

All references in this Annual Report to "BG Group," "Gazprom," "Statoil," and "Yamal" refer to BG Group Plc, Gazprom Global LNG Limited, Statoil ASA, and Yamal Trade Pte. Ltd., respectively, that are our current and prospective charterers.

References herein to the "Omnibus Agreement" refer to the Omnibus Agreement, as amended and as currently in effect, with our Sponsor.

Our Sponsor owns a minority ownership interest in each of the five entities that own Hull 2421, Hull 2422, Hull 2427, Hull 2428 and Hull 2429, respectively, including the related charters or other agreements relating to the operation or ownership of such hulls (or such LNG carriers upon delivery). We refer to these hulls (or such LNG carriers upon delivery) throughout this Annual Report as the "Additional Optional Vessels." Pursuant to the Omnibus Agreement, we have the right but not the obligation, subject to certain terms and conditions, to acquire our Sponsor's ownership interest in the Additional Optional Vessels, which is our Sponsor's minority ownership interest in the applicable vessel-owning subsidiaries.

The "Yamal LNG Project" refers to the LNG production terminal that is currently under construction on the Yamal Peninsula in Northern Russia. The completed terminal is expected to consist of three LNG trains with a total capacity of 16.5 million metric tons of LNG per year, that will require ice-class designated vessels to transport LNG from this facility, and for which certain of the vessels in our fleet, and the vessels in our Sponsor's fleet, including the Additional Optional Vessels, have been contracted. The Yamal LNG Project is a joint venture between NOVATEK (50.1%), TOTAL (20%), China National Oil & Gas Exploration and Development Corporation (CNODC) (20%) and Silk Road Fund (9.9%). Please see "Item 4. Information on the Partnership—B. Business Overview."

Unless otherwise indicated, all references to "U.S. dollars," "dollars" and "$" in this Annual Report are to the lawful currency of the United States. We use the term "LNG" to refer to liquefied natural gas, and we use the term "cbm" to refer to cubic meters in describing the carrying capacity of our vessels.

FORWARD-LOOKING STATEMENTS

This Annual Report contains certain forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act) concerning future events and our operations, performance and financial condition, including, in particular, the likelihood of our success in developing and expanding our business. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," "projects," "forecasts," "will," "may," "potential," "should," and similar expressions are forward-looking statements. These forward-looking statements reflect management's current views only as of the date of this Annual Report and are not intended to give any assurance as to future results. As a result, unitholders are cautioned not to rely on any forward-looking statements.

Forward-looking statements appear in a number of places in this Annual Report and include statements with respect to, among other things:

LNG market trends, including charter rates, factors affecting supply and demand, and opportunities for the profitable operations of LNG carriers;

our anticipated growth strategies;

the effect of a worldwide economic slowdown;

potential turmoil in the global financial markets;

fluctuations in currencies and interest rates;

general market conditions, including fluctuations in charter hire rates and vessel values;

changes in our operating expenses, including drydocking and insurance costs and bunker prices;

forecasts of our ability to make cash distributions on the units or any increases in our cash distributions;

our future financial condition or results of operations and our future revenues and expenses;

the repayment of debt and settling of interest rate swaps (if any);

our ability to make additional borrowings and to access debt and equity markets;

planned capital expenditures and availability of capital resources to fund capital expenditures;

our ability to maintain long-term relationships with major LNG traders;

our ability to leverage our Sponsor's relationships and reputation in the shipping industry;

our ability to realize the expected benefits from our vessel acquisitions;

our ability to purchase vessels from our Sponsor and other parties in the future, including the Optional Vessels (defined later);

our continued ability to enter into long-term time charters;

our ability to maximize the use of our vessels, including the re-deployment or disposition of vessels no longer under long-term time charters;

future purchase prices of newbuildings and secondhand vessels and timely deliveries of such vessels;

our ability to compete successfully for future chartering opportunities and newbuilding opportunities (if any);

acceptance of a vessel by its charterer;

termination dates and extensions of charters;

the expected cost of, and our ability to comply with, governmental regulations, maritime self-regulatory organization standards, as well as standard regulations imposed by our charterers applicable to our business;

availability of skilled labor, vessel crews and management;

our anticipated incremental general and administrative expenses as a publicly traded limited partnership and our fees and expenses payable under the fleet management agreements and the administrative services agreement with our Manager;

the anticipated taxation of our Partnership and distributions to our unitholders;

estimated future maintenance and replacement capital expenditures;

our ability to retain key employees;

charterers' increasing emphasis on environmental and safety concerns;

potential liability from any pending or future litigation;

potential disruption of shipping routes due to accidents, political events, piracy or acts by terrorists;

future sales of our common units in the public market;

our business strategy and other plans and objectives for future operations; and

other factors detailed in this Annual Report and from time to time in our periodic reports.

Forward-looking statements in this Annual Report are estimates reflecting the judgment of senior management and involve known and unknown risks and uncertainties. These forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, these forward-looking statements should be considered in light of various important factors, including those set forth in this Annual Report under the heading "Item 3. Key Information—D. Risk Factors."

We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the effect of each such factor on our business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.

We make no prediction or statement about the performance of our common units. The various disclosures included in this Annual Report and in our other filings made with the Securities and Exchange Commission, or the SEC, that attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations should be carefully reviewed and considered.

iii

TABLE OF CONTENTS

PART I.		5
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3.	KEY INFORMATION	5
ITEM 4.	INFORMATION ON THE PARTNERSHIP	42
ITEM 4A.	UNRESOLVED STAFF COMMENTS	74
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	74
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	91
ITEM 7.	MAJOR UNITHOLDERS AND RELATED PARTY TRANSACTIONS	95
ITEM 8.	FINANCIAL INFORMATION	105
ITEM 9.	THE OFFER AND LISTING.	108
ITEM 10.	ADDITIONAL INFORMATION	110
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	119
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	121
PART II		121
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	121
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	121
ITEM 15.	CONTROLS AND PROCEDURES	121
ITEM 16.	[RESERVED]	123
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	123
ITEM 16B.	CODE OF ETHICS	123
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	123
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	124
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	124
ITEM 16F.	CHANGE IN REGISTRANTS' CERTIFYING ACCOUNTANT	124
ITEM 16G.	CORPORATE GOVERNANCE	124
ITEM 16H.	MINE SAFETY DISCLOSURE	125
PART III		125
ITEM 17.	FINANCIAL STATEMENTS	125
ITEM 18.	FINANCIAL STATEMENTS	125
ITEM 19.	EXHIBITS	125

PART I.

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

A. SELECTED FINANCIAL DATA

The following table presents our selected consolidated financial and operating data. For periods prior to the completion of our IPO, which occurred on November 18, 2013, our historical consolidated financial statements have been prepared according to a transaction that constitutes a reorganization of companies under common control and has been accounted for in a manner similar to a pooling of interests, as the Sponsor Controlled Companies were indirectly wholly-owned by the Prokopiou Family prior to the transfer of ownership of these companies to us. Accordingly, our financial statements have been presented, giving retroactive effect to the transaction described above, using consolidated and combined financial historical carrying costs of the assets and liabilities of Dynagas LNG Partners and the Sponsor Controlled Companies.

The following selected historical balance sheet data as of December 31, 2015 and 2014 and statement of income data for each of the years ended December 31, 2015, 2014, 2013, 2012 and 2011 have been derived from our audited consolidated and combined financial statements which have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). The following financial data should be read in conjunction with "Item 5. Operating and Financial Review and Prospects" and our historical consolidated financial statements and the notes thereto included elsewhere in this Annual Report.

Our financial position, results of operations and cash flows could differ from those that would have resulted if we operated autonomously or as an entity independent of our Sponsor in the periods prior to our IPO for which historical financial data are presented below, and such data may not be indicative of our future operating results or financial performance.

	Year Ended December 31,
	2015			2014			2013			2012			2011
Statement of Income Data	(In thousands of Dollars, except for unit per unit data )
Voyage revenues	$	145,202		$	107,088		$	85,679		$	77,498		$	52,547
Voyage expenses- including related party (1)		(2,804	)		(2,273	)		(1,686	)		(3,468	)		(1,353	)
Vessel operating expenses		(23,244	)		(16,813	)		(11,909	)		(15,722	)		(11,350	)
General and administrative expenses- including related party		(1,805	)		(1,951	)		(387	)		(278	)		(54	)
Management fees		(4,870	)		(3,566	)		(2,737	)		(2,638	)		(2,529	)
Depreciation		(24,387	)		(17,822	)		(13,579	)		(13,616	)		(13,579	)
Dry-docking and special survey costs		-			-			-			(2,109	)		-
Operating income	$	88,092		$	64,663		$	55,381		$	39,667		$	23,682
Interest income		35			221			-			1			4
Interest and finance costs		(27,974	)		(14,524	)		(9,732	)		(9,576	)		(3,977	)
Loss on derivative financial instruments		-			-			-			(196	)		(824	)
Other, net		(103	)		201			(29	)		(60	)		(65	)
Net Income	$	60,050		$	50,561		$	45,620		$	29,836		$	18,820
Earnings per Unit (basic and diluted):

Common Unit (basic and diluted)	$	1.60		$	1.58		$	2.95		$	1.37		$	0.87
Weighted average number of units outstanding (basic and diluted):
Common units		20,505,000			17,964,288			7,729,521			6,735,000			6,735,000
Cash distributions declared and paid per common unit	$	1.69		$	1.29	(2)	$	-		$	-		$	-
Balance Sheet Data:
Total current assets	$	25,814		$	14,348		$	7,606		$	8,981		$	3,453
Vessels, net		1,036,157			839,883			453,175			466,754			480,370
Total assets		1,108,103			887,376			488,735			476,275			484,363
Total current liabilities		51,353			33,249			14,903			398,434			439,024
Total long term debt, including current portion, gross of deferred financing fees		688,333			575,000			219,585			380,715			402,189
Total partners' equity		367,838			297,698			257,699			75,175			45,339
Cash Flow Data:
Net cash provided by operating activities	$	96,944		$	76,443		$	44,204		$	27,902		$	28,974
Net cash used in investing activities		(205,045	)		(404,530	)		-			-			-
Net cash provided by/ (used in) financing activities		120,445			334,359			(38,527	)		(27,902	)		(28,974	)
Fleet Data:
Number of vessels at the end of the year		6			5			3			3			3
Average number of vessels in operation (3)		5.0			3.8			3.0			3.0			3.0
Average age of vessels in operation at end of year (years)		5.4			5.0			6.4			5.4			4.4
Available days (4)		1,836			1,384			1,095			1,056			1,095
Time Charter Equivalent (in US dollars) (5)	$	77,559		$	75,733		$	76,706		$	70 , 104		$	46,753
Fleet utilization (6)		99	%		100	%		100	%		99.5	%		99.5	%
Other Financial Data:
Adjusted EBITDA (7)	$	113,202		$	84,751		$	64,749		$	55,889		$	37,196

(1)	Voyage expenses include commissions of 1.25% paid to our Manager and third-party ship brokers.
(2)	Includes a prorated quarterly distribution for the period beginning on November 18, 2013 and ending on December 31, 2013 that was declared on January 31, 2013 and paid on February 14, 2014. The cash distribution for the fourth quarter of 2014 of $0.4225 per unit was approved on January 14, 2014 and paid on February 12, 2015 to all unitholders of record as of February 5, 2015.
(3)	Represents the number of vessels that constituted our Fleet for the relevant year, as measured by the sum of the number of days each vessel was a part of our Fleet during the period divided by the number of calendar days in the period.
(4)	Available days are the total number of calendar days our vessels were in our possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or drydockings.
(5)	Time charter equivalent rates, or TCE rates, is a measure of the average daily revenue performance of a vessel. For time charters, this is calculated by dividing total voyage revenues, less any voyage expenses, by the number of Available days during that period. Under a time charter, the charterer pays substantially all of the vessel voyage related expenses. However, we may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during dry-docking or due to other unforeseen circumstances. The TCE rate is not a measure of financial performance under U.S. GAAP (non-GAAP measure), and should not be considered as an alternative to voyage revenues, the most directly comparable GAAP measure, or any other measure of financial performance presented in accordance with U.S. GAAP. However, TCE rate is standard shipping industry performance measure used primarily to compare period-to-period changes in a company's performance and assists our management in making decisions regarding the deployment and use of our vessels and in evaluating their financial performance. Our calculation of TCE rates may not be comparable to that reported by other companies. The following table reflects the calculation of our TCE rates for the periods presented (amounts in thousands of U.S. dollars, except for TCE rates, which are expressed in U.S. dollars and Available days):

	Year Ended December 31,
	(In thousands of Dollars)
	2015				2014				2013				2012				2011
Voyage revenues		$	145,202			$	107,088			$	85,679			$	77,498			$	52,547
Voyage expenses			(2,804	)			(2,273	)			(1,686	)			(3,468	)			(1,353	)
Time charter equivalent revenues			142,398				104,815				83,993				74,030				51,194
Total Available days			1,836				1,384				1,095				1,056				1,095
Time charter equivalent (TCE) rate		$	77,559			$	75,733			$	76,706			$	70,104			$	46,753

_________________________

(6)	We calculate fleet utilization by dividing the number of our revenue earning days, which are the total number of Available days of our vessels net of unscheduled off-hire days, during a period, by the number of our Available days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are offhire for reasons other than scheduled off-hires for vessel upgrades, drydockings or special or intermediate surveys.
(7)	Adjusted EBITDA is defined as earnings before interest and finance costs, net of interest income, gains/losses on derivative financial instruments (if any), taxes (when incurred), depreciation and amortization (when incurred) and significant non-recurring items, such as accelerated time charter amortization. Adjusted EBITDA is used as a supplemental financial measure by management and external users of financial statements, such as investors, to assess our operating performance. We believe that Adjusted EBITDA assists our management and investors by providing useful information that increases the comparability of our performance operating from period to period and against the operating performance of other companies in our industry that provide Adjusted EBITDA information. This increased comparability is achieved by excluding the potentially disparate effects between periods or companies of interest, other financial items, depreciation and amortization and taxes, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. We believe that including Adjusted EBITDA as a measure of operating performance benefits investors in (a) selecting between investing in us and other investment alternatives and (b) monitoring our ongoing financial and operational strength in assessing whether to continue to hold common units.
	Adjusted EBITDA is not a measure of financial performance under U.S. GAAP, does not represent and should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with U.S. GAAP. Adjusted EBITDA excludes some, but not all, items that affect net income and these measures may vary among other companies. Therefore, Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies. The following table reconciles Adjusted EBITDA to net income, the most directly comparable U.S. GAAP financial measure, for the periods presented:

			Year Ended December 31,
	2015		2014		2013			2012		2011
Reconciliation to Net Income
Net Income	$	60,050	$	50,561	$	45,620		$	29,836	$	18,820
Net interest and finance costs ⁽¹⁾		27,939		14,303		9,732			9,771		4,797
Depreciation		24,387		17,822		13,579			13,616		13,579
Non- recurring expense from accelerated time charter amortization		-		908		-			-		-
Amortization of fair value of acquired time charter		218		-		-			-		-
Charter hire amortization and other non-cash revenue adjustments		608		1,157		(4,182	)		2,666		-
Adjusted EBITDA	$	113,202	$	84,751	$	64,749		$	55,889	$	37,196

⁽¹⁾ Includes interest and finance costs, net of interest income, and (gain)/ loss on derivative instruments, if any.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

The following risks relate principally to the industry in which we operate and to our business in general. Other risks relate principally to the securities market and ownership of our securities, including our common units, our 9.00% Series A Cumulative Redeemable Preferred Units, or our Series A Preferred Units and our 6.25% Notes due October 30, 2019, or our 2019 Notes. The occurrence of any of the events described in this section could significantly and negatively affect our business, financial condition, operating results or cash available for distribution on our units and required payments on our 2019 Notes, and the trading price of our securities.

Risks Relating to Our Partnership

Our Fleet consists of only six LNG carriers. Any limitation in the availability or operation of these vessels could have a material adverse effect on our business, results of operations and financial condition and could significantly reduce or eliminate our ability to pay the minimum quarterly distribution on our common units or distributions on our preferred units.

Our Fleet consists of only six LNG carriers. If any of our vessels is unable to generate revenues as a result of off-hire time, early termination of the time charter in effect or otherwise, our business, results of operations financial condition and ability to make quarterly and other distributions to our common and preferred unitholders could be materially adversely affected.

We currently derive all our revenue and cash flow from three charterers and the loss of any of these charterers could cause us to suffer losses or otherwise adversely affect our business.

We currently derive all of our revenue and cash flow from three charterers, BG Group, Gazprom and Statoil. For the year ended December 31, 2015, BG Group accounted for 29%, Gazprom accounted for 52% and Statoil accounted for 19% of our total revenue. All of the charters for our Fleet have fixed terms, but may be terminated early due to certain events, such as a charterer's failure to make charter payments to us because of financial inability, disagreements with us or otherwise. The ability of each of our counterparties to perform its obligations under a charter with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions, the condition of the LNG shipping industry, prevailing prices for natural gas and the overall financial condition of the counterparty. Should a counterparty fail to honor its obligations under an agreement with us, we may be unable to realize revenue under that charter and could sustain losses, which could have a material adverse effect on our business, financial condition, results of operations and ability to pay minimum quarterly distributions and other distributions to our unitholders.

In addition, a charterer may exercise its right to terminate its charter if, among other things:

the vessel suffers a total loss or is damaged beyond repair;

we default on our obligations under the charter, including prolonged periods of vessel off-hire;

war or hostilities significantly disrupt the free trade of the vessel;

the vessel is requisitioned by any governmental authority; or

a prolonged force majeure event occurs, such as war or political unrest, which prevents the chartering of the vessel.

In addition, the charter payments we receive may be reduced if the vessel does not perform according to certain contractual specifications. For example, charter hire may be reduced if the average vessel speed falls below the speed we have guaranteed or if the amount of fuel consumed to power the vessel exceeds the guaranteed amount.

Furthermore, in depressed market conditions, our charterers may no longer need a vessel that is then under charter or may be able to obtain a comparable vessel at lower rates. As a result, charterers may seek to renegotiate the terms of their existing charter agreements or avoid their obligations under those contracts. If our charterers fail to meet their obligations to us or attempt to renegotiate our charter agreements, it may be difficult to secure substitute employment for such vessel, and any new charter arrangements we secure may be at lower rates.

If any of our charters is terminated, we may be unable to re-deploy the related vessel on terms as favorable to us as our current charters, or at all. If we are unable to re-deploy a vessel for which the charter has been terminated, we will not receive any revenues from that vessel, and we may be required to pay ongoing expenses necessary to maintain the vessel in proper operating condition. Any of these factors may decrease our revenue and cash flows. Further, the loss of any of our charterers, charters or vessels, or a decline in charter hire under any of our charters, could have a material adverse effect on our business, results of operations, financial condition and ability to make minimum quarterly distributions and other distributions to our unitholders.

We are subject to certain risks with respect to our contractual counterparties, and failure of such counterparties to perform their obligations under such contracts could cause us to sustain significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have entered into, and may enter in the future, contracts, charters, newbuilding and conversion contracts with shipyards, debt agreements with financial institutions and other counterparts, interest rate swaps, foreign currency swaps, equity swaps and other agreements. Such agreements subject us to counterparty risks. The ability of each of our counterparties to perform its obligations under a contract with us will depend on a number of factors that are beyond our control and may include, among other things, general economic conditions and the overall financial condition of the counterparty. Should a counterparty fail to honor its obligations under agreements with us, we could sustain significant losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Please also see "—We currently derive all our revenue and cash flow from three charterers and the loss of any of these charterers could cause us to suffer losses or otherwise adversely affect our business."

We may not have sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses to enable us to pay the minimum quarterly distribution on our common units and distributions on our Series A Preferred Units or pay distributions at all.

Our Board of Directors makes determinations regarding the payment of distributions in its sole discretion and in accordance with our Partnership Agreement and applicable law, and there is no guarantee that we will continue to make distributions to our unitholders in the future. In addition, the markets in which we operate our vessels are volatile and we cannot predict with certainty the amount of cash, if any, that will be available for distribution in any period. We may not have sufficient cash from operations to pay the minimum quarterly distribution of $0.365 per unit on our common units. The amount of cash we can distribute on our common and preferred units principally depends upon the amount of cash we generate from our operations, which may fluctuate from quarter to quarter based on the risks described in this section, including, among other things:

the rates we obtain from our charters;

the level of our operating costs, such as the cost of crews and insurance;

the continued availability of natural gas production;

demand for LNG;

supply of LNG carriers;

prevailing global and regional economic and political conditions;

currency exchange rate fluctuations; and

the effect of governmental regulations and maritime self-regulatory organization standards on the conduct of our business.

In addition, the actual amount of cash available for distribution to our unitholders will depend on other factors, including:

the level of capital expenditures we make, including for maintaining or replacing vessels, building new vessels, acquiring secondhand vessels and complying with regulations;

the number of unscheduled off-hire days for our Fleet and the timing of, and number of days required for, scheduled drydocking of our vessels;

our debt service requirements and restrictions on distributions contained in our debt instruments;

the level of debt we will incur to fund future acquisitions, including the Optional Vessels that we have the right (but not the obligation) to acquire from our Sponsor, pursuant to the terms and subject to the conditions of the Omnibus Agreement (defined below). See "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions";

fluctuations in interest rates;

fluctuations in our working capital needs;

variable tax rates;

our ability to make, and the level of, working capital borrowings;

the performance of our subsidiaries and their ability to distribute cash to us; and

the amount of any cash reserves established by our Board of Directors.

The amount of cash we generate from our operations may differ materially from our profit or loss for the period, which will be affected by non-cash items. We may also incur expenses or liabilities or be subject to other circumstances in the future that reduce or eliminate the amount of cash that we have available for distributions. As a result of this and the other factors mentioned above, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.

Our future growth depends on our ability to expand relationships with our existing charterers, establish relationships with new charterers and obtain new time charter contracts, for which we will face substantial competition from established companies with significant resources and potential new entrants.

We will seek to enter into additional multi-year time charter contracts upon the expiration or early termination of our existing charter arrangements, and we may also seek to enter into additional multi-year time charter contracts in connection with an expansion of our Fleet. The process of obtaining multi-year charters for LNG carriers is highly competitive and generally involves an intensive screening procedure and competitive bids, which often extends for several months. We believe LNG carrier time charters are awarded based upon a variety of factors relating to the ship and the ship operator, including:

size, age, technical specifications and condition of the ship;

efficiency of ship operation;

LNG shipping experience and quality of ship operations;

shipping industry relationships and reputation for customer service;

technical ability and reputation for operation of highly specialized ships;

quality and experience of officers and crew;

safety record;

the ability to finance ships at competitive rates and financial stability generally;

relationships with shipyards and the ability to get suitable berths;

construction management experience, including the ability to obtain on-time delivery of new ships according to customer specifications; and

competitiveness of the bid in terms of overall price.

We expect substantial competition for providing marine transportation services for potential LNG projects from a number of experienced companies, including other independent ship owners as well as state-sponsored entities and major energy companies that own and operate LNG carriers and may compete with independent owners by using their fleets to carry LNG for third-parties. Some of these competitors have significantly greater financial resources and larger fleets than we have. A number of marine transportation companies—including companies with strong reputations and extensive resources and experience—have entered the LNG transportation market in recent years, and there are other ship owners and managers who may also attempt to participate in the LNG market in the future. This increased competition may cause greater price competition for time charters. As a result of these factors, we may be unable to expand our relationships with existing charterers or to obtain new time charter contracts on a profitable basis, if at all, which could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distributions to our unitholders.

We will be required to make substantial capital expenditures to expand the size of our Fleet. Depending on whether we finance our expenditures through cash from operations or by issuing debt or equity securities, or by financing or re-financing our existing vessels, our ability to make cash distributions may be diminished, our financial leverage could increase or our unitholders could be diluted.

From time to time in the future, consistent with our growth strategy, we may acquire additional vessels, including the Optional Vessels, from our Sponsor and other entities. We will be required to make substantial capital expenditures to expand the size of our Fleet and we may be required to make significant installment payments to retrofit our existing LNG carriers and to acquire LNG carriers. If we choose to purchase any other LNG carriers, we plan to finance the cost either through cash from operations, borrowings under debt facilities or other debt or equity financings.

Use of cash from operations to expand our Fleet will reduce cash available for distribution to unitholders. Our ability to obtain bank or other financing or to access the capital markets may be limited by our financial condition at the time of any such financing or offering as well as by adverse market conditions resulting from, among other things, general economic conditions, changes in the LNG industry and contingencies and uncertainties that are beyond our control. Our failure to obtain the funds for future capital expenditures could have a material adverse effect on our business, results of operations and financial condition and on our ability to make cash distributions. Even if we are successful in obtaining necessary funds, the terms of any debt or equity financings could limit our ability to pay cash distributions to unitholders. In addition, incurring additional debt may significantly increase our interest expense and financial leverage, and issuing additional equity securities may result in significant unitholder dilution and would increase the aggregate amount of cash required to pay the minimum quarterly distribution to unitholders, which could have a material adverse effect on our ability to make cash distributions.

We may be unable to make or realize expected benefits from acquisitions, which could have an adverse effect on our expected plans for growth.

Any acquisition of a vessel or business may not be profitable to us at or after the time we acquire it and may not generate cash flow sufficient to justify our investment. In addition, our acquisition growth strategy exposes us to risks that may harm our business, financial condition and operating results, including risks that we may:

fail to realize anticipated benefits, such as new customer relationships, cost-savings or cash flow enhancements;

be unable to hire, train or retain qualified shore and seafaring personnel to manage and operate our growing business and fleet;

decrease our liquidity by using a significant portion of our available cash or borrowing capacity to finance acquisitions;

significantly increase our interest expense or financial leverage if we incur additional debt to finance acquisitions;

incur or assume unanticipated liabilities, losses or costs associated with the business or vessels acquired; or

incur other significant charges, such as impairment of goodwill or other intangible assets, asset devaluation or restructuring charges.

If we acquire secondhand vessels, as opposed to newbuildings, we may be exposed to additional risks. Unlike newbuildings, secondhand vessels typically do not carry warranties as to their condition. While we generally inspect secondhand vessels prior to purchase, such an inspection would normally not provide us with as much knowledge of a vessel's condition as we would possess if it had been built for us and operated by us during its life. Repairs and maintenance costs for secondhand vessels are difficult to predict and may be substantially higher than for vessels we have operated since they were built. These costs could decrease our cash flow and reduce our liquidity and could have an adverse effect on our expected plans for growth.

We may be subject to certain risks with respect to our acquisition ,or potential acquisition, of our Sponsor's ownership interest in the Additional Optional Vessels.

If we acquire any or all of our Sponsor's ownership interest in the Additional Optional Vessels pursuant to the terms and subject to the conditions of the Omnibus Agreement, we will own such vessels jointly with Sinotrans Shipping LNG Limited, or Sinotrans, and China LNG Shipping (Holdings) Limited, or China LNG Shipping, and we will become party to the shareholders' agreement which governs this joint venture relationship. We will not own a majority of the ownership interests in the entities that own the Additional Optional Vessels and, as such, we may not be able to exercise control over such entities or the Additional Optional Vessels. In addition, while we expect that the vessel owning entities will distribute all of their available cash to us and their other holders, we cannot guarantee whether such entities will do so, if at all.

Furthermore, the Additional Optional Vessels are being constructed with highly specialized technical specifications to meet the requirements for the Yamal LNG Project and will have limited redeployment prospects to operate as conventional trading LNG carriers if the Yamal LNG Project is abandoned or cancelled. To the extent these vessels are no longer employed under the Yamal LNG Project, we may lose our option to purchase our Sponsor's ownership interest in these vessels under the Omnibus Agreement, and further, if such contracts are terminated after we have acquired such ownership interest, we may be unable to re-charter or sell these vessels without making significant capital expenditures to reformat these vessels for trading in other markets.The occurrence of any of these events could have a material adverse effect on our business, financial condition, results of operations and cash flows, and ability distribute cash to our unitholders.

The amount of our debt could limit our liquidity and flexibility in obtaining additional financing and in pursuing other business opportunities.

As of December 31, 2015, we had total outstanding long-term debt of $688.3 million consisting of amounts outstanding under our $340.0 million senior secured revolving credit facility that matures in March 2021, or our $340 Million Senior Credit Facility, our $200 million senior secured term loan facility that matures in December 2020, or our $200 Million Term Loan Facility, and our 2019 Notes. In addition, we have the ability to borrow an additional $30 million under our interest free $30 million revolving credit facility with our Sponsor, or the $30 Million Revolving Credit Facility. We expect that a large portion of our cash flow from operations will be used to repay the principal and interest on our outstanding indebtedness.

Our current indebtedness and future indebtedness that we may incur could affect our future operations, as a portion of our cash flow from operations will be dedicated to the payment of interest and principal on such debt and will not be available for other purposes. Covenants contained in our debt agreements may affect our flexibility in planning for, and reacting to, changes in our business or economic conditions, limit our ability to dispose of assets or place restrictions on the use of proceeds from such dispositions, withstand current or future economic or industry downturns and compete with others in our industry for strategic opportunities, and limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes and our ability to make minimum quarterly distributions to our unitholders.

Our ability to service our debt will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, some of which are beyond our control. If our operating results are not sufficient to service our current or future indebtedness, we will be forced to take actions such as reducing or eliminating distributions to our unitholders, reducing or delaying our business activities, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing our debt, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms, or at all.

Our Series A Preferred Units are subordinate to our indebtedness, and the interests of holders of Series A Preferred units could be diluted by the issuance of additional preferred units, including additional Series A Preferred Units, and by other transactions.

Our Series A Preferred Units are subordinated to all of our existing and future indebtedness. The payment of principal and interest on our debt reduces cash available for distribution s and therefore, our ability to pay distributions on, redeem at our option or pay the liquidation preference on our Series A Preferred Units in liquidation or otherwise may be subject to prior payments due to the holders of our indebtedness.

The issuance of additional limited partner interests on a parity with or senior to our Series A Preferred Units would dilute the interests of the holders of our Series A Preferred Units, and any issuance of senior securities or parity securities or additional indebtedness could affect our ability to pay distributions on, redeem or pay the liquidation preference on our Series A Preferred Units. No provisions relating to our Series A Preferred Units protect the holders of our Series A Preferred Units in the event of a highly leveraged or other transaction, including a merger or the sale, lease or conveyance of all or substantially all our assets or business, which might adversely affect the holders of our Series A Preferred Units.

We may be unable to comply with covenants in our debt agreements or any future financial obligations that impose operating and financial restrictions on us.

Certain of our existing and future debt agreements, which may be secured by mortgages on our vessels, impose and will impose certain operating and financial restrictions on us, mainly to ensure that the market value of the mortgaged vessel under the applicable credit facility does not fall below a certain percentage of the outstanding amount of the debt agreement, which we refer to as the asset coverage ratio. In addition, certain of our debt agreements require us to satisfy certain other financial covenants, including maintenance of minimum cash liquidity levels, minimum EBITDA to interest expense, minimum net worth, limitation on total borrowings and market value adjusted leverage.

The operating restrictions contained in our existing and future debt agreements may prohibit or otherwise limit our ability to, among other things:

obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions or other purposes on favorable terms, or at all;

make distributions to unitholders when an event of default exists, as applicable;

incur additional indebtedness, create liens or issue guarantees;

charter our vessels or change the terms of our existing charter agreements;

sell, transfer or lease our assets or vessels or the shares of our vessel-owning subsidiaries;

make investments and capital expenditures;

reduce our partners' capital; and

undergo a change in ownership or Manager.

Therefore, we may need to seek permission from our lenders in order to engage in some actions. Our lenders' interests may be different from ours and we may not be able to obtain our lenders' permission when needed. This may limit our ability to pay distributions, including the minimum quarterly distributions on our common units and quarterly distributions on our Series A Preferred Units, finance our future operations or capital requirements, make acquisitions or pursue business opportunities.

In addition, our secured credit facilities require us to maintain specified financial ratios and to satisfy financial covenants, including ratios and covenants based on the market value of the vessels in our fleet. Should our charter rates or vessel values materially decline in the future, we may seek to obtain waivers or amendments from our lenders with respect to such financial ratios and covenants, or we may be required to take action to reduce our debt or to act in a manner contrary to our business objectives to meet any such financial ratios and satisfy any such financial covenants. Events beyond our control, including changes in the economic and business conditions in the shipping markets in which we operate, may affect our ability to comply with these covenants. We cannot assure you that we will meet these ratios or satisfy these covenants or that our lenders will waive any failure to do so or amend these requirements. A breach of any of the covenants in, or our inability to maintain the required financial ratios under, our credit facilities would prevent us from borrowing additional money under our credit facilities and could result in a default under our credit facilities. If a default occurs under our credit facilities, the lenders could elect to declare the outstanding debt, together with accrued interest and other fees, to be immediately due and payable and foreclose on the collateral securing that debt, which could constitute a part, all, or substantially all of our assets. Moreover, in connection with any waivers or amendments to our credit facilities that we may obtain, our lenders may impose additional operating and financial restrictions on us or modify the terms of our existing credit facilities. These restrictions may further restrict our ability to, among other things, make distributions to our unitholders repurchase our securities, make capital expenditures, or incur additional indebtedness.

A violation of any of the provisions contained in our existing or future debt agreements may constitute an event of default under such debt agreement, which, unless cured or waived or modified by our lenders, provides our lenders with the right to, among other things, require us to post additional collateral, enhance our equity and liquidity, increase our interest payments, pay down our indebtedness to a level where we are in compliance with our loan covenants, sell vessels in our Fleet, reclassify our indebtedness as current liabilities and accelerate our indebtedness and foreclose their liens on our vessels and the other assets securing the credit facilities, which would impair our ability to continue to conduct our business.

See "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources."

Our Sponsor may be unable to service its debt requirements and comply with the provisions contained in the credit agreements secured by the Optional Vessels. If our Sponsor fails to perform its obligations under its debt agreements or any other agreement relating to the Optional Vessels, our business and expected plans for growth may be materially affected.

Our Sponsor may be unable to fulfill its obligations under its debt and other agreements that are secured by or relate to the Optional Vessels. Failure on behalf of our Sponsor to perform its obligations under its debt, including paying scheduled installments and complying with certain covenants, may constitute an event of default under these secured loan agreements. If an event of default occurs under these loan agreements, our Sponsor's lenders could accelerate the outstanding loans and declare all amounts borrowed due and payable. In this case, if our Sponsor is unable to obtain a waiver or amendment or does not otherwise have enough cash on hand to repay the outstanding borrowings, its lenders may, among other things, foreclose their liens on the Optional Vessels. In addition, if our Sponsor fails to perform its obligations under other agreements governing the Optional vessels, we might not be able to take delivery of such Optional Vessels at all. In these cases, we may not be able to exercise our rights under the Omnibus Agreement to acquire the Optional Vessels, which would likely have a material adverse effect on our business and our expected plans for growth.

In addition, since our Sponsor is a private company and there is little or no publicly available information about it, we or an investor could have little advance warning of potential financial or other problems that might affect our Sponsor that could have a material adverse effect on us.

We are dependent on our affiliated Manager for the management of our Fleet and for the provision of executive management and financial support services.

We have entered into management agreements, or the Management Agreements, with our affiliated Manager for the commercial and technical management of our Fleet, including crewing, maintenance and repair. The loss of our Manager's services or its failure to perform its obligations to us could materially and adversely affect the results of our operations. In addition, our Manager provides us with significant management, administrative, executive, financial and other support services. Our operational success and ability to execute our growth strategy will depend significantly upon the satisfactory performance of these services. Our business will be harmed if our Manager fails to perform these services satisfactorily, if they cancel their agreements with us or if they stop providing these services to us.

The control of our General Partner may be transferred to a third-party without unitholder consent.

Our General Partner may transfer its General Partner interest to a third-party in a merger or in a sale of all or substantially all of its assets without the consent of the unitholders. In addition, our Partnership Agreement does not restrict the ability of the members of our General Partner from transferring their respective membership interests in our General Partner to a third-party.

Our General Partner's affiliates, including our Sponsor, may compete with us.

Our Partnership Agreement provides that our General Partner will be restricted from engaging in any business activities other than acting as our General Partner and those activities incidental to its ownership of interests in us. In addition, our Partnership Agreement provides that our General Partner, for so long as it is General Partner of our Partnership, will cause its affiliates not to engage in, by acquisition or otherwise, the businesses described above.

Similarly, pursuant to the Omnibus Agreement with our Sponsor and our General Partner, our Sponsor and its affiliates (other than us, and our subsidiaries) generally have agreed, for the term of the Omnibus Agreement, not to acquire, own, operate or contract for any LNG carriers acquired or placed under contracts with an initial term of four or more years. The Omnibus Agreement, however, contains significant exceptions which include, among other things, the owning and operating of the Optional Vessels that may allow our Sponsor or any of its affiliates to compete with us, which could harm our business. Our Sponsor and its affiliates may compete with us, subject to the restrictions contained in the Omnibus Agreement, and could own and operate LNG carriers under charters of four years or more that may compete with our vessels if we do not acquire such vessels when they are offered to us pursuant to the terms of the Omnibus Agreement. See "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions."

Mr. Tony Lauritzen, our Chief Executive Officer, Mr. Michael Gregos, our Chief Financial Officer, and certain other officers will not devote all of their time to our business, which may hinder our ability to operate successfully.

Mr. Tony Lauritzen, our Chief Executive Officer, Mr. Michael Gregos, our Chief Financial Officer, and certain other officers who perform executive officer functions for us, are not required to work full-time on our affairs and are involved in other business activities with our Sponsor and its affiliates, which may result in their spending less time than is appropriate or necessary to manage our business successfully. Based solely on the anticipated relative sizes of our Fleet and the fleet owned by our Sponsor and its affiliates over the next twelve months, we estimate that Mr. Lauritzen, Mr. Gregos, and certain other officers may spend a substantial portion of their monthly business time on our business activities and their remaining time on the business of our Sponsor and its affiliates. However, the actual allocation of time could vary significantly from time to time depending on various circumstances and needs of the businesses, such as the relative levels of strategic activities of the businesses. As a result, there could be material competition for the time and effort of our officers who also provide services to our General Partner's affiliates, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Unitholders have limited voting rights, and our Partnership Agreement restricts the voting rights of our unitholders that own more than 4.9% of our common units.

Unlike the holders of common stock in a corporation, holders of common units have only limited voting rights on matters affecting our business. We will hold a meeting of the limited partners every year to elect one or more members of our Board of Directors that are eligible for reelection and to vote on any other matters that are properly brought before the meeting. Common unitholders are entitled to elect only three of the five members of our Board of Directors. The elected directors will be elected on a staggered basis and will serve for three year terms. Our General Partner has the right to appoint the remaining two directors and set the terms for which those directors will serve. The Partnership Agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting the unitholders' ability to influence the manner or direction of management. Unitholders have no right to elect our General Partner, and our General Partner may not be removed except by a vote of the holders of at least 66 2/3% of the outstanding common units and subordinated units, including any units owned by our General Partner, our Sponsor and their respective affiliates, voting together as a single class.

Our Partnership Agreement further restricts unitholders' voting rights by providing that if any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board), determining the presence of a quorum or for other similar purposes under our Partnership Agreement, unless required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our General Partner, its affiliates and persons who acquired common units with the prior approval of our Board of Directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

Our Partnership Agreement limits the duties our General Partner and our directors and officers may have to our unitholders and restricts the remedies available to unitholders for actions taken by our General Partner or our directors and officers.

Our Partnership Agreement provides that our Board of Directors has the authority to oversee and direct our operations, management and policies on an exclusive basis. The Marshall Islands Revised Limited Partnership Act, or the Partnership Act, states that a member or manager's "duties and liabilities may be expanded or restricted by provisions in the Partnership Agreement." As permitted by the Partnership Act, our Partnership Agreement contains provisions that reduce the standards to which our General Partner and our directors and our officers may otherwise be held by Marshall Islands law. For example, our Partnership Agreement:

provides that our General Partner may make determinations or take or decline to take actions without regard to our or our unitholders' interests. Our General Partner may consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or our unitholders. Decisions made by our General Partner will be made by its sole owner. Specifically, our General Partner may decide to exercise its right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, call right, pre-emptive rights or registration rights, consent or withhold consent to any merger or consolidation of the Partnership, appoint certain of our directors or vote for the election of any director, vote or refrain from voting on amendments to our Partnership Agreement that require a vote of the outstanding units, voluntarily withdraw from the Partnership, transfer (to the extent permitted under our Partnership Agreement) or refrain from transferring its units, the general partner interest or incentive distribution rights or vote upon the dissolution of the Partnership;

provides that our directors and officers are entitled to make other decisions in "good faith," meaning they reasonably believe that the decision is in our best interests;

generally provides that affiliated transactions and resolutions of conflicts of interest not approved by our conflicts committee of our Board of Directors and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third-parties or be "fair and reasonable" to us and that, in determining whether a transaction or resolution is "fair and reasonable," our Board of Directors may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and

provides that neither our General Partner nor our officers or our directors will be liable for monetary damages to us, our members or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our General Partner, our directors or officers or those other persons engaged in actual fraud or willful misconduct.

In order to become a member of our Partnership, a common unitholder is required to agree to be bound by the provisions in the Partnership Agreement, including the provisions discussed above.

Fees and cost reimbursements, which our Manager will determine for services provided to us, will be substantial, will be payable regardless of our profitability and will reduce our cash available for distribution to our unitholders.

Our Manager, which is wholly-owned by Mr. George Prokopiou, is responsible for the commercial and technical management of the vessels in our Fleet pursuant to the Management Agreements. We currently pay our Manager a fee of $2,732 per day for each vessel for providing our ship owning subsidiaries with technical, commercial, insurance, accounting, financing, provisions, crewing and bunkering services. In addition we pay our Manager a commercial management fee equal to 1.25% of the gross charter hire and the ballast bonus, which is the amount paid to the shipowner as compensation for all or part of the cost of positioning the vessel to the port where the vessel will be delivered to the charterer. We incurred an aggregate expense of approximately $6.7 million in connection with the commercial and technical management of our Fleet for the year ended December 31, 2015.

The management fee increases by 3% annually unless otherwise agreed, between us, with approval of our conflicts committee, and our Manager. The management fees payable for the vessels may be further increased if our Manager has incurred material unforeseen costs of providing the management services, by an amount to be agreed between us and our Manager, which amount will be reviewed and approved by our conflicts committee.

We have further entered into an executive services agreement, or the Executive Services Agreement, with our Manager, pursuant to which our Manager provides us with the services of our executive officers, who report directly to our Board of Directors. Under the Executive Services Agreement, our Manager is entitled to an executive services fee of €538,000 per annum, for the initial five year term, which expires in November 2018, payable in equal monthly installments. After the expiration of the firm period, the Executive Services Agreement will automatically be renewed for successive five year terms unless terminated earlier. As of December 31, 2015, we incurred approximately $0.6 million in connection with this agreement.

Pursuant to an administrative services agreement, or the Administrative Services Agreement, our Manager also provides us with certain administrative and support services for which we currently pay a monthly fee of $10,000, plus all related costs and expenses. As of December 31, 2015, we incurred $0.1 million in connection with this agreement.

For a description of our Management Agreements, Executive Services Agreement and Administrative Services Agreement, see "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions." The fees and expenses payable pursuant to the Management Agreements, Executive Services Agreement and the Administrative Services Agreement will be payable without regard to our financial condition or results of operations. The payment of fees to could adversely affect our ability to pay cash distributions to our unitholders.

Our Partnership Agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our General Partner and even if public unitholders are dissatisfied, they will be unable to remove our General Partner without our Sponsor's consent, unless our Sponsor's ownership interest in us is decreased; all of which could diminish the trading price of our common units.

Our Partnership Agreement contains provisions that may have the effect of discouraging a person or group from attempting to remove our current management or our General Partner.

The unitholders are unable to remove our General Partner without its consent because our General Partner and its affiliates, including our Sponsor, own sufficient units to be able to prevent its removal. The vote of the holders of at least 66 2/3% of all outstanding common and subordinated units voting together as a single class is required to remove our General Partner. Our Sponsor owns 610,000 of our common units and all of our subordinated units, representing approximately 43.9% of the outstanding common and subordinated units.

If our General Partner is removed without "cause" during the subordination period and units held by our General Partner and our Sponsor are not voted in favor of that removal, all remaining subordinated units will automatically convert into common units, any existing arrearages on the common units will be extinguished, and our General Partner will have the right to convert its incentive distribution rights into common units or to receive cash in exchange for those interests based on the fair market value of those interests at the time. A removal of our General Partner under these circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until we had met certain distribution and performance tests. Any conversion of our General Partner's interest or incentive distribution rights would be dilutive to existing unitholders. Furthermore, any cash payment in lieu of such conversion could be prohibitively expensive. "Cause" is narrowly defined to mean that a court of competent jurisdiction has entered a final, non-appealable judgment finding our General Partner liable for actual fraud or willful or wanton misconduct. Cause does not include most cases of charges of poor business decisions, such as charges of poor management of our business by the directors appointed by our General Partner, so the removal of our General Partner because of the unitholders' dissatisfaction with our General Partner's decisions in this regard would most likely result in the termination of the subordination period.

Common unitholders are entitled to elect only three of the five members of our Board of Directors. Our General Partner in its sole discretion appoints the remaining two directors.

Election of the three directors elected by unitholders is staggered, meaning that the members of only one of three classes of our elected directors are selected each year. In addition, the directors appointed by our General Partner serve for terms determined by our General Partner.

Our Partnership Agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about our operations as well as other provisions limiting the unitholders' ability to influence the manner or direction of management.

Unitholders' voting rights are further restricted by the Partnership Agreement provision providing that if any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board), determining the presence of a quorum or for other similar purposes under our Partnership Agreement, unless required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our General Partner, its affiliates and persons who acquired common units with the prior approval of our Board of Directors are not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

There are no restrictions in our Partnership Agreement on our ability to issue additional equity securities.

The effect of these provisions may be to diminish the price at which the common units will trade.

You may not have limited liability if a court finds that unitholder action constitutes control of our business.

As a limited partner in a partnership organized under the laws of the Marshall Islands, you could be held liable for our obligations to the same extent as a General Partner if you participate in the "control" of our business. Our General Partner generally has unlimited liability for the obligations of the Partnership, such as its debts and environmental liabilities, except for those contractual obligations of the Partnership that are expressly made without recourse to our General Partner. In addition, the limitations on the liability of holders of limited partner interests for the obligations of a limited partnership have not been clearly established in some jurisdictions in which we do business.

We can borrow money to pay distributions, which would reduce the amount of credit available to operate our business.

Our Partnership Agreement allows us to make working capital borrowings to pay distributions. Accordingly, if we have available borrowing capacity, we can make distributions on all our units even though cash generated by our operations may not be sufficient to pay such distributions. Any working capital borrowings by us to make distributions will reduce the amount of working capital borrowings we can make for operating our business. For more information, see "Item 5. Operating and Financial Review and Prospects."

We depend on our Manager to assist us in operating and expanding our business.

We subcontract the commercial and technical management of our Fleet, including crewing, maintenance and repair, to our Manager; the loss of our Manager's services or its failure to perform its obligations to us could materially and adversely affect the results of our operations.

Our operational success and ability to execute our growth strategy will depend significantly upon the satisfactory performance of these services. Our business will be harmed if our service providers fail to perform these services satisfactorily, if they cancel their agreements with us or if they stop providing these services to us.

Our ability to enter into new charters and expand our customer relationships will depend largely on our ability to leverage our relationship with our Manager and its reputation and relationships in the shipping industry. If our Manager suffers material damage to its reputation or relationships, it may harm our ability to:

renew existing charters upon their expiration;

obtain new charters;

successfully interact with shipyards;

obtain financing on commercially acceptable terms;

maintain access to capital under the Sponsor credit facility; or

maintain satisfactory relationships with suppliers and other third-parties.

Our current time charters and certain of our debt agreements prevent us from changing our Manager.

Our ability to change our Manager with another affiliated or third-party Manager, is prohibited by provisions in our current time charters and would constitute an event of default under our $340 Million Senior Credit Facility and our $200 Million Term Loan Facility, without their prior consent. In addition, we cannot assure you that future debt agreements or time charter contracts with our existing or new lenders or charterers, respectively, will not contain similar provisions.

Since our Manager is a privately held company and there is little or no publicly available information about it, an investor could have little advance warning of potential financial and other problems that might affect our Manager that could have a material adverse effect on us.

The ability of our Manager to continue providing services for our benefit will depend in part on its own financial strength. Circumstances beyond our control could impair our Manager's financial strength, and because it is privately held, it is unlikely that information about its financial strength would become public unless our Manager began to default on its obligations. As a result, an investor in our common units might have little advance warning of problems affecting our Manager, even though these problems could have a material adverse effect on us.

Our Manager may be unable to attract, provide and retain key management personnel, which may negatively impact the effectiveness of our management and our results of operation.

Our success depends to a significant extent upon the abilities and the efforts of our executive officers, whose services are provided to us by our Manager pursuant to our Executive Services Agreement. While we believe that we have an experienced management team, the loss or unavailability of one or more of our senior executives for any extended period of time could have an adverse effect on our business and results of operations.

A shortage of qualified officers and crew could have an adverse effect on our business and financial condition.

LNG carriers require a technically skilled officer staff with specialized training. As the world LNG carrier fleet continues to grow, the demand for technically skilled officers and crew has been increasing. Increases in our historical vessel operating expenses have been attributable primarily to the rising costs of recruiting and retaining officers for our Fleet. If we or our third-party ship Managers are unable to employ technically skilled staff and crew, we will not be able to adequately staff our vessels. A material decrease in the supply of technically skilled officers or an inability of our Manager to attract and retain such qualified officers could impair our ability to operate, or increase the cost of crewing our vessels, which would materially adversely affect our business, financial condition and results of operations and significantly reduce our ability to pay quarterly distributions to our common and preferred unitholders.

The derivative contracts we may enter into, in the future, to hedge our exposure to fluctuations in interest rates could result in higher than market interest rates and charges against our income.

As of December 31, 2015, we had total outstanding long-term debt of $688.3 million, of which $438.3 million was exposed to a floating interest rate. In order to manage our current or future exposure to interest rate fluctuations, we may use interest rate swaps to effectively fix a part of our floating rate debt obligations. As of December 31, 2015, we had not entered into interest rate swap agreements to fix the interest rate on our floating rate bank debt. Any future hedging strategies, however, may not be effective and we may incur substantial losses if interest rates move materially differently from our expectations.

We are a holding company, and our ability to make cash distributions to our unitholders will be limited by the value of investments we currently hold and by the distribution of funds from our subsidiaries.

We are a holding company whose assets mainly consist of equity interests in our subsidiaries. As a result, our ability to make cash distributions to our unitholders will depend on the performance of our operating subsidiaries. If we are not able to receive sufficient funds from our subsidiaries, we will not be able to pay distributions unless we obtain funds from other sources. We may not be able to obtain the necessary funds from other sources on terms acceptable to us.

We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common units less attractive to investors.

We are an "emerging growth company" as defined in the JOBS Act. As an "emerging growth company" we are exempt from having our independent auditor assess our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act. We cannot predict if investors will find our common units less attractive because we rely on this exemption. If some investors find our common units less attractive as a result, there may be a less active trading market for our units and our unit price may be more volatile. We will continue to be deemed an "emerging growth company" until the earliest of the last day of the fiscal year of during which we had total annual gross revenues of $1 billion or more, the last day of the fiscal year following our fifth IPO anniversary, the date in which, during the previous 3-year period, we have issued more than $1.0 billion in non-convertible debt, or the date on which we will be deemed to be a large accelerated filer.

Our ability to grow and to meet our financial needs, including our future obligations to holders of the Series A Preferred Units, may be adversely affected by our cash distribution policy.

Our cash distribution policy, which is consistent with our Partnership Agreement, requires us to distribute all of our available cash (as defined in our Partnership Agreement) each quarter. As a result, we do not expect to accumulate significant amounts of cash. Accordingly, our growth may not be as fast as businesses that reinvest their available cash to expand ongoing operations.

In determining the amount of cash available for distribution, our Board of Directors approves the amount of cash reserves to set aside, including reserves for future maintenance and replacement capital expenditures, working capital and other matters. We also rely upon external financing sources, including commercial borrowings, to fund our capital expenditures. Accordingly, to the extent we do not have sufficient cash reserves or are unable to obtain financing, our cash distribution policy may significantly impair our ability to meet our financial needs or to grow.

In addition, we are not required to accumulate cash for the purpose of meeting our future obligations to holders of our Series A Preferred Units. Depending on the timing and amount of our cash distributions, these distributions could significantly reduce or eliminate the cash available to us in subsequent periods to make payments on the Series A Preferred Units.

Due to our lack of diversification, adverse developments in our LNG shipping business could reduce our ability to make distributions to our unitholders.

We rely exclusively on the cash flow generated from our LNG carriers. Due to our lack of diversification, an adverse development in the LNG shipping industry could have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets or lines of businesses.

We may experience operational problems with vessels that reduce revenue and increase costs.

LNG carriers are complex and their operation is technically challenging. Marine transportation operations are subject to mechanical risks and problems. Operational problems may lead to loss of revenue or higher than anticipated operating expenses or require additional capital expenditures. Any of these results could harm our business, financial condition, results of operations and ability to make cash distributions to our unitholders.

Upon the expiration of the subordination period, the subordinated units will convert into common units and will then participate pro rata with other common units in distributions of available cash.

During the subordination period, which we define elsewhere in this Annual Report, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.365 per unit, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. Distribution arrearages do not accrue on the subordinated units. The purpose of the subordinated units is to increase the likelihood that during the subordination period there will be available cash from operating surplus to be distributed on the common units. Upon the expiration of the subordination period, the subordinated units will convert into common units and will then participate pro rata with other common units in distributions of available cash. See "Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Our Cash Distribution Policy."

Actions taken by our Board of Directors may affect the amount of cash available for distribution to unitholders or accelerate the right to convert subordinated units.

The amount of cash that is available for distribution to unitholders is affected by decisions of our Board of Directors regarding such matters as:

the amount and timing of asset purchases and sales;

cash expenditures;

borrowings;

estimates of maintenance and replacement capital expenditures;

the issuance of additional units; And

the creation, reduction or increase of reserves in any quarter.

In addition, borrowings by us and our affiliates do not constitute a breach of any duty owed by our General Partner or our directors to our unitholders, including borrowings that have the purpose or effect of:

enabling our General Partner or its affiliates to receive distributions on any subordinated units held by them or the incentive distribution rights; or

hastening the expiration of the subordination period.

For example, in the event we have not generated sufficient cash from our operations to pay the minimum quarterly distribution on our common units and our subordinated units, our Partnership Agreement permits us to borrow funds, which would enable us to make this distribution on all outstanding units.

Our Partnership Agreement provides that we and our subsidiaries may borrow funds from our General Partner and its affiliates. Our General Partner and its affiliates may not borrow funds from us or our subsidiaries.

Risks Relating to Our Industry

Our future growth and performance depends on continued growth in LNG production and demand for LNG and LNG shipping.

A complete LNG project includes production, liquefaction, storage, regasification and distribution facilities, in addition to the marine transportation of LNG. Increased infrastructure investment has led to an expansion of LNG production capacity in recent years, but material delays in the construction of new liquefaction facilities could constrain the amount of LNG available for shipping, reducing ship utilization. While global LNG demand has continued to rise, it has risen at a slower pace than previously predicted and the rate of its growth has fluctuated due to several factors, including the global economic crisis and continued economic uncertainty, fluctuations in the price of natural gas and other sources of energy, the continued acceleration in natural gas production from unconventional sources in regions such as North America and the highly complex and capital intensive nature of new or expanded LNG projects, including liquefaction projects. Continued growth in LNG production and demand for LNG and LNG shipping could be negatively affected by a number of factors, including:

increases in interest rates or other events that may affect the availability of sufficient financing for LNG projects on commercially reasonable terms;

increases in the cost of natural gas derived from LNG relative to the cost of natural gas generally;

increases in the production levels of low-cost natural gas in domestic natural gas consuming markets, which could further depress prices for natural gas in those markets and make LNG uneconomical;

increases in the production of natural gas in areas linked by pipelines to consuming areas, the extension of existing, or the development of new pipeline systems in markets we may serve, or the conversion of existing non-natural gas pipelines to natural gas pipelines in those markets;

decreases in the consumption of natural gas due to increases in its price, decreases in the price of alternative energy sources or other factors making consumption of natural gas less attractive;

any significant explosion, spill or other incident involving an LNG facility or carrier;

infrastructure constraints such as delays in the construction of liquefaction facilities, the inability of project owners or operators to obtain governmental approvals to construct or operate LNG facilities, as well as community or political action group resistance to new LNG infrastructure due to concerns about the environment, safety and terrorism;

labor or political unrest or military conflicts affecting existing or proposed areas of LNG production or regasification;

decreases in the price of LNG, which might decrease the expected returns relating to investments in LNG projects;

new taxes or regulations affecting LNG production or liquefaction that make LNG production less attractive; or

negative global or regional economic or political conditions, particularly in LNG consuming regions, which could reduce energy consumption or its growth.

Reduced demand for LNG and LNG shipping or any reduction or limitation in LNG production capacity, could have a material adverse effect on our ability to secure future multi-year time charters upon expiration or early termination of our current charter arrangements, or for any new ships we acquire, which could harm our business, financial condition, results of operations and cash flows, including cash available for distribution to our unitholders.

Fluctuations in overall LNG demand growth could adversely affect our ability to secure future time charters.

Over the past five years, global LNG demand has remained flat at around 240 million tons per year. The effect of rising Asian demand has been offset by declining demand from European countries. Preliminary estimates by Drewry Shipping Consultants Ltd., or Drewry, suggest that global LNG trade in 2015 declined marginally by 3% mainly because of the changing priorities of major LNG importers such as Japan and South Korea in favor of nuclear energy and coal based power plants. Lower crude oil prices have also put a pressure on the LNG demand. Continued economic uncertainty and the continued acceleration of unconventional natural gas production could also have an adverse effect on our ability to secure future term charters.

Demand for LNG shipping could be significantly affected by volatile natural gas prices and the overall demand for natural gas.

Gas prices are volatile and are affected by numerous factors beyond our control, including but not limited to the following:

worldwide demand for natural gas;

the cost of exploration, development, production, transportation and distribution of natural gas;

expectations regarding future energy prices for both natural gas and other sources of energy;

the level of worldwide LNG production and exports;

government laws and regulations, including but not limited to environmental protection laws and regulations;

local and international political, economic and weather conditions;

political and military conflicts; and

the availability and cost of alternative energy sources, including alternate sources of natural gas in gas importing and consuming countries.

Seasonality in demand, peak-load demand, and other short-term factors such as pipeline gas disruptions and maintenance schedules of utilities affect charters of less than two years and rates. In general, reduced demand for LNG, LNG carriers or LNG shipping would have a material adverse effect on our future growth and could harm our business, results of operations and financial condition.

Hire rates for LNG carriers may fluctuate substantially. If rates are lower when we are seeking a new charter, our revenues and cash flows may decline.

Our ability from time to time to charter or re-charter any ship at attractive rates will depend on, among other things, the prevailing economic conditions in the LNG industry. Hire rates for LNG carriers may fluctuate over time as a result of changes in the supply-demand balance relating to current and future ship capacity. This supply-demand relationship largely depends on a number of factors outside our control. The LNG charter market is connected to world natural gas prices and energy markets, which we cannot predict. A substantial or extended decline in demand for natural gas or LNG could adversely affect our ability to re-charter our vessels at acceptable rates or to acquire and profitably operate new ships. Hire rates for newbuildings are correlated with the price of newbuildings. Hire rates at a time when we may be seeking new charters may be lower than the hire rates at which our vessels are currently chartered. If hire rates are lower when we are seeking a new charter, our revenues and cash flows, including cash available for distributions to our unitholders, may decline, as we may only be able to enter into new charters at reduced or unprofitable rates or we may have to secure a charter in the spot market, where hire rates are more volatile. Prolonged periods of low charter hire rates or low ship utilization could also have a material adverse effect on the value of our assets.

Vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of vessels, we may incur a loss.

Factors that influence vessel values include:

prevailing economic conditions in the natural gas and energy markets;

a substantial or extended decline in demand for LNG;

increases in the supply of vessel capacity;

the size and age of a vessel; and

the cost of retrofitting or modifying secondhand vessels, as a result of technological advances in vessel design or equipment, changes in applicable environmental or other regulations or standards, customer requirements or otherwise.

As our vessels age, the expenses associated with maintaining and operating them are expected to increase, which could have an adverse effect on our business and operations if we do not maintain sufficient cash reserves for maintenance and replacement capital expenditures. Moreover, the cost of a replacement vessel would be significant. If a charter terminates, we may be unable to re-deploy the affected vessels at attractive rates and, rather than continue to incur costs to maintain and finance them, we may seek to dispose of them. Our inability to dispose of vessels at a reasonable value could result in a loss on their sale and adversely affect our ability to purchase a replacement vessel, results of operations and financial condition and ability to pay minimum quarterly or other distributions to our unitholders.

An oversupply of ships or delays or abandonment of planned projects may lead to a reduction in the charter hire rates we are able to obtain when seeking charters in the future.

According to Drewry, during the period from 2011 to January 2016, the global fleet of LNG carriers grew from 358 to 422 vessels due to the construction and delivery of new LNG carriers and low levels of vessel demolition. Although the global newbuilding orderbook dropped sharply in 2008, 2009 and 2010, ordering activity increased in the light of Fukushima nuclear disaster and, according to Drewry, a total of 56 LNG carrier newbuilding orders were placed in 2011 and a further 33 in 2012. In 2013 and2014, ordering activity remained firm and a total of 100 newbuild orders were placed. However, provisional data suggest that only 32 new vessels were ordered in 2015 because of weaker macroeconomic outlook. According to Drewry, as of January 31, 2016, the newbuilding orderbook consisted of 141 vessels with a combined capacity of 23.6 million cbm, equivalent to 36.8% of the current global LNG carrier fleet by capacity. The delivery of these newbuildings will occur between 2016 and 2019.

According to Drewry, as of January 31, 2016 only 11 LNG carriers, representing 2.7% of the LNG vessels in the global LNG fleet, have an Ice Class 1A designation or equivalent rating.

According to Drewry, as of January 31, 2016, there were only 56 LNG carriers currently in operation, including the vessels in our Fleet, with a carrying capacity of between 149,000 and 155,000 cbm and a membrane containment system. There are a total of 141 LNG carriers on order, of which 10 are being constructed with these specifications.

We may have more difficulty entering into multi-year time charters in the future if an active spot LNG shipping market continues to develop.

One of our principal strategies is to enter into additional LNG carrier long term time charters. Most shipping requirements for new LNG projects continue to be provided on a multi-year basis, though the level of spot voyages and time charters of less than 24 months in duration has grown in the past few years. If an active spot market continues to develop, we may have increased difficulty entering into multi-year time charters upon expiration or early termination of our current charters or for any vessels that we acquire in the future, and, as a result, our cash flow may be less stable. In addition, an active spot LNG market may require us to enter into charters based on changing market prices, as opposed to contracts based on a fixed rate, which could result in a decrease in our cash flow in periods when the market price for shipping LNG is depressed or insufficient funds are available to cover our financing costs for related vessels.

Further technological advancements and other innovations affecting LNG carriers could reduce the charter hire rates we are able to obtain when seeking new employment and this could adversely impact the value of our assets.

The charter rates, asset value and operational life of an LNG carrier are determined by a number of factors, including the ship's efficiency, operational flexibility and physical life. Efficiency includes speed and fuel economy. Flexibility includes the ability to enter harbors, utilize related docking facilities and pass through canals and straits. Physical life is related to the original design and construction, the ongoing maintenance and the impact of operational stresses on the asset. If more advanced ship designs are developed in the future and new ships are built that are more efficient or more flexible or have longer physical lives than ours, competition from these more technologically advanced LNG carriers could adversely affect the charter hire rates we will be able to secure when we seek to re-charter our vessels upon expiration or early termination of our current charter arrangements and could also reduce the resale value of our vessels. This could adversely affect our revenues and cash flows, including cash available for distributions to our unitholders.

If we cannot meet our charterers' quality and compliance requirements we may not be able to operate our vessels profitably which could have an adverse effect on our future performance, results of operations, cash flows and financial position.

Customers, and in particular those in the LNG industry, have a high and increasing focus on quality and compliance standards with their suppliers across the entire value chain, including the shipping and transportation segment. Our continuous compliance with these standards and quality requirements is vital for our operations. Related risks could materialize in multiple ways, including a sudden and unexpected breach in quality and/or compliance concerning one or more vessels, a continuous decrease in the quality concerning one or more LNG carriers occurring over time. Moreover, continuous increasing requirements from LNG industry constituents can further complicate our ability to meet the standards. Any noncompliance by the Partnership, either suddenly or over a period of time, on one or more LNG Carriers, or an increase in requirements by our charterers above and beyond what we deliver, may have a material adverse effect on our future performance, results of operations, cash flows and financial position.

Operating costs and capital expenses will increase as our vessels age.

In general, capital expenditures and other costs necessary for maintaining a ship in good operating condition increase as the age of the ship increases. Accordingly, it is likely that the operating costs of our vessels will increase in the future.

Reliability of suppliers may limit our ability to obtain supplies and services when needed.

We rely, and will in the future rely, on a significant supply of consumables, spare parts and equipment to operate, maintain, repair and upgrade our Fleet. Delays in delivery or unavailability of supplies could result in off-hire days due to consequent delays in the repair and maintenance of our Fleet. This would negatively impact our revenues and cash flows. Cost increases could also negatively impact our future operations.

Exposure to currency exchange rate fluctuations will result in fluctuations in our cash flows and operating results.

Historically our revenue has been generated in U.S. Dollars, but we incur capital, operating and administrative expenses in multiple currencies, including, among others, the Euro. If the U.S. Dollar weakens significantly, we would be required to convert more U.S. Dollars to other currencies to satisfy our obligations, which would cause us to have less cash available for distribution. Because we report our operating results in U.S. Dollars, changes in the value of the U.S. Dollar also result in fluctuations in our reported revenues and earnings. In addition, under U.S. GAAP, all foreign currency-denominated monetary assets and liabilities such as cash and cash equivalents, accounts receivable, restricted cash and accounts payable are revalued and reported based on the prevailing exchange rate at the end of the reporting period. This revaluation may cause us to report significant non-monetary foreign currency exchange gains and losses in certain periods.

An increase in operating expenses, dry-docking costs or bunker costs could materially and adversely affect our financial performance.

Our operating expenses and dry-dock capital expenditures depend on a variety of factors including crew costs, provisions, deck and engine stores and spares, lubricating oil, insurance, maintenance and repairs and shipyard costs, many of which are beyond our control and affect the entire shipping industry. Also, while we do not bear the cost of fuel (bunkers) under our time charters, fuel is a significant expense in our operations when our vessels are, for example, moving to or from dry-dock or when off-hire. The price and supply of fuel is unpredictable and fluctuates based on events outside our control, including geopolitical developments, supply and demand for oil and gas, actions by OPEC and other oil and gas producers, war and unrest in oil-producing countries and regions, regional production patterns and environmental concerns. These may increase vessel operating and dry-docking costs further, which could materially and adversely affect our results of operations.

The operation of LNG carriers is inherently risky, and an incident involving significant loss of or environmental consequences involving any of our vessels could harm our reputation and business.

Our vessels and their cargoes are at risk of being damaged or lost because of events such as:

marine disasters;

piracy;

environmental accidents;

bad weather;

mechanical failures;

grounding, fire, explosions and collisions;

human error; and

war and terrorism.

An accident involving any of our vessels could result in any of the following:

death or injury to persons, loss of property or environmental damage;

delays or failure in the delivery of cargo;

loss of revenues from or termination of charter contracts;

governmental fines, penalties or restrictions on conducting business;

spills, pollution and the liability associated with the same;

higher insurance rates; and

damage to our reputation and customer relationships generally.

Any of these events could result in a material adverse effect on our business, financial condition and operating results. If our vessels suffer damage, they may need to be repaired. The costs of vessel repairs are unpredictable and can be substantial. We may have to pay repair costs that our insurance policies do not cover. The loss of earnings while these vessels are being repaired, as well as the actual cost of these repairs, would decrease our results of operations. If any of our vessels is involved in an accident with the potential risk of environmental consequences, the resulting media coverage could have a material adverse effect on our business, results of operations and cash flows, which in turn could weaken our financial condition and negatively affect our ability to pay distributions to our unitholders.

Our insurance may be insufficient to cover losses that may occur to our property or result from our operations.

The operation of LNG carriers is inherently risky. Although we carry protection and indemnity insurance consistent with industry standards, all risks may not be adequately insured against, and any particular claim may not be paid. Any claims covered by insurance would be subject to deductibles, and since it is possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material. Certain of our insurance coverage is maintained through mutual protection and indemnity associations, and as a member of such associations we may be required to make additional payments over and above budgeted premiums if member claims exceed association reserves. We may be unable to procure adequate insurance coverage at commercially reasonable rates in the future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the future may result in the lack of availability of, insurance against risks of environmental damage or pollution. A marine disaster could exceed our insurance coverage, which could harm our business, financial condition and operating results. Any uninsured or underinsured loss could harm our business and financial condition. In addition, our insurance may be voidable by the insurers as a result of certain of our actions, such as our vessels failing to maintain certification with applicable maritime self-regulatory organizations.

Changes in the insurance markets attributable to terrorist attacks may also make certain types of insurance more difficult for us to obtain. In addition, upon renewal or expiration of our current policies, the insurance that may be available to us may be significantly more expensive than our existing coverage.

Our vessels may suffer damage and we may face unexpected costs and off-hire days.

In the event of damage to our owned vessels, the damaged ship would be off-hire while it is being repaired, which would decrease our revenues and cash flows, including cash available for distributions to our unitholders. In addition, the costs of ship repairs are unpredictable and can be substantial. In the event of repair costs that are not covered by our insurance policies, we may have to pay such repair costs, which would decrease our earnings and cash flows.

Volatile economic conditions may adversely impact our ability to obtain financing or refinance our future credit facilities on acceptable terms, which may hinder or prevent us from operating or expanding our business.

Global financial markets and economic conditions have been, and continue to be, volatile. These issues, along with significant write-offs in the financial services sector, the significant drop in crude oil prices, the re-pricing of credit risk and the current weak economic conditions, have made, and will likely continue to make, it difficult to obtain additional financing. The current state of global financial markets and current economic conditions might adversely impact our ability to issue additional equity at prices which will not be dilutive to our existing unitholders or preclude us from issuing equity at all.

Also, as a result of concerns about the stability of financial markets generally and the solvency of counterparties specifically, the cost of obtaining money from the credit markets has increased as many lenders have increased interest rates, enacted tighter lending standards, refused to refinance existing debt at all or on terms similar to current debt and reduced, and in some cases ceased, to provide funding to borrowers. Due to these factors, we cannot be certain that financing will be available to the extent required, or that we will be able to refinance our future credit facilities, on acceptable terms or at all. If financing or refinancing is not available when needed, or is available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be unable to enhance our existing business, complete the acquisition of newbuildings (if any) and additional vessels or otherwise take advantage of business opportunities as they arise.

As of the date of this Annual Report, we have not secured any financing in connection with the potential acquisition of the Optional Vessels, since it is uncertain if and when such purchase options will be exercised. Our Sponsor has entered into loan agreements in connection with these Optional Vessels. In the event we acquire any or all of the Optional Vessels in the future, we may enter into agreements with our Sponsor to novate these loan agreements to us. Any such novation would be subject to each respective lender's consent.

In addition, volatility and uncertainty concerning current global economic conditions may cause our charterers to defer projects in response to tighter credit, decreased capital availability and declining customer confidence, which may negatively impact the demand for our vessels and services and could also result in defaults under our current charters. A tightening of the credit markets may further negatively impact our operations by affecting the solvency of our suppliers or charterers which could lead to disruptions in delivery of supplies such as equipment for conversions, cost increases for supplies, accelerated payments to suppliers, customer bad debts or reduced revenues.

Compliance with safety and other requirements imposed by classification societies may be very costly and may adversely affect our business.

The hull and machinery of every commercial LNG carrier must be classed by a classification society. The classification society certifies that the ship has been built and maintained in accordance with the applicable rules and regulations of that classification society. Moreover, every ship must comply with all applicable international conventions and the regulations of the ship's flag state as verified by a classification society. Finally, each ship must successfully undergo periodic surveys, including annual, intermediate and special surveys performed under the classification society's rules.

If any ship does not maintain its class, it will lose its insurance coverage and be unable to trade, and the ship's owner will be in breach of relevant covenants under its financing arrangements. Failure to maintain the class of one or more of our vessels could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distributions to our unitholders.

The LNG shipping industry is subject to substantial environmental and other regulations, which may significantly limit our operations or increase our expenses.

Our operations are materially affected by extensive and changing international, national, state and local environmental laws, regulations, treaties, conventions and standards which are in force in international waters or in the jurisdictional waters of the countries in which our vessels operate and in the countries in which our vessels are registered. These requirements relate to equipping and operating ships, providing security and to minimizing or addressing impacts on the environment from ship operations. We have incurred, and expect to continue to incur, substantial expenses in complying with these requirements, including expenses for ship modifications and changes in operating procedures. We also could incur substantial costs, including cleanup costs, civil and criminal penalties and sanctions, the suspension or termination of operations and third-party claims as a result of violations of, or liabilities under, such laws and regulations.

In addition, these requirements can affect the resale value or useful lives of our vessels, require a reduction in cargo capacity, necessitate ship modifications or operational changes or restrictions or lead to decreased availability of insurance coverage for environmental matters. They could further result in the denial of access to certain jurisdictional waters or ports or detention in certain ports. We are required to obtain governmental approvals and permits to operate our vessels. Delays in obtaining such governmental approvals may increase our expenses, and the terms and conditions of such approvals could materially and adversely affect our operations.

Additional laws and regulations may be adopted that could limit our ability to do business or increase our operating costs, which could materially and adversely affect our business. For example, new or amended legislation relating to ship recycling, sewage systems, emission control (including emissions of greenhouse gases) as well as ballast water treatment and ballast water handling may be adopted. The United States has enacted legislation and regulations that require more stringent controls of air and water emissions from ocean-going ships. Such legislation or regulations may require additional capital expenditures or operating expenses (such as increased costs for low-sulfur fuel) in order for us to maintain our vessels' compliance with international and/or national regulations. We also may become subject to additional laws and regulations if we enter new markets or trades.

We also believe that the heightened environmental, quality and security concerns of insurance underwriters, regulators and charterers will generally lead to additional regulatory requirements, including enhanced risk assessment and security requirements as well as greater inspection and safety requirements on all LNG carriers in the marine transportation market. These requirements are likely to add incremental costs to our operations, and the failure to comply with these requirements may affect the ability of our vessels to obtain and, possibly, collect on, insurance or to obtain the required certificates for entry into the different ports where we operate.

Some environmental laws and regulations, such as the U.S. Oil Pollution Act of 1990, or OPA, provide for potentially unlimited joint, several, and/or strict liability for owners, operators and demise or bareboat charterers for oil pollution and related damages. OPA applies to discharges of any oil from a ship in U.S. waters, including discharges of fuel and lubricants from an LNG carrier, even if the ships do not carry oil as cargo. In addition, many states in the United States bordering on a navigable waterway have enacted legislation providing for potentially unlimited strict liability without regard to fault for the discharge of pollutants within their waters. We also are subject to other laws and conventions outside the United States that provide for an owner or operator of LNG carriers to bear strict liability for pollution, such as the Convention on Limitation of Liability for Maritime Claims of 1976, or the "London Convention."

Some of these laws and conventions, including OPA and the London Convention, may include limitations on liability. However, the limitations may not be applicable in certain circumstances, such as where a spill is caused by a ship owner's or operators' intentional or reckless conduct. In addition, in response to the Deepwater Horizon oil spill, the U.S. Congress is currently considering a number of bills that could potentially modify or eliminate the limits of liability under OPA.

Compliance with OPA and other environmental laws and regulations also may result in ship owners and operators incurring increased costs for additional maintenance and inspection requirements, the development of contingency arrangements for potential spills, obtaining mandated insurance coverage and meeting financial responsibility requirements.

Please see "Item 4. Information on the Partnership—B. Business Overview—Environmental and Other Regulations."

Climate change and greenhouse gas restrictions may adversely impact our operations and markets.

Due to concern over the risks of climate change, a number of countries and the International Maritime Organization, or IMO, have adopted, or are considering the adoption of, regulatory frameworks to reduce greenhouse gas emission from ships. These regulatory measures may include adoption of cap and trade regimes, carbon taxes, increased efficiency standards and incentives or mandates for renewable energy. Although emissions of greenhouse gases from international shipping currently are not subject to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, or the "Kyoto Protocol", a new treaty may be adopted in the future that includes additional restrictions on shipping emissions to those already adopted under the International Convention for the Prevention of Marine Pollution from Ships (MARPOL), and some countries have made voluntary pledges to control the emissions of greenhouse gasses. The IMO has already approved two sets of mandatory requirements to address greenhouse gases from ships: the Energy Efficiency Design Index, or EEDI, and the Ship Energy Efficiency Management plan, or SEEMP. Compliance with future changes in laws and regulations relating to climate change could increase the costs of operating and maintaining our vessels and could require us to install new emission controls, as well as acquire allowances, pay taxes related to our greenhouse gas emissions, or administer and manage a greenhouse gas emissions program. Revenue generation and strategic growth opportunities may also be adversely affected.

Adverse effects upon the oil and gas production industry relating to climate change, including growing public concern about the environmental impact of climate change, may also have an effect on demand for our services. For example, increased regulation of greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create greater incentives for use of alternative energy sources. Any long-term material adverse effect on the oil and gas production industry could have significant financial and operational adverse impacts on our business that we cannot predict with certainty at this time.

Please see "Item 4. Information on the Partnership—B. Business Overview—Environmental and Other Regulations."

We operate our vessels worldwide, which could expose us to political, governmental and economic instability that could harm our business.

Because we operate our vessels worldwide in the geographic areas where our charterers do business, our operations may be affected by economic, political and governmental conditions in the countries where our vessels operate, where they are registered, or where our charterers are located. Any disruption caused by these factors could harm our business, financial condition, results of operations and cash flows. In particular, our vessels frequent LNG terminals in countries including Egypt, Equatorial Guinea and Trinidad as well as transit through the Gulf of Aden and the Strait of Malacca. In addition, we, either directly, or indirectly through our customer Gazprom, an international energy company based in Russia, may be affected by political tension in Europe between Russia and the Ukraine following Russia's annexation of Crimea. Economic, political and governmental conditions in these and other regions have from time to time resulted in military conflicts, terrorism, attacks on ships, mining of waterways, piracy and other efforts to disrupt shipping. Future hostilities or other political instability in the geographic regions where we operate or may operate could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distributions to our unitholders. In addition, our business could also be harmed by tariffs, trade embargoes and other economic sanctions by the United States or other countries against countries in the Middle East, Southeast Asia, Russia or elsewhere as a result of terrorist attacks, hostilities or diplomatic or political pressures that limit trading activities with those countries.

Failure to comply with the U.S. Foreign Corrupt Practices Act and other anti-bribery legislation in other jurisdictions could result in fines, criminal penalties, contract terminations and an adverse effect on our business.

We may operate in a number of countries throughout the world, including countries known to have a reputation for corruption. We are committed to doing business in accordance with applicable anti-corruption laws and have adopted a code of business conduct and ethics which is consistent and in full compliance with the U.S. Foreign Corrupt Practices Act of 1977. We are subject, however, to the risk that we, our affiliated entities or our or their respective officers, directors, employees and agents may take actions determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition. In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating, and resolving actual or alleged violations is expensive and can consume significant time and attention of our senior management.

Terrorist attacks, international hostilities and piracy could adversely affect our business, financial condition, results of operations and cash flows.

The threat of future terrorist attacks continues to cause uncertainty in the world financial markets and may affect our business, financial condition, results of operations and cash flows, including cash available for distributions to our unitholders. Turmoil in Iran and uncertainty surrounding the Strait of Hormuz, as well as tension in Afghanistan, North Korea, Russia and the Ukraine, and the continuing hostilities in the Middle East, may lead to additional acts of terrorism, further regional conflicts and other armed actions around the world, which may contribute to further instability in the global financial markets. These uncertainties could also adversely affect our ability to obtain additional financing on terms acceptable to us, or at all or impact the shipyards constructing our Sponsor's LNG carrier newbuildings.

In the past, political conflicts have also resulted in attacks on ships, mining of waterways and other efforts to disrupt international shipping, particularly in the Arabian Gulf region. Acts of terrorism and piracy have also affected and may continue to affect ships trading in regions such as the South China Sea, West Africa and the Gulf of Aden. In 2012,"M/T Smyrni", a vessel managed by an affiliated company, was hijacked by pirates and was released after almost one year in captivity. Any terrorist attacks targeted at our ships may in the future negatively materially affect our business, financial condition, results of operations and cash flows and could directly impact our vessels or our charterers. We may not be adequately insured to cover losses from these incidents. In addition, crew costs, including those due to employing onboard security guards, could increase in such circumstances.

In addition, LNG facilities, shipyards, ships, pipelines and gas fields could be targets of future terrorist attacks or piracy. Any such attacks could lead to, among other things, bodily injury or loss of life, as well as damage to the ships or other property, increased ship operating costs, including insurance costs, reductions in the supply of LNG and the inability to transport LNG to or from certain locations. Terrorist attacks, war or other events beyond our control that adversely affect the production, storage or transportation of LNG to be shipped by us could entitle our charterers to terminate our charter contracts in certain circumstances, which would harm our cash flows and our business.

Terrorist attacks, or the perception that LNG facilities and LNG carriers are potential terrorist targets, could materially and adversely affect expansion of LNG infrastructure and the continued supply of LNG. Concern that LNG facilities may be targeted for attack by terrorists has contributed significantly to local community and environmental group resistance to the construction of a number of LNG facilities, primarily in North America. If a terrorist incident involving an LNG facility or LNG carrier did occur, in addition to the possible effects identified in the previous paragraph, the incident may adversely affect the construction of additional LNG facilities and could lead to the temporary or permanent closing of various LNG facilities currently in operation.

The vessels we own or manage could be required by our charterers' instructions to call on ports located in countries that are subject to restrictions imposed by the United States and other governments.

Although no vessels operated by us have called on ports located in countries subject to sanctions and embargoes imposed by the U.S. government and countries identified by the U.S. government as state sponsors of terrorism, such as Iran (sanctions lifted early in 2016), Sudan and Syria, in the future our vessels may call on ports in these countries from time to time on our charterers' instructions. The U.S. sanctions and embargo laws and regulations vary in their application, as they do not all apply to the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended or strengthened over time. In 2010, the U.S. enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the scope of the Iran Sanctions Act. Among other things, CISADA expands the application of the prohibitions to companies such as ours and introduces limits on the ability of companies and persons to do business or trade with Iran when such activities relate to the investment, supply or export of refined petroleum or petroleum products. In addition, in 2012, President Obama signed Executive Order 13608 which prohibits foreign persons from violating or attempting to violate, or causing a violation of any sanctions in effect against Iran or facilitating any deceptive transactions for or on behalf of any person subject to U.S. sanctions. Any persons found to be in violation of Executive Order 13608 will be deemed a foreign sanctions evader and will be banned from all contacts with the United States, including conducting business in U.S. dollars. Also in 2012, President Obama signed into law the Iran Threat Reduction and Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which created new sanctions and strengthened existing sanctions. Among other things, the Iran Threat Reduction Act intensifies existing sanctions regarding the provision of goods, services, infrastructure or technology to Iran's petroleum or petrochemical sector. The Iran Threat Reduction Act also includes a provision requiring the President of the United States to impose five or more sanctions from Section 6(a) of the Iran Sanctions Act, as amended, on a person the President determines is a controlling beneficial owner of, or otherwise owns, operates, or controls or insures a vessel that was used to transport crude oil from Iran to another country and (1) if the person is a controlling beneficial owner of the vessel, the person had actual knowledge the vessel was so used or (2) if the person otherwise owns, operates, or controls, or insures the vessel, the person knew or should have known the vessel was so used. Such a person could be subject to a variety of sanctions, including exclusion from U.S. capital markets, exclusion from financial transactions subject to U.S. jurisdiction, and exclusion of that person's vessels from U.S. ports for up to two years.

On November 24, 2013, the P5+1 (the United States, United Kingdom, Germany, France, Russia and China) entered into an interim agreement with Iran entitled the "Joint Plan of Action" ("JPOA"). Under the JPOA it was agreed that, in exchange for Iran taking certain voluntary measures to ensure that its nuclear program is used only for peaceful purposes, the U.S. and EU would voluntarily suspend certain sanctions for a period of six months.

On January 20, 2014, the U.S. and E.U. indicated that they would begin implementing the temporary relief measures provided for under the JPOA. These measures included, among other things, the suspension of certain sanctions on the Iranian petrochemicals, precious metals, and automotive industries from January 20, 2014 until July 20, 2014. The JPOA was subsequently extended twice.

On July 14, 2015, the P5+1 and the EU announced that they reached a landmark agreement with Iran titled the Joint Comprehensive Plan of Action Regarding the Islamic Republic of Iran's Nuclear Program (the "JCPOA"), which is intended to significantly restrict Iran's ability to develop and produce nuclear weapons for 10 years while simultaneously easing sanctions directed toward non-U.S. persons for conduct involving Iran, but taking place outside of U.S. jurisdiction and does not involve U.S. persons. On January 16, 2016 ("Implementation Day"), the United States joined the EU and the UN in lifting a significant number of their nuclear-related sanctions on Iran following an announcement by the International Atomic Energy Agency ("IAEA") that Iran had satisfied its respective obligations under the JCPOA.

U.S. sanctions prohibiting certain conduct that is now permitted under the JCPOA have not actually been repealed or permanently terminated at this time. Rather, the U.S. government has implemented changes to the sanctions regime by: (1) issuing waivers of certain statutory sanctions provisions; (2) committing to refrain from exercising certain discretionary sanctions authorities; (3) removing certain individuals and entities from OFAC's sanctions lists; and (4) revoking certain Executive Orders and specified sections of Executive Orders. These sanctions will not be permanently "lifted" until the earlier of "Transition Day," set to occur on October 20, 2023, or upon a report from the IAEA stating that all nuclear material in Iran is being used for peaceful activities.

Although we believe that we have been in compliance with all applicable sanctions and embargo laws and regulations, and intend to maintain such compliance, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Any such violation could result in fines, penalties or other sanctions that could severely impact our ability to access U.S. capital markets and conduct our business, and could result in some investors deciding, or being required, to divest their interest, or not to invest, in us. In addition, certain institutional investors may have investment policies or restrictions that prevent them from holding securities of companies that have contracts with countries identified by the U.S. government as state sponsors of terrorism. The determination by these investors not to invest in, or to divest from, our common units may adversely affect the price at which our common units trade. Moreover, our charterers may violate applicable sanctions and embargo laws and regulations as a result of actions that do not involve us or our vessels, and those violations could in turn negatively affect our reputation. In addition, our reputation and the market for our securities may be adversely affected if we engage in certain other activities, such as entering into charters with individuals or entities in countries subject to U.S. sanctions and embargo laws that are not controlled by the governments of those countries, or engaging in operations associated with those countries pursuant to contracts with third-parties that are unrelated to those countries or entities controlled by their governments. Investor perception of the value of our common units may be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding countries. In addition, charterers and other parties that we have previously entered into contracts with regarding our vessels may be affiliated with persons or entities that are now or may soon be the subject of sanctions imposed by the Obama administration and/or the European Union or other international bodies in 2014 in response to recent events relating to Russia, Crimea and the Ukraine. If we determine that such sanctions require us to terminate existing contracts or if we are found to be in violation of such sanctions, we may suffer reputational harm and our results of operations may be adversely affected.

Governments could requisition our vessels during a period of war or emergency, resulting in loss of earnings.

The government of a jurisdiction where one or more of our vessels are registered could requisition for title or seize our vessels. Requisition for title occurs when a government takes control of a ship and becomes its owner. Also, a government could requisition our vessels for hire. Requisition for hire occurs when a government takes control of a ship and effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or emergency, although governments may elect to requisition ships in other circumstances. Although we would expect to be entitled to government compensation in the event of a requisition of one or more of our vessels, the amount and timing of payments, if any, would be uncertain. A government requisition of one or more of our vessels would result in off-hire days under our time charters and may cause us to breach covenants in debt agreements, and could have a material adverse effect on our business, financial condition, results of operations and cash flows, including cash available for distribution to our unitholders.

Maritime claimants could arrest our vessels, which could interrupt our cash flows.

Crew members, suppliers of goods and services to a vessel, shippers of cargo and other parties may be entitled to a maritime lien against a vessel for unsatisfied debts, claims or damages. In many jurisdictions, a claimant may seek to obtain security for its claim by arresting a vessel through foreclosure proceedings. The arrest or attachment of one or more of our vessels could interrupt our cash flow and require us to pay large sums of money to have the arrest or attachment lifted. In addition, in some jurisdictions, such as South Africa, under the "sister ship" theory of liability, a claimant may arrest both the vessel which is subject to the claimant's maritime lien and any "associated" vessel, which is any vessel owned or controlled by the same owner. Claimants could attempt to assert "sister ship" liability against a vessel in our Fleet for claims relating to another of our vessels.

We may be subject to litigation that could have an adverse effect on us.

We may in the future be involved from time to time in litigation matters. These matters may include, among other things, contract disputes, personal injury claims, environmental claims or proceedings, toxic tort claims, employment matters and governmental claims for taxes or duties as well as other litigation that arises in the ordinary course of our business. We cannot predict with certainty the outcome of any claim or other litigation matter. The ultimate outcome of any litigation matter and the potential costs associated with prosecuting or defending such lawsuits, including the diversion of management's attention to these matters, could have an adverse effect on us and, in the event of litigation that could reasonably be expected to have a material adverse effect on us, could lead to an event of default under our credit facilities.

Risks Relating to our Common Units

The price of our common units may be volatile.

The price of our common units may be volatile and may fluctuate due to factors including:

our payment of cash distributions to our unitholders;

actual or anticipated fluctuations in quarterly and annual results;

fluctuations in the seaborne transportation industry, including fluctuations in the LNG carrier market;

mergers and strategic alliances in the shipping industry;

changes in governmental regulations or maritime self-regulatory organization standards;

shortfalls in our operating results from levels forecasted by securities analysts; announcements concerning us or our competitors;

the failure of securities analysts to publish research about us, or analysts making changes in their financial estimates;

general economic conditions;

terrorist acts;

future sales of our units or other securities;

investors' perception of us and the LNG shipping industry;

the general state of the securities market; and

other developments affecting us, our industry or our competitors.

Securities markets worldwide are experiencing significant price and volume fluctuations. The market price for our common units may also be volatile. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common units in spite of our operating performance.

Increases in interest rates may cause the market price of our common units to decline.

An increase in interest rates may cause a corresponding decline in demand for equity investments in general. Any such increase in interest rates or reduction in demand for our common units resulting from other relatively more attractive investment opportunities may cause the trading price of our common units to decline.

Unitholders may have liability to repay distributions.

Under some circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under the Marshall Islands Limited Partnership Act, or the Marshall Islands Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets. Marshall Islands law provides that for a period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Marshall Islands law will be liable to the limited partnership for the distribution amount. Assignees who become substituted limited partners are liable for the obligations of the assignor to make contributions to the Partnership that are known to the assignee at the time it became a limited partner and for unknown obligations if the liabilities could be determined from the Partnership Agreement. Liabilities to partners on account of their partnership interest and liabilities that are non-recourse to the partnership are not counted for purposes of determining whether a distribution is permitted.

We have been organized as a limited partnership under the laws of the Marshall Islands, which does not have a well-developed body of partnership law.

We are organized in the Republic of the Marshall Islands, which does not have a well-developed body of case law or bankruptcy law and, as a result, unitholders may have fewer rights and protections under Marshall Islands law than under a typical jurisdiction in the United States. Our partnership affairs are governed by our Partnership Agreement and by the Marshall Islands Act. The provisions of the Marshall Islands Act resemble the limited partnership laws of a number of states in the United States, most notably Delaware. The Marshall Islands Act also provides that it is to be applied and construed to make it uniform with the Delaware Revised Uniform Partnership Act and, so long as it does not conflict with the Marshall Islands Act or decisions of the Marshall Islands courts, interpreted according to the non-statutory law (or case law) of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Marshall Islands Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as the courts in Delaware. For example, the rights of our unitholders and the fiduciary responsibilities of our General Partner under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. As a result, unitholders may have more difficulty in protecting their interests in the face of actions by our General Partner and its officers and directors than would unitholders of a similarly organized limited partnership in the United States. Further, the Republic of the Marshall Islands does not have a well-developed body of bankruptcy law. As such, in the case of a bankruptcy of our Partnership, there may be a delay of bankruptcy proceedings and the ability of unitholders and creditors to receive recovery after a bankruptcy proceeding.

We are a "foreign private issuer" under New York Stock Exchange, or the NYSE, rules, and as such we are entitled to exemption from certain corporate governance standards of the NYSE applicable to domestic companies, and holders of our common units may not have the same protections afforded to unitholders of companies that are subject to all of the NYSE corporate governance requirements.

We are a "foreign private issuer" under the securities laws of the United States and the rules of the NYSE. Under the securities laws of the United States, "foreign private issuers" are subject to different disclosure requirements than U.S. domiciled registrants, as well as different financial reporting requirements. Under the NYSE rules, a "foreign private issuer" is subject to less stringent corporate governance requirements. Subject to certain exceptions, the rules of the NYSE permit a "foreign private issuer" to follow its home country practice in lieu of the listing requirements of the NYSE.

A majority of our directors qualify as independent under the NYSE director independence requirements. However, we cannot assure you that we will continue to maintain an independent board in the future. In addition, we may have one or more non-independent directors serving as committee members on our compensation committee. As a result, non-independent directors may among other things, participate in fixing the compensation of our management, making share and option awards and resolving governance issues regarding our Partnership.

Accordingly, in the future holders of our common units may not have the same protections afforded to shareholders of companies that are subject to all of the NYSE corporate governance requirements.

For a description of our corporate governance practices, please see "Item 6. Directors, Senior Management and Employees."

Because we are organized under the laws of the Marshall Islands, it may be difficult to serve us with legal process or enforce judgments against us, our directors or our management.

We are organized under the laws of the Marshall Islands, and substantially all of our assets are located outside of the United States. In addition, our directors and officers generally are or will be non-residents of the United States, and all or a substantial portion of the assets of these non-residents are located outside the United States. As a result, it may be difficult or impossible for holders of our common units to bring an action against us or against these individuals in the United States if they believe that their rights have been infringed under securities laws or otherwise. Even if holders of our common units are successful in bringing an action of this kind, the laws of the Marshall Islands and of other jurisdictions may prevent or restrict them from enforcing a judgment against our assets or the assets of our directors or officers.

Our Partnership Agreement designates the Court of Chancery of the State of Delaware as the sole and exclusive forum, unless otherwise provided for by Marshall Islands law, for certain litigation that may be initiated by our unitholders, which could limit our unitholders' ability to obtain a favorable judicial forum for disputes with the Partnership.

Our Partnership Agreement provides that, unless otherwise provided for by Marshall Islands law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any claims that:

arise out of or relate in any way to the Partnership Agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the Partnership Agreement or the duties, obligations or liabilities among limited partners or of limited partners to us, or the rights or powers of, or restrictions on, the limited partners or us);

are brought in a derivative manner on our behalf;

assert a claim of breach of a fiduciary duty owed by any director, officer or other employee of us or our General Partner, or owed by our General Partner, to us or the limited partners;

assert a claim arising pursuant to any provision of the Partnership Act; or

assert a claim governed by the internal affairs doctrine

regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims. Any person or entity purchasing or otherwise acquiring any interest in our common units shall be deemed to have notice of and to have consented to the provisions described above. This forum selection provision may limit our unitholders' ability to obtain a judicial forum that they find favorable for disputes with us or our directors, officers or other employees or unitholders.

Substantial future sales of our common units could cause the market price of our common units to decline.

Sales of a substantial number of our common units in the public market, or the perception that these sales could occur, may depress the market price for our common units. These sales could also impair our ability to raise additional capital through the sale of our equity securities in the future.

The issuance by us of additional common units or other equity securities would have the following effects:

our existing unitholders' proportionate ownership interest in us will decrease;

the distribution amount payable per unit on our common units may be lower;

the relative voting strength of each previously outstanding common unit may be diminished; and

the market price of our common units may decline.

Provisions in our organizational documents may have anti-takeover effects.

Our Partnership Agreement contains provisions that could make it more difficult for a third-party to acquire us without the consent of our Board of Directors. These provisions require approval of our Board of Directors and prior consent of our General Partner.

These provisions could also make it difficult for our unitholders to replace or remove our current Board of Directors or could have the effect of discouraging, delaying or preventing an offer by a third-party to acquire us, even if the third-party's offer may be considered beneficial by many unitholders. As a result, unitholders may be limited in their ability to obtain a premium for their common units.

Risks Relating to Conflicts of Interest

Our Sponsor, our General Partner and their respective affiliates own a significant interest in us and have conflicts of interest and limited duties to us and our common unitholders, which may permit them to favor their own interests to your detriment.

Members of the Prokopiou Family control our Sponsor, our Manager and our General Partner. Our Sponsor owns 610,000 of our common units and all of our subordinated units, representing approximately 43.9% of the outstanding common and subordinated units in aggregate (our Series A Preferred Units, which, generally, have no voting rights, are excluded), and our General Partner owns a 0.1% General Partner interest in us and 100% of our incentive distribution rights and therefore may have considerable influence over our actions. The interests of our Sponsor and the members of the Prokopiou Family may be different from your interests and the relationships described above could create conflicts of interest. We cannot assure you that any conflicts of interest will be resolved in your favor.

Conflicts of interest may arise between our Sponsor and its affiliates on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our Sponsor and its affiliates may favor their own interests over the interests of our unitholders. Although a majority of our directors are elected by our common unitholders, our General Partner, through its appointed directors, will have certain influence on decisions made by our Board of Directors. Our Board of Directors has a conflicts committee comprised of independent directors. Our Board of Directors may, but is not obligated to, seek approval of the conflicts committee for resolutions of conflicts of interest that may arise as a result of the relationships between our Sponsor and its affiliates, on the one hand, and us and our unaffiliated limited partners, on the other hand. There can be no assurance that a conflict of interest will be resolved in favor of us.

These conflicts include, among others, the following situations:

neither our Partnership Agreement nor any other agreement requires our Sponsor or our General Partner or their respective affiliates to pursue a business strategy that favors us or utilizes our assets, and their officers and directors have a fiduciary duty to make decisions in the best interests of their respective unitholders, which may be contrary to our interests;

our Partnership Agreement provides that our General Partner may make determinations or take or decline to take actions without regard to our or our unitholders' interests. Specifically, our General Partner may exercise its call right, pre-emptive rights, registration rights or right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, consent or withhold consent to any merger or consolidation of the Partnership, appoint certain directors or vote for the election of any director, vote or refrain from voting on amendments to our Partnership Agreement that require a vote of the outstanding units, voluntarily withdraw from the Partnership, transfer (to the extent permitted under our Partnership Agreement) or refrain from transferring its units, the General Partner interest or incentive distribution rights or vote upon the dissolution of the Partnership;

our General Partner and our directors and officers have limited their liabilities and any fiduciary duties they may have under the laws of the Marshall Islands, while also restricting the remedies available to our unitholders, and, as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by the General Partner and our directors and officers, all as set forth in the Partnership Agreement;

our General Partner and our Manager are entitled to reimbursement of all reasonable costs incurred by them and their respective affiliates for our benefit; our Partnership Agreement does not restrict us from paying our General Partner and our Manager or their respective affiliates for any services rendered to us on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities on our behalf;

our General Partner may exercise its right to call and purchase our common units if it and its affiliates own more than 80% of our common units; and is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of its limited call right.

Although a majority of our directors are elected by common unitholders, our General Partner will likely have substantial influence on decisions made by our Board of Directors.

Neither our Partnership Agreement nor any other agreement requires our Sponsor to pursue a business strategy that favors us or utilizes our assets or dictates what markets to pursue or grow. Our Sponsor's directors and executive officers have a fiduciary duty to make these decisions in the best interests of the shareholders of our Sponsor, which may be contrary to our interests.

Because certain of our officers and directors are also officers of our Sponsor and its affiliates, such directors have fiduciary duties to our Sponsor and its affiliates that may cause them to pursue business strategies that disproportionately benefit our Sponsor, or which otherwise are not in the best interests of us or our unitholders.

Our General Partner is allowed to take into account the interests of parties other than us, such as our Sponsor.

Our Partnership Agreement contains provisions that reduce the standards to which our General Partner would otherwise be held by Marshall Islands fiduciary duty law. For example, our Partnership Agreement permits our General Partner to make a number of decisions in its individual capacity, as opposed to in its capacity as our General Partner. This entitles our General Partner to consider only the interests and factors that it desires, and it has no duty or obligations to give any consideration to any interest of or factors affecting us, our affiliates or any unitholder. Decisions made by our General Partner in its individual capacity will be made by its sole owner, Dynagas Holding Ltd. Specifically, our General Partner will be considered to be acting in its individual capacity if it exercises its call right, pre-emptive rights, registration rights or right to make a determination to receive common units in a resetting of the target distribution levels related to its incentive distribution rights, consents or withholds consent to any merger or consolidation of the Partnership, appoints any directors or votes for the election of any director, votes or refrains from voting on amendments to our Partnership Agreement that require a vote of the outstanding units, voluntarily withdraws from the Partnership, transfers (to the extent permitted under our Partnership Agreement) or refrains from transferring its units, General Partner interest or incentive distribution rights it owns or votes upon the dissolution of the Partnership.

We reimburse our General Partner and its affiliates for expenses.

We reimburse our General Partner and its affiliates for costs incurred, if any, in managing and operating us. Our Partnership Agreement provides that our General Partner will determine the expenses that are allocable to us in good faith.

Common unitholders have no right to enforce obligations of our General Partner and its affiliates under agreements with us.

Any agreements between us, on the one hand, and our General Partner and its affiliates, on the other, will not grant to the unitholders, separate and apart from us, the right to enforce the obligations of our General Partner and its affiliates in our favor.

Contracts between us, on the one hand, and our General Partner and its affiliates, on the other, will not be the result of arm's-length negotiations.

Neither our Partnership Agreement nor any of the other agreements, contracts and arrangements between us and our General Partner and its affiliates are or will be the result of arm's-length negotiations. Our Partnership Agreement generally provides that any affiliated transaction, such as an agreement, contract or arrangement between us and our General Partner and its affiliates, must be:

on terms no less favorable to us than those generally being provided to or available from unrelated third-parties; or

"fair and reasonable" to us, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us).

Our Manager, which provides our executive officers and certain management and administrative services to us, may also enter into additional contractual arrangements with any of its affiliates on our behalf; however, there is no obligation of any affiliate of our Manager to enter into any contracts of this kind.

Common units are subject to our General Partner's limited call right.

Our General Partner may exercise its right to call and purchase common units as provided in the Partnership Agreement or assign this right to one of its affiliates or to us. Our General Partner may use its own discretion, free of fiduciary duty restrictions, in determining whether to exercise this right. Our General Partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of this limited call right. As a result, a common unitholder may have common units purchased from the unitholder at an undesirable time or price.

We may choose not to retain separate counsel for ourselves or for the holders of common units.

The attorneys, independent accountants and others who perform services for us have been retained by our Board of Directors. Attorneys, independent accountants and others who perform services for us are selected by our Board of Directors or the conflicts committee and may perform services for our General Partner and its affiliates. We may retain separate counsel for ourselves or the holders of common units in the event of a conflict of interest between our General Partner and its affiliates, on the one hand, and us or the holders of common units, on the other, depending on the nature of the conflict. We do not intend to do so in most cases.

Tax Risks

In addition to the following risk factors, please see "Item 10. Additional Information—E. Taxation" for a more complete discussion of the material Marshall Islands and United States federal income tax consequences of owning and disposing of our common units.

We may be subject to taxes, which will reduce our cash available for distribution to our unitholders.

We and our subsidiaries may be subject to tax in the jurisdictions in which we are organized or operate, reducing the amount of cash available for distribution. In computing our tax obligation in these jurisdictions, we are required to take various tax accounting and reporting positions on matters that are not entirely free from doubt and for which we have not received rulings from the governing authorities. We cannot assure you that upon review of these positions the applicable authorities will agree with our positions. A successful challenge by a tax authority could result in additional tax imposed on us or our subsidiaries, further reducing the cash available for distribution. In addition, changes in our operations or ownership could result in additional tax being imposed on us or our subsidiaries in jurisdictions in which operations are conducted. Please see "Item 10. Additional Information—E. Taxation"

We may have to pay tax on United States-source income, which would reduce our earnings and cash flow.

Under the U.S. Internal Revenue Code of 1986, as amended, (the "Code") the United States source gross transportation income of a ship-owning or chartering corporation, such as ourselves, generally is subject to a 4% United States federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under a tax treaty or Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.

Based on advice we received from Seward & Kissel LLP, our United States counsel, we believe we qualified for this statutory tax exemption for our taxable year ended December 31, 2015, and we intend to take this position for United States federal income tax reporting purposes. However, there are factual circumstances beyond our control that could cause us to lose the benefit of this tax exemption in future taxable years and thereby become subject to the 4% United States federal income tax described above. It is noted that holders of our common units are limited to owning 4.9% of the voting power of such common units. Assuming that such limitation is treated as effective for purposes of determining voting power under Section 883, then our 5% Unitholders could not own 50% of more of our common units. If contrary to these expectations, our 5% Unitholders were to own 50% or more of the common units, we would not qualify for exemption under Section 883 unless we could establish that among the closely-held group of 5% Unitholders, there are sufficient 5% Unitholders that are qualified stockholders for purposes of Section 883 to preclude non-qualified 5% Unitholders in the closely-held group from owning 50% or more of our common units for more than half the number of days during the taxable year. In order to establish this, sufficient 5% Unitholders that are qualified stockholders would have to comply with certain documentation and certification requirements designed to substantiate their identity as qualified stockholders. These requirements are onerous and there can be no assurance that we would be able to satisfy them. The imposition of this taxation could have a negative effect on our business and would result in decreased earnings and cash available for distribution payments to our unitholders. For a more detailed discussion, see "Item 10. Additional Information—E. Taxation."

United States tax authorities could treat us as a "passive foreign investment company," which would have adverse United States federal income tax consequences to United States unitholders.

A non-U.S. entity treated as a corporation for United States federal income tax purposes will be treated as a "passive foreign investment company" (or PFIC) for U.S. federal income tax purposes if at least 75% of its gross income for any taxable year consists of "passive income" or at least 50% of the average value of its assets produce, or are held for the production of, "passive income." For purposes of these tests, "passive income" includes dividends, interest, gains from the sale or exchange of investment property, and rents and royalties other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business. For purposes of these tests, income derived from the performance of services does not constitute "passive income." U.S. shareholders of a PFIC are subject to a disadvantageous United States federal income tax regime with respect to the income derived by the PFIC, the distributions they receive from the PFIC, and the gain, if any, they derive from the sale or other disposition of their interests in the PFIC. Based on our current and projected method of operation, and on an opinion of our United States counsel, Seward & Kissel LLP, we believe that we were not a PFIC in the year ended December 31, 2015 and will not be a PFIC for any future taxable year. We have received an opinion of our United States counsel in support of this position that concludes that the income our subsidiaries earned from certain of our time-chartering activities should not constitute passive income for purposes of determining whether we are a PFIC. In addition, we have represented to our United States counsel that we expect that more than 25% of our gross income for the year ended December 31, 2015 and each future year will arise from such time-chartering activities or other income which does not constitute passive income, and more than 50% of the average value of our assets for each such year will be held for the production of such non passive income. Assuming the composition of our income and assets is consistent with these expectations, and assuming the accuracy of other representations we have made to our United States counsel for purposes of their opinion, our United States counsel is of the opinion that we should not be a PFIC for the year ended December 31, 2014 year or any future year. This opinion is based and its accuracy is conditioned on representations, valuations and projections provided by us regarding our assets, income and charters to our United States counsel. While we believe these representations, valuations and projections to be accurate, the shipping market is volatile and no assurance can be given that they will continue to be accurate at any time in the future.

While Seward & Kissel LLP, our United States counsel, has provided us with an opinion in support of our position, the conclusions reached are not free from doubt, and it is possible that the United States Internal Revenue Service, or the IRS, or a court could disagree with this position. In addition, although we intend to conduct our affairs in a manner to avoid being classified as a PFIC with respect to each taxable year, we cannot assure you that the nature of our operations will not change in the future and that we will not become a PFIC in any taxable year. If the IRS were to find that we are or have been a PFIC for any taxable year (and regardless of whether we remain a PFIC for subsequent taxable years), our U.S. unitholders would face adverse United States federal income tax consequences. See "Item 10. Additional Information—E. Taxation" for a more detailed discussion of the United States federal income tax consequences to United States unitholders if we are treated as a PFIC.

ITEM 4.

INFORMATION ON THE PARTNERSHIP

A. HISTORY AND DEVELOPMENT OF THE PARTNERSHIP

Dynagas LNG Partners LP was organized as a limited partnership in the Republic of the Marshall Islands on May 29, 2013 for the purpose of owning, operating, and acquiring LNG carriers. In October 2013, we acquired from our Sponsor three LNG carriers, the Clean Energy , the Ob River and the Amur River (formerly named the Clean Force ), which we refer to as our Initial Fleet, in exchange for 6,735,000 of our common units and all of our subordinated units. In November 2013, we completed our underwritten IPO of 8,250,000 common units, together with 4,250,000 common units offered by our Sponsor, at $18.00 per common unit, and in December 2013, the underwriters in the IPO exercised in full their option to purchase an additional 1,875,000 common units from our Sponsor. Our common units trade on the NYSE under the ticker symbol "DLNG."

Pursuant to the Omnibus Agreement that we, and certain of our subsidiaries, have entered into with our Sponsor and our General Partner, we have the right, subject to certain conditions, to acquire from our Sponsor certain identified LNG carriers. Please see "—Optional Vessels" for a description of these vessels.

Securities Offerings

In September 2014, we completed our underwritten public offering of $250.0 million aggregate principal amount 6.25% Senior Notes due 2019, or our 2019 Notes. The 2019 Notes commenced trading on the NYSE on December 30, 2014 under the ticker symbol "DLNG 19."

In June 2014, we completed our underwritten public offering of 4,800,000 common units at $22.79 common per unit, and on June 18, 2014, the underwriters in the offering exercised their option to purchase an additional 720,000 common units at the same price.

In July 2015, we completed our underwritten public offering of 3,000,000 9.00% Series A Cumulative Redeemable Preferred Units at $25.00 per unit. Our Series A Preferred Units trade on the NYSE under the ticker symbol "DLNG PR A."

Vessel Acquisitions

In June 2014, we completed the acquisition of the Arctic Aurora , a 2013-built ice class liquefied natural gas carrier, and the related time charter contract, from our Sponsor, pursuant to our right to acquire this vessel under the Omnibus Agreement in effect at that time, for a purchase price of $235.0 million. We funded the purchase price of this vessel using the net proceeds we received in the June 2014 offering together with the proceeds we received from our $340 Million Senior Credit Facility (which refinanced our 2013 Senior Credit Facility).

In September 2014, we completed the acquisition of the Yenisei River , a 2013-built ice class liquefied natural gas carrier, and the related time charter contract, from our Sponsor, pursuant to our right to acquire this vessel under the Omnibus Agreement in effect at that time, for a purchase price of $257.5 million. We funded the purchase price of this vessel using the net proceeds we received from our 2019 Notes offering, together with cash on hand.

In December 2015, we acquired the Lena River , a 2013-built ice class liquefied natural gas carrier, and the related time charter contract, from our Sponsor, pursuant to our right to acquire this vessel under the Omnibus Agreement in effect at that time, for a purchase price of $240.0 million. We funded the purchase price using the net proceeds we received from our offering of Series A Preferred Units, borrowings under our $200 Million Term Loan Facility, and cash on hand.

Our principal executive offices are located at 23, Rue Basse, 98000 Monaco and our telephone number at that address is 011 377 99 99 6445.

B. BUSINESS OVERVIEW

We are a growth-oriented limited partnership focused on owning and operating LNG carriers. Our vessels are currently employed on multi-year time charters, which we define as charters of two years or more, with international energy companies, such as BG Group, Gazprom and Statoil, providing us with the benefits of stable cash flows and high utilization rates. We intend to leverage the reputation, expertise, and relationships of our Sponsor and our Manager, in maintaining cost-efficient operations and providing reliable seaborne transportation services to our charterers. In addition, we intend to make further vessel acquisitions from our Sponsor and from third-parties. There is no guarantee that we will grow the size of our Fleet or the per unit distributions that we intend to pay, or that we will be able to make further vessel acquisitions from our Sponsor or third-parties.

Our Fleet

We currently own and operate a fleet of six LNG carriers, consisting of the three LNG carriers in our Initial Fleet, the Clean Energy , the Ob River and the Amur River (formerly named the Clean Force), and three 2013-built Ice Class LNG carriers that we subsequently acquired from our Sponsor the Arctic Aurora , the Yenisei River , and the Lena River, which we refer to collectively as our "Fleet." The vessels in our Fleet have an average age of 5.7 years and are contracted under multi-year charters with BG Group, Gazprom, Statoil and Yamal with an average remaining charter term, as of April 15, 2016, of approximately 10.4 years, including the charter agreements relating to the Yenisei River and the Lena River relating to the Yamal LNG Project. The Yamal LNG Project charter agreements relating to the Yenisei River and the Lena River are subject to important conditions, which, unless satisfied, may result in the cancellation of the charter agreement at the charterer's option, in which case we would not realize any revenues under such charter agreements.

Our Fleet is managed by our Manager, Dynagas Ltd., a company controlled by Mr. George Prokopiou. See "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions."

All of the vessels in our Fleet other than the Clean Energy have been assigned with Lloyds Register Ice Class notation 1A FS, or Ice Class, designation for hull and machinery and are fully winterized, which means that they are designed to call at ice-bound and harsh environment terminals and to withstand temperatures up to minus 30 degrees Celsius. According to Drewry, only eleven LNG carriers, representing less than 3.0% of the LNG vessels in the global LNG fleet, have an Ice Class 1A designation or equivalent rating. Moreover, we are the only LNG transportation company in the world that is currently transiting the Northern Sea Route, which is a shipping lane from the Atlantic Ocean to the Pacific Ocean entirely in Arctic waters, with LNG carriers. In addition, we believe that each of the vessels in our Fleet is optimally sized with a carrying capacity of between approximately 150,000 and 155,000 cbm, which allows us to maximize operational flexibility as such medium-to-large size LNG vessels are compatible with most existing LNG terminals around the world. We believe that these specifications enhance our trading capabilities and future employment opportunities because they provide greater diversity in the trading routes available to our charterers.

We believe that the key characteristics of each of the vessels in our Fleet include the following:

optimal sizing with a carrying capacity of between approximately 150,000 and 155,000 cbm (which is a medium- to large-size class of LNG carrier) that maximizes operational flexibility as such vessel is compatible with most existing LNG terminals around the world;

the vessels in our Fleet consist of two series of sister vessels, which are vessels built at the same shipyard, Hyundai Heavy Industries Co. Ltd., that share (i) a near-identical hull and superstructure layout, (ii) similar displacement, and (iii) roughly comparable features and equipment;

utilization of a membrane containment system that uses insulation built directly into the hull of the vessel with a membrane covering inside the tanks designed to maintain integrity and that uses the vessel's hull to directly support the pressure of the LNG cargo, which we refer to as a "membrane containment system" (see "—The International Liquefied Natural Gas (LNG) Shipping Industry—The LNG Fleet" for a description of the types of LNG containment systems); and

double-hull construction, based on the current LNG shipping industry standard.

According to Drewry, as of the date hereof, there are only 56 LNG carriers currently in operation, including the six vessels in our Fleet, with a carrying capacity of between 149,000 and 155,000 cbm and a membrane containment system, and a total of 141 LNG carriers on order of which 10 are being constructed with these specifications.

The following table sets forth additional information about our Fleet as of April 15, 2016:

Vessel Name	Shipyard*	Year Built	Capacity (cbm)	Ice Class	Flag State	Charterer	Charter Commencement Date	Earliest Charter Expiration	Latest Charter Expiration Including Non-Exercised Options
Clean Energy	HHI	2007	149,700	No	Marshall Islands	BG Group	February 2012	April 2017	May 2017
Ob River	HHI	2007	149,700	Yes	Marshall Islands	Gazprom Gazprom	September 2012 April 2018	April 2018 March 2028	May 2018 ⁽¹⁾ May 2028 ⁽²⁾
Amur River	HHI	2008	149,700	Yes	Marshall Islands	Gazprom	June 2015	June 2028	August 2028
Arctic Aurora	HHI	2013	155,000	Yes	Malta	Statoil	August 2013	July 2018	Renewal Options ⁽³⁾
Yenisei River	HHI	2013	155,000	Yes	Marshall Islands	Gazprom Yamal	July 2013 2019 (estimated)	July 2018 2034	August 2018 2049 ⁽⁴⁾
Lena River	HHI	2013	155,000	Yes	Marshall Islands	Gazprom Yamal	October 2013 2019-2020 (estimated)	September 2018 2034/2035	October 2018 2049/2050(4)

*	As used in this Annual Report, "HHI" refers to the shipyard Hyundai Heavy Industries Co. Ltd.
(1)	On March 23, 2016, Gazprom extended the term of the existing charter, on substantially identical terms, until May 2018.
(2)	On March 24, 2016, we entered into a new long-term charter with Gazprom for the Ob River , for a firm charter duration of 10 years. This charter is expected to commence upon expiration of the current Gazprom charter for the Ob River .
(3)	Statoil may renew its charter for consecutive additional one-year periods each year following the initial five year period.
(4)	The Yenisei River and the Lena River are each contracted to commence employment between January 1, 2019 and June 30, 2020 under long-term time charter contracts for the Yamal LNG Project, each with an initial term of 15 years, which may be extended by three consecutive periods of five years each. Each of these time charter contracts is subject to important conditions, which, if not satisfied, may result in their cancellation before charter term commences or early termination. Please see "—Our Chartering Strategy and Charterers" for additional information.

The Optional Vessels

The Omnibus Agreement provides us with the right to acquire from our Sponsor certain identified vessels. Initially, this agreement provided us with the right to acquire from our Sponsor seven fully winterized LNG carrier vessels, of which, as of the date of this Annual Report, we have purchased three such vessels. We currently have the right to acquire the four remaining Optional Vessels, which we refer to as the "Initial Optional Vessels."

In addition, following an amendment to the Omnibus Agreement in April 2016, we also have the right to acquire from our Sponsor its interest, which is currently 49.0%, in each of the five entities that each owns a 172,000 cubic meter ARC7 LNG carrier that is currently under construction, or the Additional Optional Vessels, subject to the terms and conditions of the Omnibus Agreement. We collectively refer to the Initial Optional Vessels and the Additional Optional Vessels as the "Optional Vessels."

We may exercise our right to purchase each of the Optional Vessels for a specified period following the date of delivery of such vessel from the shipyard. For additional information, please see "—Rights to Purchase Optional Vessels" and "Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions."

Initial Optional Vessels

Our Sponsor owns, directly or indirectly, 100% of the equity interests of the entities that own the four Initial Optional Vessels. One of the Initial Optional Vessels, the Clean Ocean , is operating under a multi-year time charter with Cheniere, after which time, it is scheduled to commence employment under a long-term time charter for the Yamal LNG Project. Three of the Initial Optional Vessels, the Clean Planet , Clean Horizon , and Clean Vision , currently operate in an LNG carrier pool, or the Cool Pool, that was established on October 1, 2015, by our Manager, Golar LNG Limited and Gaslog Carriers Ltd., with a view to optimizing the operation of the pool vessels through improved scheduling, efficiencies and common marketing of the pooled vessels. Vessels operating in the Cool Pool are employed in the LNG spot market on charters of twelve months or less. Together with our Sponsor's three vessels, the Cool Pool currently consists of 15 LNG carriers. In 2019, the Clean Planet , Clean Horizon , and Clean Vision are scheduled to commence employment under long-term charters for the Yamal LNG Project.

The Additional Optional Vessels

In August 2015, our Sponsor and two unrelated third-parties, Sinotrans and China LNG Shipping, entered into a joint venture, pursuant to which they agreed to share in the ownership and operation of the Additional Optional Vessels. The Additional Optional Vessels are currently under construction at Daewoo Shipbuilding & Marine Engineering Co., or DSME. Two of the Additional Optional Vessels are expected to be delivered to the joint venture in the fourth quarter of 2017 and three of the Additional Optional Vessels are expected to be delivered in the first quarter of 2019. Upon each of their deliveries, the Additional Optional Vessels are scheduled to commence employment under long-term charters for the Yamal LNG Project. Our Manager will provide vessel management services for the Additional Optional Vessels.

Our Sponsor currently owns a 49.0% ownership interest in each of the five entities that each owns an Additional Optional Vessel, and Sinotrans and China LNG Shipping equally split the remaining 51.0% ownership interest of each such entity. Under the Omnibus Agreement, we have the right, subject to certain conditions, to acquire our Sponsor's ownership interest in each of the five entities referenced above that respectively own the Additional Optional Vessels.

Specifications of the Optional Vessels

Each of the Optional Vessels has, or is expected to have, the Ice Class designation, or its equivalent, for hull and machinery. In the event we acquire any or all of the Optional Vessels in the future, we believe the staggered delivery dates of these newbuilding LNG carriers will facilitate a smooth integration of the vessels into our Fleet, contributing to our annual Fleet growth through 2021.

The Initial Optional Vessels are equipped with a membrane containment system. The compact and efficient utilization of the hull structure reduces the required principal dimensions of the vessel compared to earlier LNG designs and results in relatively higher fuel efficiency and smaller quantities of LNG required for cooling down vessels' tanks. In addition, the Initial Optional Vessels are equipped with a tri-fuel diesel electric propulsion system, which is expected to reduce both fuel costs and emissions.

The five 172,000 cubic meter ARC7 Additional Optional Vessels that are under construction at DSME in South Korea will have a maximum of 2.1 meter ice breaking capabilities in both forward and reverse directions.

The following table provides certain information about the Optional Vessels as of April 15, 2016.

Vessel Name

Shipyard

Delivery
Date

Capacity
Cbm

Ice
Class

Charter
Commencement

Pool / Charterer

Earliest
Charter
Expiration

Initial Optional Vessels:

Clean Ocean ⁽¹⁾

HHI

Q2-2014

162,000

Yes

Q2 2015

Cheniere & Yamal

2035

Clean Planet ⁽²⁾

HHI

Q3-2014

162,000

Yes

2019

Cool Pool & Yamal

2034

Clean Horizon ⁽²⁾

HHI

Q3-2015

162,000

Yes

2019

Cool Pool & Yamal

2034

Clean Vision ⁽²⁾

HHI

Q1-2016

162,000

Yes

2019

Cool Pool & Yamal

2034

Additional Optional Vessels * :

Hull No.2421 ⁽³⁾

DSME

Q4-2017

172,410

Yes

2017

Yamal

Q4-2045

Hull No.2422 ⁽³⁾

DSME

Q4-2017

172,410

Yes

2017

Yamal

Q4-2045

Hull No.2427 ⁽³⁾

DSME

Q1-2019

172,410

Yes

2019

Yamal

Q4-2045

Hull No.2428 ⁽³⁾

DSME

Q1-2019

172,410

Yes

2019

Yamal

Q4-2045

Hull No.2429 ⁽³⁾

DSME

Q1-2019

172,410

Yes

2019

Yamal

Q4-2045

*	Our Sponsor directly or indirectly owns a 49.0% interest in these vessels.

(1)	Following the expiration of the time charter with Cheniere, this vessel is contracted to be employed under a long term time charter for the Yamal LNG project, for a period of 15 years, which may be extended by three consecutive five-year optional periods.

(2)	Vessel is contracted to commence employment within 2019 under long term charters for the Yamal LNG Project for an initial term of 15 years, which may be extended by three consecutive periods of five years each.

(3)	Upon its delivery from the shipyard, vessel will operate under a fixed rate time charter contract for the Yamal LNG Project until December 31, 2045, plus extension options.

Rights to Purchase the Optional Vessels

Under the Omnibus Agreement, we have the right, subject to certain conditions, to purchase the Initial Optional Vessels and our Sponsor's ownership interest in the entities that respectively own the Additional Optional Vessels, from our Sponsor at a purchase price to be determined pursuant to the terms and conditions of the Omnibus Agreement. These purchase rights expire 24 months following the respective delivery of each Optional Vessel from the shipyard (or in the case of the Clean Ocean and the Clean Planet , until March 31, 2017, and in the case of our Sponsor's ownership interest in the entities that own the Additional Optional Vessels, within 24 months following the expiration, without acceptance, of our 30-day option to purchase such interests pursuant to the Omnibus Agreement, so long as such Additional Optional Vessels are employed under a long-term charter of four or more years upon their respective delivery dates). If we are unable to agree with our Sponsor on the purchase price of any of the Initial Optional Vessels or our Sponsor's ownership interest in the entities that respectively own the Additional Optional Vessels, as the case may be, the respective purchase price will be determined by an independent appraiser, such as an investment banking firm, broker or firm generally recognized in the shipping industry as qualified to perform the tasks for which such firm has been engaged, and we will have the right, but not the obligation, to purchase such assets at such price. The independent appraiser will be mutually appointed by our Sponsor and a committee comprised of certain of our independent directors, or the conflicts committee. See "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions" for information on how the purchase price is calculated.

The purchase price of the Initial Optional Vessels or our Sponsor's ownership interest in the Additional Optional Vessels, as the case may be, as finally determined by an independent appraiser, may be an amount that is greater than what we are able or willing to pay or we may be unwilling to proceed to purchase such vessel if such acquisition would not be in our best interests. We will not be obliged to purchase the Optional Vessels at the determined price, and, accordingly, we may not complete the purchase of such vessels, which may have an adverse effect on our expected plans for growth. In addition, our ability to purchase the Optional Vessels, should we exercise our right to purchase such vessels, is dependent on our ability to obtain additional financing to fund all or a portion of the acquisition costs of these vessels.

We acquired from our Sponsor the Arctic Aurora and the Yenisei River in 2014, and the Lena River in 2015, pursuant to our right to acquire such vessels under the Omnibus Agreement. As of the date of this Annual Report, we have not secured any financing in connection with the potential acquisition of any of the remaining Optional Vessels.

Our Sponsor has secured financing for the Initial Optional Vessels. In addition, our Sponsor together with its joint venture partners are in discussions with prospective lenders to secure financing for the Additional Optional Vessels. In the event we acquire any or all of such Optional Vessels in the future, we may enter into agreements with our Sponsor to novate these loan agreements to us. Any such novation would be subject to each respective lender's consent. Please see "Risk Factors—Our Sponsor may be unable to service its debt requirements and comply with the provisions contained in the credit agreements secured by the Optional Vessels. If our Sponsor fails to perform its obligations under its loan agreements, our business and expected plans for growth may be materially affected."

Our Chartering Strategy and Charterers

We seek to employ our vessels on multi-year time charters with international energy companies that provide us with the benefits of stable cash flows and high utilization rates. We charter our vessels for a fixed period of time at daily rates that are generally fixed, but which could contain a variable component to adjust for, among other things, inflation and/or to offset the effects of increases in operating expenses.

The Clean Energy is currently chartered to BG Group under a time charter contract with an average remaining term of approximately 1.0 year as of April 15, 2016, based on the earliest redelivery permitted under our charter. The Ob River , Yenisei River , Amur River and the Lena River are currently employed with Gazprom under time charter contracts with an average remaining term of approximately 4.8 years as of April 15, 2016, based on the earliest redelivery under our charters. The Ob River is further contracted to Gazprom for a charter term of 10 years, upon the expiration of its current charter. The Arctic Aurora is currently chartered to Statoil under a time charter contract with an average remaining term of approximately 2.4 years as of April 15, 2016, based on the earliest redelivery permitted under this charter.

The Yenisei River and the Lena River are further contracted for the Yamal LNG Project for an initial term of 15 years, beginning between January 1, 2019 and June 30, 2020, which may be extended for three consecutive periods of five years each at charterer's option. These charter contracts are subject to significant conditions, which, if not satisfied, or waived by the charterer, may result in termination of the charter at the charterer's option, prior to or after employment commences, in which case we may not realize any revenues under such charter agreements. These conditions include, but are not limited to, requirements with respect to our Sponsor and certain of its affiliates, which may be outside of our control. We can provide no assurance that these two vessels will be able to commence employment under the Yamal LNG Project charter agreements or realize any revenues under such charter agreements.

Based on the charter contracts described in the preceding paragraphs and the minimum expected number of days committed under those contracts (excluding options to extend), as of April 15, 2016, we had estimated contracted revenue backlog of approximately $1.6 billion with average remaining contract duration of 10.4 years.

We may not be able to perform under these contracts due to events within or beyond our control, and our counterparty may seek to cancel or renegotiate our contracts for various reasons. Our inability or the inability of our counterparty, to perform under the respective contractual obligations may affect our ability to realize the estimated contractual backlog listed above and may have a material adverse effect on our financial position, results of operations and cash flows and our ability to realize the contracted revenues under these agreements. Our estimated contract backlog may be adversely affected if the Yamal LNG Project for which certain of our vessels are contracted to be employed is delayed, abandoned or not completed due to failure of the project to obtain financing or due to changes in the demand for LNG.

In the year ended December 31, 2015, we received all of our revenues from three charterers, which individually accounted for 52%, 29% and 19% of our revenues, respectively, as compared to the same period in 2014, which individually accounted for 36%, 50% and 14% respectively.

The International Liquefied Natural Gas (LNG) Shipping Industry

All the information and data presented in this section, including the analysis of the various sectors of the international liquefied natural gas (LNG) shipping industry has been provided by Drewry Shipping Consultants, Ltd., or Drewry, an independent consulting and research company. Drewry has advised that the statistical and graphical information contained herein is drawn from its database and other sources. In connection therewith, Drewry has advised that: (a) certain information in Drewry's database is derived from estimates or subjective judgments; (b) the information in the databases of other maritime data collection agencies may differ from the information in Drewry's database; (c) while Drewry has taken reasonable care in the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation procedures.

Overview of Natural Gas Market

Natural gas is one of the key sources of global energy; the others include oil, coal, hydroelectricity and nuclear power. In the last three decades, demand for natural gas has grown faster than the demand for any other fossil fuel. Since the early 1970s, natural gas' share of total global primary energy consumption has risen from 18% in 1970 to just less than 24% in 2015, the latest year for which data is available.

Natural Gas Share of Primary Energy Consumption: 1970-2015

(% – Based On Million Tons Oil Equivalent)

(1) Provisional

Source: Industry sources, Drewry

Natural gas has a number of advantages that will make it a competitive source of energy in the future. Apart from abundant supplies, which will help to keep gas prices competitive, it is the fossil fuel least affected by regulatory policies aimed to curb greenhouse gas emissions because it is the lowest carbon-intensive fossil fuel. In recent years, consumption of natural gas has risen steadily due to global economic growth and increasing energy demand, consumers' desires to diversify energy sources, market deregulation, competitive pricing and recognition that natural gas is a cleaner energy source as compared to coal and oil. Carbon dioxide emissions and other pollutants from gas are half the level produced from coal when used in power generation.

Natural gas is primarily used in power generation (electricity) and for heating. Worldwide reserves are estimated at 187 trillion cbm, which is enough for 55 years of supply at current rates of consumption. Over the past decade, global LNG demand has risen over 2.3% per annum, with growth of over 6% per annum in the Middle East and Asia-Pacific followed by Africa at 4%.

As such, in the last decade a large part of the growth in natural gas consumption has been accounted for by countries in Asia and the Middle East, where gas consumption almost doubled between 2005 and 2015.

World Natural Gas Consumption: 1970-2015

(Million Tons Oil Equivalent)

(1) Provisional

Source: Industry sources, Drewry

The IEA has stated that global reserves of natural gas are large enough to accommodate rapid expansion of gas demand for several decades. Gas reserves and production are widely spread across the globe but the geographical disparity between areas of production and areas of consumption has been the principal stimulus of international trade in gas.

World Natural Gas Production: 1970-2015

(Million Tons Oil Equivalent)

(1) Provisional

Source: Industry sources, Drewry

Gas production in North America has increased due to the emergence of shale gas reserves and new techniques such as horizontal drilling & hydraulic fracturing to access and extract these reserves. U.S. domestic gas production now exceeds domestic gas consumption for a large part of the year which may reduce future gas import rates. Additionally, rising United States (U.S.) domestic production may drive down domestic gas prices and raise the likelihood of U.S. gas exports.

As a result of these developments the North American gas market is moving in a different cycle from the rest of the world and there is a price differential with other markets (see the chart below). Regional price differentials create the opportunity for arbitrage and also act as a catalyst for the construction of new productive capacity. Given these conditions, interest in exporting LNG gas from the U.S. has grown and a number of new liquefaction plants are now planned. However the price differential has reduced substantially in 2015 because of sharp decline in LNG prices in international market and this may lead to delay or cancellation of some new planned facilities.

Natural Gas Prices: 2005-2016

(U.S.$ per Mbtu)

Source: Drewry

The LNG Market

To turn natural gas into a liquefied form, natural gas must be super cooled to a temperature of approximately minus 260 degrees Fahrenheit. This process reduces the gas to approximately 1/600th of its original volume in a gaseous state. Reducing the volume enables economical storage and transportation by ship over long distances. LNG is transported by sea in specially built tanks on double-hulled ships to a receiving terminal, where it is unloaded and stored in heavily insulated tanks. Next, in regasification facilities at the receiving terminal, the LNG is returned to its gaseous state, or regasified, to be shipped by pipeline for distribution to natural gas customers.

Source: Drewry

LNG Supply

Between 2013 and 2015 considerable investments were announced for new LNG productive capacity. Approximately 134 million tons of new LNG productive capacity was under construction in February 2016. In addition, firm plans have been announced for another 199 million tons of new LNG production capacity. There are also another 359 million tons of potential LNG speculative capacity for which no confirmed plans exist.

World LNG Production Capacity – February 2016

(Million Tons per Annum)

Source: Drewry

LNG production capacity will expand significantly as several new production facilities which are now under construction and due on stream in the next few years. Generally, every additional one million tons of LNG productive capacity creates demand for up to two LNG carriers in the 150,000 cbm size range.

In the last decade, more countries have entered the LNG export market. In January 2016, there were 22 producers and exporters of LNG compared with just 12 in 2004. As a result, world trade in LNG has risen from 130 million tons in 2002 to a provisional 245 million tons in 2015.

LNG Exports: 2004-2015

(Million Tons)

(1) Provisional

Source: Drewry

Historically, LNG exporters were located in just three regions: Algeria and Libya in North Africa , Indonesia, Malaysia, Brunei and Australia in Southeast Asia/Australasia , and Abu Dhabi and Qatar in the Middle East (excluding smaller scale LNG exports from Alaska). However, the entry of Trinidad & Tobago, Nigeria and Norway has added a significant regional diversification to LNG exports in the Atlantic basin. Equally, the addition of Oman as an exporter and the rapid expansion of Qatari production have also positioned the Middle East as an increasingly significant player in the global LNG business. Qatar is now the world's largest producer and exporter of LNG, accounting for close to one-third of all trade in LNG.

Currently, U.S. LNG exports are from the established plant in Alaska, with exports expected to commence from the Sabine Pass project in the U.S. Gulf in 2016, as it has now received U.S. regulatory approval. Initial shipments from the first phase of this 12.2 cbm plant are scheduled to commence in March 2016, which we believe will create demand for 10-12 LNG carriers of 150,000 cbm plus. A second phase is also planned which will add a similar level of productive capacity. If and when the second phase of the Sabine Pass project goes ahead, we believe that it could create demand for additional 10-12 LNG carriers. In the meantime some re-exports are also taking place from Lake Charles and Freeport LNG.

LNG Demand

In tandem with the growth in the number of LNG suppliers there has been a corresponding increase in the number of importers. In 2004 there were just 14 countries importing LNG, but by January 2016 this number had surged to 30.

LNG imports by country between 2004 and 2015 are shown in the table below. Despite diversification in the number of importers, Japan, and to a lesser extent South Korea, provide the backbone of LNG trades, collectively accounting for 52% of total LNG imports. Elsewhere, there has been strong growth in European imports, as LNG has provided a source of gas supplies during periods of high winter demand.

LNG Imports by Country 2004-2015

(Million Tons)

(1) Provisional

Source: Drewry

Chinese imports of LNG commenced in 2006 and since then have grown exponentially from mere 0.7 million tons to 19.7 billion tons in 2015.. The sharp rise in the country's LNG imports is attributed to the government's stated policy to increase the share of gas in total Chinese energy demand. The increased emphasis on LNG as a source of energy is the result of Beijing's aim to cut its greenhouse gas emissions per unit of GDP by 60-65% from 2005 levels.

Further expansion of regasification and terminal import infrastructure which is now underway will support the continued growth in Chinese LNG imports. China is not dissimilar from the U.S. in that it has large deposits of shale gas, but geological structures in China are far more complicated. Additionally, China lacks the infrastructure to support the rapid development of domestic gas supplies. As such, this will create an opportunity for imported LNG. Monthly trends in LNG imports among Asian importers between January 2000 and January 2016 are shown in the chart below.

Asian LNG Imports: 2000-2016

(Tons)

Source: Drewry

International Trade in Natural Gas

Generally, a pipeline is the most economical way of transporting natural gas from a producer to a consumer, provided that the pipeline is not too distant from the natural gas reserves. However, for some areas, such as the Far East, the lack of an adequate pipeline infrastructure means that natural gas must be turned into a liquefied form (LNG), as this is the only economical and feasible way it can be transported over long distances. Additionally, sea transportation of LNG is a more flexible solution than pipeline as it can accommodate required changes in trade patterns that are economically or politically driven.

International trade in natural gas has almost doubled between 2000 and 2015, with total LNG trade rising by 147% and account for one-third of total natural gas trade. As a result, LNG captured a growing share of international gas trade, with key drivers of this growth being the diversification of consumers, flexibility among producers, cost efficient transport and access to competitively priced gas.

World Natural Gas Trade 1990-2015

(Billion Cubic Metres )

(1) Provisional

Source: Drewry

LNG Shipping Routes

Although the number of LNG shipping routes has increased in recent years due to growth in the number of LNG suppliers and consumers, demand for shipping services remains heavily focused on a number of key trade routes. In 2015, the principal trade routes for LNG shipping included: the South Pacific (Indonesia, Malaysia, Australia and Brunei) and the Middle East (Qatar, Oman and the UAE) to the North Pacific (Japan, South Korea, Taiwan and increasingly China), North Africa and Nigeria to Europe and the U.S., and Trinidad to the U.S., South America and Europe.

One important result of the geographical shifts in LNG production and consumption is that demand for shipping services, expressed in terms of ton miles, has grown much faster that the underlying increase in LNG trade. Ton miles are derived by multiplying the volume of cargo by the distance between the load and discharge port on each voyage.

LNG Seaborne Trade 2004-2015

(1) Provisional

Source: Drewry

Between 2005 and 2015, total demand for LNG shipping services, expressed in terms of ton miles, increased by 155%.

LNG Trades Requiring Ice Class Tonnage

Ice Class Vessel Classifications

Ice class is assigned where a ship is strengthened to navigate in specific ice conditions. Ice class vessels are governed by different ice class rules and regulations depending on their area of operations.

Baltic Sea

Bay and Gulf of Bothnia, Gulf of Finland - Finnish-Swedish Ice Class Rules (FSICR)

Gulf of Finland (Russian territorial waters) - Russian Maritime Register (RMR) Ice Class Rules

Arctic Ocean

Barents, Kara, Laptev, East Siberian and Chukchi Seas - Russian Maritime Register (RMR) Ice Class Rules

Beaufort Sea, Baffin Bay, etc. - Canadian Arctic Shipping Pollution Prevention Rules (CASPPR)

RMR Ice Class Rules

There are also ice class rules and regulations for commercial ship operations on inland lakes, mainly the Great Lakes/St. Lawrence Seaway.

In the context of current commercial newbuilding orders, the FSICR have become the de facto standard for new tonnage. Four ice classes are defined in the FSICR. The FSICR fairway due ice classes along with the design notional level thicknesses, in order of strength from high to low, are:

Class	Standard
1A Super (1AS)	Design notional level ice thickness of 1.0m. For extreme harsh ice conditions.
1A	Design notional level ice thickness of 0.8m. For harsh ice conditions.
1B	Design notional level ice thickness of 0.6m. For medium ice conditions.
1C	Design notional level ice thickness of 0.4m. For mild ice conditions.

The FSICR and the system of ice navigation operated during the winter months in the Northern Baltic are the most well developed criteria and standards for ice navigation. The system of ice navigation comprises three fundamental elements:

Ice class merchant vessels (compliant with the FSICR for navigation in the northern Baltic);

Fairway navigation channels; and

Ice breaker assistance.

Year-round navigation and continuity of trade using the above three fundamental elements was first introduced in the northern Baltic sea areas during the 1960s, and the current FSICR Rule set, as well as the system of ice navigation, has evolved over the years to its current state.

Requirement for Ice Class Tonnage

The FSICR include technical requirements for hull and machinery scantlings as well as for the minimum propulsion power of ships. The hull of ice class vessels and the main propulsion machinery must be safe. The vessel must have sufficient power for safe operation in ice-covered waters. During the vessels' normal operations, they encounter various ice interaction loadings, which calls for strengthened hull structures.

In addition to class rules, ships have to fulfill requirements set by maritime authorities in various jurisdictions. For example, the Russian marine operations headquarters accept ships with ice-strengthening according to or at least the equivalent of FSICR 1B to operate in the Northern Sea Route, or the NSR, if they fulfill additional requirements on crewing and icebreaker assistance.

Ice Class LNG Fleet

The number of ships in the international LNG fleet with an ice class standard is very low. As of January 2016, there were only 11 LNG carriers with Ice Class 1A standard in operation and a further 1 vessel with Ice Class 1A on order. The only company to date that has experience with and performed NSR transits with LNG carriers is Dynagas Ltd.

Northern Sea Route (NSR)

Currently there are NSR cargo flows are dominated by oil and gas exports and the export of minerals, in particular coal and ore. Demand for shipping for these commodities in the region has been increasing in recent years, driven by several key factors:

reduced level of sea ice has extended the summer shipping season in the Arctic and is making some areas easy to navigate;

increase in mineral resource development activities in the Arctic;

commodity demand growth in Asian economies;

technological developments which have made NSR a more feasible shipping route than in the past; and

chronic political problems in the Middle East, piracy in North Africa and non-transparent commercial disputes over the Suez in Egypt.

These factors have made NSR a promising alternative.

Northern Sea Route

Source: Drewry

As a result, the NSR has experienced exponential growth in trade volumes between 2010 and 2013. The table below illustrates this development. The year 2013 set a record both in the number of vessels and in the amount of cargoes registered on this route. Traffic on the NSR dropped in 2014 and only 23 vessels passed through it. Moreover, the provisional data suggests that a further drop in traffic was recorded in 2015.

Northern Sea Route—Seaborne Traffic

Source: Drewry, Centre for High North Logistics

As of today the most suitable LNG terminal for loading LNG for transport to the Far East is located in Northern Norway. The NSR to Japan is approximately 45% shorter than traditional shipping routes generally sailing through the Suez Canal. The Arctic route allows ships to save on time, fuel, and environmental emissions. In Northern Russia located within the NSR there are large gas reserves that are being planned for LNG exports.

In general, ships below 1A ice-class will not be allowed to trade on NSR. This affords an advantage to those owners with ice class tonnage. Furthermore, owners/operators with experience of operating in ice conditions will have an edge over the traditional tramp operators who make occasional forays into the region during the winter months.

The LNG Fleet

LNG carriers are specialist vessels designed to transport LNG between liquefaction facilities and import terminals. They are double-hulled vessels with a sophisticated containment system that holds and insulates LNG to maintain it in liquid form. Any LNG that evaporates during the voyage and converts to natural gas (normally referred to as boil-off) can be used as fuel to help propel the ship.

Among the existing fleet there are several different types of containment systems used on LNG carriers, but the two most popular systems are:

The Moss Rosenberg spherical system, which was designed in the 1970s and is used by a large portion of the existing LNG fleet. In this system, multiple self-supporting, spherical tanks are built independent of the carrier and arranged inside its hull.

The Gaz Transport membrane system, which is built inside the carrier and consists of insulation between thin primary and secondary barriers. The membrane is designed to accommodate thermal expansion and contraction without overstressing the membrane.

However, it is the case that most new vessels are being built with membrane systems such as the Gaz Transport system. This trend is primarily a result of lower Suez Canal fees and related costs associated with passage through the canal (which is required for many long-haul trade routes) for carriers with membrane systems. In addition, membrane system ships tend to operate more efficiently since the spheres on the Moss Rosenberg systems create more wind resistance. Generally, membrane ships achieve better speed consumption due to improved hull utilization, reduced cool down time and better terminal capacity.

The cargo capacity of an LNG carrier is measured in cbm. As of January 31, 2016, the worldwide fleet totaled 422 ships with a combined capacity of 64.2 million cbm. The breakdown of the fleet by vessel size is shown below.

The LNG Fleet by Vessel Size: January 31, 2016

Source: Drewry

Within the current fleet there are only 33 vessels with ice class certification and they account for less than 9% of the global LNG fleet. These ships are niche part of the market and command a premium over the freight rates of non-ice class vessels.

The age profile of the existing fleet as of January 31, 2016 is shown below. The average age of all LNG carriers in service is 10.3 years, with fleet age generally increases as ship size decreases.

LNG Fleet Age Profile: January 31, 2016

Source: Drewry

Due to high quality construction and in most cases high quality maintenance, LNG carriers tend to have longer trading lives than oil tankers; it is not unusual to see ships older than 35 years still in service. However, there is some anecdotal evidence to suggest that older ships may find it harder to find employment in the future. Ships built before 1990 will likely become candidates for replacement in the not too distant future.

LNG Shipping Arrangements

LNG carriers are usually chartered for a fixed period of time with the charter rate payable to the owner on a monthly basis. Shipping arrangements are normally based on charters of five years or more because:

LNG projects are expensive and typically involve an integrated chain of dedicated facilities. Accordingly, the overall success of an LNG project depends heavily on long-term planning and coordination of project activities, including marine transportation.

LNG carriers are expensive to build, and the cash-flow from long-term fixed-rate charters supports vessel financing.

Most end users of LNG are utility companies, power stations or petrochemical producers and their operations depend on reliable and uninterrupted delivery of LNG. Although most shipping requirements for new LNG projects continue to be provided on a long-term basis, spot voyages (typically consisting of a single voyage) and time charters of four years or less have become a feature of the market in recent years. However, it should be noted that the LNG spot market is different from the tanker spot market. In the tanker market, the term "spot trade" refers to a single voyage, which is arranged at a short notice. In the LNG market, it relates to the transport of one or more cargoes, sometimes within a specified time period between one and six months, with a set-up time of possibly several months.

Newbuilding Prices

Similar to other types of vessels, newbuilding prices for LNG carriers rose steeply in the late 1980s and early 1990s, and then began to drift downwards in the mid-1990s and fall sharply in the late 1990s. At the beginning of 1992, the price of a 125,000 cbm ship from a Far East yard was reported to be approximately $270 million to $290 million, compared with a low of $120 million at the end of 1986. However, by early 2000 new orders were being struck at a new low of around $150 million.

After the lows of early 2000, prices crept above $165 million in the first half of 2001, but fell back to the $160 million to $165 million range in the second half of the year. Further pressure on newbuilding prices in general pushed typical prices closer to $160 million in 2002, and by 2003 prices fell to just above $150 million. However, a host of factors, including constrained shipbuilding capacity, currency movements and high steel prices led to an increase in prices in 2004 to around $175 million. Prices rose above $200 million in 2005 and renewed pressure on shipbuilding prices pushed prices close to $220 million in 2006.

LNG Carrier Newbuilding Prices: 2003-2016

(End Period - U.S. $ Million)

Source: Drewry

Prices for larger sized LNG carriers of 210-220,000 cbm were around $215 million when first ordered in late 2004 and increased to $235 million in the summer of 2005.

Newbuilding prices reached an all-time high mark of $250 million around mid-2008, influenced by a number of factors, including the declining dollar exchange rate, easy availability of finance, high steel prices and tight shipbuilding capacity. However, newbuilding prices then fell in the wake of little new ordering in the period 2008-2011. The newbuilding price for LNG carries increase marginally by 2% from $202 million in 2011 to $206 million in 2014. In January 2016 the newbuilding price for a 150-160,000 cbm ship was assessed at US$206 million.

LNG Safety

LNG shipping is generally safe relative to other forms of commercial marine transportation. In the past forty years, there have been no significant accidents or cargo spillages involving an LNG carrier, even though over 40,000 plus LNG voyages have been made during that time.

LNG is non-toxic and non-explosive in its liquid state. It only becomes explosive or inflammable when heated and vaporized, and then only when in a confined space within a narrow range of concentrations in the air (5% to 15%). The risks and hazards from an LNG spill vary depending on the size of the spill, environmental conditions and the site at which the spill occurs.

Competition

We operate in markets that are highly competitive and based primarily on supply and demand. The process of obtaining new time charters generally involves intensive screening and competitive bidding, and often extends for several months. LNG carrier time charters are generally awarded based upon a variety of factors relating to the vessel operator, including but not limited to price, customer relationships, operating expertise, professional reputation and size, age and condition of the vessel. We believe that the LNG shipping industry is characterized by the significant time required to develop the operating expertise and professional reputation necessary to obtain and retain charterers.

We expect substantial competition for providing marine transportation services for potential LNG projects from a number of experienced companies, including state-sponsored entities and major energy companies. Many of these competitors have significantly greater financial resources and larger and more versatile fleets than we do. We anticipate that an increasing number of marine transportation companies, including many with strong reputations and extensive resources and experience, will enter the LNG transportation market. This increased competition may cause greater price competition for time charters.

Seasonality

Historically, LNG trade, and therefore charter rates, increased in the winter months and eased in the summer months as demand for LNG in the Northern Hemisphere rose in colder weather and fell in warmer weather. The tanker industry in general has become less dependent on the seasonal transport of LNG than a decade ago as new uses for LNG have developed, spreading consumption more evenly over the year. There is a higher seasonal demand during the summer months due to energy requirements for air conditioning in some markets and a pronounced higher seasonal demand during the winter months for heating in other markets. However, our vessels primarily operate under multi-year charters and are not subject to the effect of seasonal variations in demand.

Environmental and Other Regulations

General

Governmental and international agencies extensively regulate the carriage, handling, storage and regasification of LNG. These regulations include international conventions and national, state and local laws and regulations in the countries where our vessels now or, in the future, will operate or where our vessels are registered. We cannot predict the ultimate cost of complying with these regulations, or the impact that these regulations will have on the resale value or useful lives of our vessels. Various governmental and quasi-governmental agencies require us to obtain permits, licenses and certificates for the operation of our vessels.

Although we believe that we are substantially in compliance with applicable environmental laws and regulations and have all permits, licenses and certificates required for our vessels, future non-compliance or failure to maintain necessary permits or approvals could require us to incur substantial costs or temporarily suspend operation of one or more of our vessels. A variety of governmental and private entities inspect our vessels on both a scheduled and unscheduled basis. These entities, each of which may have unique requirements and each of which conducts frequent inspections, include local port authorities, such as the U.S. Coast Guard, harbor master or equivalent, classification societies, flag state, or the administration of the country of registry, charterers, terminal operators and LNG producers.

International Maritime Regulation of LNG Vessels

The IMO is the United Nations' agency that provides international regulations governing shipping and international maritime trade, including the International Convention on Civil Liability for Oil Pollution Damage, the International Convention on Civil Liability for Bunker Oil Pollution Damage, and the International Convention for the Prevention of Pollution from Ships, or the "MARPOL Convention." The flag state, as defined by the United Nations Convention on Law of the Sea, has overall responsibility for the implementation and enforcement of international maritime regulations for all ships granted the right to fly its flag. The "Shipping Industry Guidelines on Flag State Performance" evaluates flag states based on factors such as sufficiency of infrastructure, ratification of international maritime treaties, implementation and enforcement of international maritime regulations, supervision of surveys, casualty investigations, and participation at IMO meetings. The requirements contained in the International Management Code for the Safe Operation of Ships and for Pollution Prevention (the ISM Code) promulgated by the IMO, govern our operations. Among other requirements, the ISM Code requires the party with operational control of a vessel to develop an extensive safety management system that includes, among other things, the adoption of a policy for safety and environmental protection policy setting forth instructions and procedures for operating its vessels safely and also describing procedures for responding to emergencies. We are compliant with the requirement to hold a Document of Compliance under the ISM Code.

Vessels that transport gas, including LNG carriers, are also subject to regulation under the International Gas Carrier Code (or the IGC Code) published by the IMO. The IGC Code provides a standard for the safe carriage of LNG and certain other liquid gases by prescribing the design and construction standards of vessels involved in such carriage. Compliance with the IGC Code must be evidenced by a Certificate of Fitness for the Carriage of Liquefied Gases of Bulk. Each of our vessels is in compliance with the IGC Code and each of our newbuilding/conversion contracts requires that the vessel receive certification that it is in compliance with applicable regulations before it is delivered. Non-compliance with the IGC Code or other applicable IMO regulations may subject a shipowner or a bareboat charterer to increased liability, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to, or detention in, some ports.

In 1996, the International Convention on Liability and Compensation for Damages in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS) was adopted and subsequently amended by the 2010 Protocol. The HNS Convention introduces strict liability for the shipowner and covers pollution damage as well as the risks of fire and explosion, including loss of life or personal injury and damage to property. HNS includes, among other things, liquefied natural gas. However, the HNS Convention lacked the ratifications required to come into force. In April 2010, a consensus at the Diplomatic Conference convened by the IMO adopted the 2010 Protocol. Under the 2010 Protocol, if damage is caused by bulk HNS, compensation would first be sought from the shipowner. The 2010 Protocol has not yet entered into effect. It will enter into force eighteen months after the date on which certain consent and administrative requirements are satisfied. While a majority of the necessary number of states has indicated their consent to be bound by the 2010 Protocol, the required minimum has not been met.

The IMO also promulgates ongoing amendments to the International Convention for the Safety of Life at Sea 1974 and its protocol of 1988, otherwise known as the SOLAS Convention. The SOLAS Convention provides rules for the construction of and equipment required for commercial vessels and includes regulations for safe operation. It requires the provision of lifeboats and other life-saving appliances, requires the use of the Global Maritime Distress and Safety System which is an international radio equipment and watchkeeping standard, afloat and at shore stations, and relates to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (or STCW) also promulgated by the IMO. Flag states that have ratified the SOLAS Convention and STCW generally employ the classification societies, which have incorporated the SOLAS Convention and STCW requirements into their class rules, to undertake surveys to confirm compliance. May 2012 SOLAS Convention amendments entered into force as of January 1, 2014. Additionally, May 2013 SOLAS Convention amendments, pertaining to emergency drills, entered into force in January 2015.

In the wake of increased worldwide security concerns, the IMO amended the SOLAS Convention and added the International Ship and Port Facilities Security Code (ISPS) as a new chapter to that convention. The objective of the ISPS, which came into effect on July 1, 2004, is to detect security threats and take preventive measures against security incidents affecting ships or port facilities. Our Manager has developed Security Plans, appointed and trained Ship and Office Security Officers and all of our vessels have been certified to meet the ISPS Code. See "—Vessel Security Regulations" for a more detailed discussion about these requirements.

The SOLAS Convention and other IMO regulations concerning safety, including those relating to treaties on training of shipboard personnel, lifesaving appliances, radio equipment and the global maritime distress and safety system, are applicable to our operations. Non-compliance with these types of IMO regulations may subject us to increased liability or penalties, may lead to decreases in available insurance coverage for affected vessels and may result in the denial of access to or detention in some ports. For example, the U.S. Coast Guard and European Union authorities have indicated that vessels not in compliance with the ISM Code will be prohibited from trading in U.S. and European Union ports.

The MARPOL Convention establishes environmental standards relating to oil leakage or spilling, garbage management, sewage, air emissions, handling and disposal of noxious liquids and the handling of harmful substances in packaged form. MARPOL is broken into six Annexes, each of which establishes environmental standards relating to different sources of pollution: Annex I relates to oil leakage or spilling; Annexes II and III relate to harmful substances carried, in bulk, in liquid or packaged form, respectively; Annexes IV and V relate to sewage and garbage management, respectively; and Annex VI, adopted by the IMO in September of 1997, relates to air emissions.

The IMO amended Annex I to MARPOL, including a new regulation relating to oil fuel tank protection, and the new regulation applies to various ships delivered on or after August 1, 2010. It includes requirements for the protected location of the fuel tanks, performance standards for accidental oil fuel outflow, a tank capacity limit and certain other maintenance, inspection and engineering standards. IMO regulations also require owners and operators of vessels to adopt Ship Oil Pollution Emergency Plans. Periodic training and drills for response personnel and for vessels and their crews are required.

The IMO continues to review and introduce new regulations. It is impossible to predict what additional regulations, if any, may be passed by the IMO and what effect, if any, such regulation may have on our operations.

Air Emissions

In September 1997, the IMO adopted MARPOL 73/78 Annex VI "Regulations for the prevention of Air Pollution" (or Annex VI) to MARPOL to address air pollution from ships. Annex VI came into force on May 19, 2005. It applies to all ships, fixed and floating drilling rigs and other floating platforms and sets limits on sulfur oxide and nitrogen oxide emissions from ship exhausts, and prohibits deliberate emissions of ozone depleting substances, such as chlorofluorocarbons (CFC). Annex VI also includes a global cap on sulfur content of fuel oil and allows for special areas to be established with more stringent controls on sulfur emissions. The certification requirements for Annex VI depend on size of the vessel and time of periodical classification survey. Ships weighing more than 400 gross tons and engaged in international voyages involving countries that have ratified the conventions, or ships flying the flag of those countries, are required to have an International Air Pollution Prevention Certificate (or an IAPP Certificate). Annex VI has been ratified by some but not all IMO member states. Annex VI came into force in the United States on January 8, 2009, and the U.S. Coast Guard issues IAPP Certificates. All the vessels in our Fleet have been issued with IAPP Certificates.

On July 1, 2010 amendments to Annex VI to the MARPOL Convention that require progressively stricter limitations on sulfur emissions from ships proposed by the United States, Norway and other IMO member states took effect. Beginning on January 1, 2012, fuel used to power ships may contain no more than 3.5% sulfur. This cap will then decrease to 0.5% by January 1, 2020 subject to IMO review on availability of 0.50% sulfur fuels which has to be completed by 2018. However, as of July 1, 2010 in Emission Control Areas (or ECAs), limitations on sulfur emissions require that fuels contain no more than 1% sulfur and his cap was further reduced to 0.1% as of January 1, 2015. In fact, the EPA released a penalty policy for violations of the sulfur fuel standard and related provisions for ships on January 16, 2015, which applies to violations of the international standards for sulfur emissions from ships that went into effect on January 1, 2015. In August 2012, the North American ECA became enforceable. The Baltic Sea and the North Sea have also been designated ECAs. The North American ECA includes areas subject to the exclusive sovereignty of the United States and Canada. Consequently, in August 2012, when the North American ECA became effective, the sulfur limit in marine fuel was capped at 1.0%, which was the capped amount for all other ECAs (Baltic Sea ECA and North Sea ECA) since July 1, 2010. In January 1, 2014 when the US Caribbean ECA became effective, the sulfur limit in marine fuel was capped at 1.0 %. As of January 1, 2015 the cap on fuel sulfur content in all ECAs including North American ECA and US Caribbean ECA is reduced to 0.1%. The amendments also establish new tiers of stringent nitrogen oxide emissions standards for marine engines installed in new vessels, having keel laying on or after January 1, 2016 and sailing within North American and US Caribbean ECAs. Further, the European directive 2005/33/EC, which became effective January 1, 2010, bans the use of fuel oils containing more than 0.1% sulfur by mass by any merchant vessel while at berth in any EU country. Our vessels have achieved compliance, where necessary, by being arranged to burn gas only in their boilers when alongside. Marine Gas Oil and Low Sulfur Marine Gas Oil, or MGO and LSMGO, respectively, have been purchased as the only fuel for the Diesel Generators.

Additionally, as discussed above, more stringent emission standards could apply in coastal areas designated as ECAs, such as the United States and Canadian coastal areas designated by the IMO's Marine Environment Protection Committee (MEPC), as discussed in "—U.S. Clean Air Act" below. U.S. air emissions standards are now equivalent to these amended Annex VI requirements, and once these amendments become effective, we may incur costs to comply with these revised standards. Additional or new conventions, laws and regulations may be adopted that could require the installation of expensive emission control systems.

Ballast Water Management Convention

The IMO has negotiated international conventions that impose liability for oil pollution in international waters and the territorial waters of the signatory to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments (or the BWM Convention) in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with a requirement for mandatory ballast water treatment. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping. The Convention has not yet entered into force because a sufficient number of states have failed to adopt it, but it is close.

As referenced below, the U.S. Coast Guard issued new ballast water management rules on March 23, 2012. Under the requirements of the convention for units with ballast water capacity more than 5000 cubic meters that were constructed in 2011 or before, ballast water management exchange or treatment will be accepted until 2016. From 2016 (or not later than the first intermediate or renewal survey after 2016), only ballast water treatment will be accepted by the Convention.

Bunkers Convention/CLC State Certificate

The IMO has negotiated international conventions that impose liability for oil pollution in international waters and the territorial waters of the signatory to such conventions. For example, the IMO adopted an International Convention for the Control and Management of Ships' Ballast Water and Sediments (or the BWM Convention) in February 2004. The BWM Convention's implementing regulations call for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009), to be replaced in time with mandatory concentration limits. The BWM Convention will not become effective until 12 months after it has been adopted by 30 states, the combined merchant fleets of which represent not less than 35% of the gross tonnage of the world's merchant shipping. To date, the BWM Convention has not yet been ratified but proposals regarding implementation have recently been submitted to the IMO.

The IMO has passed a resolution encouraging the ratification of the Convention and calling upon those countries that have already ratified to encourage the installation of ballast water management systems on new ships. Many of the implementation dates originally written in the BWM Convention have already passed, so that once the BWM Convention enters into force, the period for installation of mandatory ballast water exchange requirements would be extremely short, with several thousand ships a year needing to install ballast water management systems (BWMS). For this reason, on December 4, 2013, the IMO Assembly passed a resolution revising the application dates of BWM Convention so that they are triggered by the entry into force date and not the dates originally in the BWM Convention. This in effect makes all vessels constructed before the entry into force date "existing" vessels, and allows for the installation of a BWMS on such vessels at the first renewal survey following entry into force of the convention. Furthermore, in October 2014 the MEPC met and adopted additional resolutions concerning the BWM Convention's implementation. Once mid-ocean ballast exchange or ballast water treatment requirements become mandatory, the cost of compliance could increase for ocean carriers and the costs of ballast water treatments may be material. However, many countries already regulate the discharge of ballast water carried by vessels from country to country to prevent the introduction of invasive and harmful species via such discharges. The United States for example, requires vessels entering its waters from another country to conduct mid-ocean ballast exchange, or undertake some alternate measure, and to comply with certain reporting requirements. Although we do not believe that the costs of such compliance would be material, it is difficult to predict the overall impact of such a requirement on our operations.

As referenced below, the U.S. Coast Guard issued new ballast water management rules on March 23, 2012. Under the requirements of the convention for units with ballast water capacity more than 5000 cubic meters that were constructed in 2011 or before, ballast water management exchange or treatment were accepted until January 1, 2016. From January 1, 2016 (or not later than the first intermediate or renewal survey after 2016), only ballast water treatment will be accepted by the Convention.

Anti-Fouling Requirements

In 2001, the IMO adopted the International Convention on the Control of Harmful Anti-fouling Systems on Ships, or the "Anti-fouling Convention." The Anti-fouling Convention, which entered into force on September 17, 2008, prohibits the use of organotin compound coatings to prevent the attachment of mollusks and other sea life to the hulls of vessels after September 1, 2003. Vessels of over 400 gross tons engaged in international voyages must obtain an International Anti-fouling System Certificate and undergo a survey before the vessel is put into service or when the antifouling systems are altered or replaced. We have obtained Anti-fouling System Certificates for all of our vessels that are subject to the Anti-Fouling Convention and do not believe that maintaining such certificates will have an adverse financial impact on the operation of our vessels.

United States Environmental Regulation of LNG Vessels

Our vessels operating in U.S. waters now or, in the future, will be subject to various federal, state and local laws and regulations relating to protection of the environment. In some cases, these laws and regulations require us to obtain governmental permits and authorizations before we may conduct certain activities. These environmental laws and regulations may impose substantial penalties for noncompliance and substantial liabilities for pollution. Failure to comply with these laws and regulations may result in substantial civil and criminal fines and penalties. As with the industry generally, our operations will entail risks in these areas, and compliance with these laws and regulations, which may be subject to frequent revisions and reinterpretation, increases our overall cost of business.

Oil Pollution Act and CERCLA

The U.S. Oil Pollution Act of 1990 (OPA 90) established an extensive regulatory and liability regime for environmental protection and cleanup of oil spills. OPA 90 affects all "owners and operators" whose vessels trade with the United States or its territories or possessions, or whose vessels operate in the waters of the United States, which include the U.S. territorial waters and the two hundred nautical mile exclusive economic zone of the United States. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) applies to the discharge of hazardous substances whether on land or at sea. While OPA 90 and CERCLA would not apply to the discharge of LNG, they may affect us because we carry oil as fuel and lubricants for our engines, and the discharge of these could cause an environmental hazard. Under OPA 90, vessel operators, including vessel owners, managers and bareboat or "demise" charterers, are "responsible parties" who are all liable regardless of fault, individually and as a group, for all containment and clean-up costs and other damages arising from oil spills from their vessels. These "responsible parties" would not be liable if the spill results solely from the act or omission of a third-party, an act of God or an act of war. The other damages aside from clean-up and containment costs are defined broadly to include:

natural resource damages and related assessment costs;

real and personal property damages;

net loss of taxes, royalties, rents, profits or earnings capacity;

net cost of public services necessitated by a spill response, such as protection from fire, safety or health hazards; and

loss of subsistence use of natural resources.

Effective December 21, 2015, the U.S. Coast Guard adjusted the limits of OPA liability to the greater of $2,200 per gross ton or $18,796,800 for any double-hull tanker that is over 3,000 gross tons (subject to possible adjustment for inflation). These limits of liability do not apply, however, where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct. These limits likewise do not apply if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. This limit is subject to possible adjustment for inflation. OPA 90 specifically permits individual states to impose their own liability regimes with regard to oil pollution incidents occurring within their boundaries, and some states have enacted legislation providing for unlimited liability for discharge of pollutants within their waters. In some cases, states, which have enacted their own legislation, have not yet issued implementing regulations defining shipowners' responsibilities under these laws.

CERCLA, which also applies to owners and operators of vessels, contains a similar liability regime and provides for cleanup, removal and natural resource damages for releases of "hazardous substances." Liability under CERCLA is limited to the greater of $300 per gross ton or $0.5 million for each release from vessels not carrying hazardous substances as cargo or residue, and $300 per gross ton or $5 million for each release from vessels carrying hazardous substances as cargo or residue. As with OPA 90, these limits of liability do not apply where the incident is caused by violation of applicable U.S. federal safety, construction or operating regulations, or by the responsible party's gross negligence or willful misconduct or if the responsible party fails or refuses to report the incident or to cooperate and assist in connection with the substance removal activities. OPA 90 and CERCLA each preserve the right to recover damages under existing law, including maritime tort law. We believe that we are in substantial compliance with OPA 90, CERCLA and all applicable state regulations in the ports where our vessels call.

OPA 90 requires owners and operators of vessels to establish and maintain with the U.S. Coast Guard evidence of financial responsibility sufficient to meet the limit of their potential strict liability under OPA 90/CERCLA. Under the regulations, evidence of financial responsibility may be demonstrated by insurance, surety bond, self-insurance or guaranty. Under OPA 90 regulations, an owner or operator of more than one vessel is required to demonstrate evidence of financial responsibility for the entire fleet in an amount equal only to the financial responsibility requirement of the vessel having the greatest maximum liability under OPA 90/CERCLA. Each of our shipowning subsidiaries that has vessels trading in U.S. waters has applied for, and obtained from the U.S. Coast Guard National Pollution Funds Center, three-year certificates of financial responsibility, supported by guarantees which we purchased from an insurance based provider. We believe that we will be able to continue to obtain the requisite guarantees and that we will continue to be granted certificates of financial responsibility from the U.S. Coast Guard for each of our vessels that is required to have one.

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico may also result in additional regulatory initiatives or statutes, including the raising of liability caps under OPA. For example, on August 15, 2012, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) issued a final drilling safety rule that became effective on October 22, 2012 for offshore oil and gas operations that strengthens the requirements for safety equipment, well control systems, and blowout prevention practice. A rule issued by the Bureau of Ocean Energy Management, or BOEM, that increased the limits of liability of damages for offshore facilities under the OPA based on inflation took effect in January 2015. Compliance with any new requirements of OPA may substantially impact our cost of operations or require us to incur additional expenses to comply with any new regulatory initiatives or statutes.

Clean Water Act

The United States Clean Water Act (or CWA) prohibits the discharge of oil or hazardous substances in United States navigable waters unless authorized by a permit or exemption, and imposes strict liability in the form of penalties for unauthorized discharges. The CWA also imposes substantial liability for the costs of removal, remediation and damages and complements the remedies available under OPA and CERCLA. In additional, many U.S. states that border a navigable waterway have enacted environmental pollution laws that impose strict liability on a person for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent that U.S. federal law.

The United States Environmental Protection Agency (EPA) regulates the discharge of ballast water, bilge water, and other discharges incidental to the normal operation of vessels within U.S. waters. Under the new rules, which took effect February 6, 2009, commercial vessels 79 feet in length or longer (other than commercial fishing vessels), or Regulated Vessels, are required to obtain a CWA permit regulating and authorizing such normal discharges. This permit, which the EPA has designated as the Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels (or VGP) incorporates the current U.S. Coast Guard requirements for ballast water management as well as supplemental ballast water requirements, and includes limits applicable to 26 specific discharge streams, such as deck runoff, bilge water and gray water. For each discharge type, among other things, the VGP establishes effluent limits pertaining to the constituents found in the effluent, including best management practices (or BMPs) designed to decrease the amount of constituents entering the waste stream. Unlike land-based discharges, which are deemed acceptable by meeting certain EPA-imposed numerical effluent limits, each of the 26 VGP discharge limits is deemed to be met when a Regulated Vessel carries out the BMPs pertinent to that specific discharge stream. The VGP imposes additional requirements on certain Regulated Vessel types that emit discharges unique to those vessels. Administrative provisions, such as inspection, monitoring, recordkeeping and reporting requirements, are also included for all Regulated Vessels. Several U.S. states have added specific requirements to the VGP and, in some cases, may require vessels to install ballast water treatment technology to meet biological performance standards. For a new vessel delivered to an owner or operator after September 19, 2009 to be covered by the VGP, the owner must submit a Notice of Intent, or NOI, at least 30 days before the vessel operates in United States waters. On March 28, 2013 the EPA re-issued the VGP for another five years, which took effect December 19, 2013. The 2013 VGP contains ballast water discharge standards for most vessels that now contain numeric limits. EPA is also planning to finalize the VGP for small vessels- the VGP but the final rule has not yet been issued.

National Aquatic Invasive Species Act

The National Invasive Species Act (or NISA) was enacted in 1996 in response to growing reports of harmful organisms being released into U.S. ports through ballast water taken on by ships in foreign ports. NISA established a ballast water management program for ships entering U.S. waters, which require the installation of equipment to treat ballast water before it is discharged in U.S. waters or, in the alternative, the implementation of other port facility disposal arrangements or procedures. Vessels not complying with these regulations are restricted from entering U.S. waters. The U.S. Coast Guard must approve any technology before it is placed on a vessel but has not yet approved the technology for vessels to meet these standards. Under NISA, mid-ocean ballast water exchange is voluntary, except for ships heading to the Great Lakes, Hudson Bay, or vessels engaged in the foreign export of Alaskan North Slope crude oil. However, NISA's exporting and record-keeping requirements are mandatory for vessels bound for any port in the United States. If the mid-ocean ballast exchange is made mandatory throughout the United States, or if water treatment requirements or options are instituted, the costs of compliance could increase for ocean carriers.

The Coast Guard's revised regulations on ballast water management by establishing standards are consistent with those adopted by the IMO in 2004. The final rule requires that ballast water discharge have no more than 10 living organisms per milliliter for organisms between 10 and 50 micrometers in size. For organisms larger than 50 micrometers, the discharge can have 10 living organisms per cubic meter of discharge. New ships constructed on or after December 1, 2012 must comply with these standards and some existing ships must comply with these standards and some existing ships must comply by their first dry dock after January 1, 2014. Compliance with these regulations will require us to incur additional costs and other measures that may be significant.

Notwithstanding the foregoing, as of January 1, 2014, vessels are technically subject to the phasing-in of these standards. As a result, the USCG has provided waivers to vessels which cannot install the as-yet unapproved technology. The EPA, on the other hand, has taken a different approach to enforcing ballast discharge standards under the VGP. On December 27, 2013, the EPA issued an enforcement response policy in connection with the new VGP in which the EPA indicated that it would take into account the reasons why vessels do not have the requisite technology installed, but will not grant any waivers.

It should also be noted that in October 2015, the Second Circuit Court of Appeals issued a ruling that directed the EPA to redraft the sections of the 2013 VGP that address ballast water. However, the Second Circuit stated that 2013 VGP will remain in effect until the EPA issues a new VGP. It presently remains unclear how the ballast water requirements set forth by the EPA, the USCG, and IMO BWM Convention, some of which are in effect and some which are pending, will co-exist.

The USCG's revised ballast water standards are consistent with requirements under the BWM Convention. Compliance with the EPA and the USCG regulations could require the installation of equipment on our vessels to treat ballast water before it is discharged or the implementation of other port facility disposal arrangements or procedures at potentially substantial cost, or may otherwise restrict our vessels from entering U.S. waters. In addition, certain states have enacted more stringent discharge standards as conditions to their required certification of the VGP.

Clean Air Act

The U.S. Clean Air Act of 1970, as amended (or the CAA) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants. Our vessels are subject to vapor control and recovery requirements for certain cargoes when loading, unloading, ballasting, cleaning and conducting other operations in regulated port areas and emission standards for so-called "Category 3" marine diesel engines operating in U.S. waters. The marine diesel engine emission standards are currently limited to new engines beginning with the 2004 model year. On April 30, 2010, the EPA promulgated final emission standards for Category 3 marine diesel engines equivalent to those adopted in the amendments to Annex VI to MARPOL. The emission standards apply in two stages: near-term standards for newly-built engines will apply from 2011, and long-term standards requiring an 80% reduction in nitrogen dioxides (or NOx) will apply from 2016. The CAA also requires states to draft State Implementation Plans, or SIPs, designed to attain national health-based air quality standards in each state. Although state-specific, SIPs may include regulations concerning emissions resulting from vessel loading and unloading operations by requiring the installation of vapor control equipment. Compliance with these standards may cause us to incur costs to install control equipment on our vessels in the future.

Other Regulations

The European Union has also adopted legislation that would: (1) ban manifestly sub-standard vessels (defined as those over 15 years old that have been detained by port authorities at least twice in a six month period) from European waters and create an obligation of port states to inspect vessels posing a high risk to maritime safety or the marine environment; and (2) provide the European Union with greater authority and control over classification societies, including the ability to seek to suspend or revoke the authority of negligent societies.

The European Union has implemented regulations requiring vessels to use reduced sulfur content fuel for their main and auxiliary engines. The EU Directive 2005/33/EC (amending Directive 1999/32/EC) introduced parallel requirements in the European Union to those in MARPOL Annex VI in respect of the sulfur content of marine fuels. In addition, it has introduced a 0.1% maximum sulfur requirement for fuel used by ships at berth in EU ports, effective January 1, 2010.

In 2005, the European Union adopted a directive on ship-source pollution, imposing criminal sanctions for intentional, reckless or negligent pollution discharges by ships. The directive could result in criminal liability for pollution from vessels in waters of European countries that adopt implementing legislation. Criminal liability for pollution may result in substantial penalties or fines and increased civil liability claims. We cannot predict what regulations, if any, may be adopted by the European Union or any other country or authority.

Regulation of Greenhouse Gas Emissions

In February 2005, the Kyoto Protocol entered into force. Pursuant to the Kyoto Protocol, adopting countries are required to implement national programs to reduce emissions of certain gases, generally referred to as greenhouse gases, which are suspected of contributing to global warming. Currently, the emissions of greenhouse gases from ships involved in international transport are not subject to the Kyoto Protocol. In December 2009, more than 27 nations, including the United States and China, signed the Copenhagen Accord, which includes a non-binding commitment to reduce greenhouse gas emissions. In addition, in December 2011, the Conference of the Parties to the United Nations Convention on Climate Change adopted the Durban Platform which calls for a process to develop binding emissions limitations on both developed and developing countries under the United Nations Framework Convention on Climate Change applicable to all Parties. The 2015 United Nations Convention on Climate Change Conference in Paris did not result in an agreement that directly limited greenhouse gas emissions from shipping. For 2020, the EU made a unilateral commitment to reduce overall greenhouse gas emissions from its member stated by 20% of 1990 levels. The EU also committed to reduce its emissions by 20% under the Kyoto Protocol's second period, from 2013 to 2020.

As of January 1, 2013, all ships (including rigs and drillships) must comply with mandatory requirements adopted by MEPC in July 2011 relating to greenhouse gas emissions. The amendments to MARPOL Annex VI Regulations for the prevention of air pollution from ships add a new Chapter 4 to Annex VI on Regulations on energy efficiency requiring the Energy Efficiency Design Index (EEDI), for new ships, and the Ship Energy Efficiency Management Plan (SEEMP) for all ships. Other amendments to Annex VI add new definitions and requirements for survey and certification, including the format for the International Energy Efficiency Certificate. The regulations apply to all ships of 400 gross tonnage and above. These new rules will likely affect the operations of vessels that are registered in countries that are signatories to MARPOL Annex VI or vessels that call upon ports located within such countries. The implementation of the EEDI and SEEMP standards could cause us to incur additional compliance costs. The IMO is also planning to implement market-based mechanisms to reduce greenhouse gas emissions from ships at an upcoming MEPC session. It is impossible to predict the likelihood that such a standard might be adopted or its potential impact on our operations at this time.

In the United States, the EPA has issued a final finding that greenhouse gases threaten public health and safety, and has promulgated regulations that regulate the emission of greenhouse gases. In 2009 and 2010, EPA adopted greenhouse reporting requirements for various onshore facilities, and also adopted a rule potentially imposing control technology requirements on certain stationary sources subject to the federal Clean Air Act. The EPA may decide in the future to regulate greenhouse gas emissions from ships and has already been petitioned by the California Attorney General to regulate greenhouse gas emissions from ocean-going vessels. Other federal and state regulations relating to the control of greenhouse gas emissions may follow, including climate change initiatives that have recently been considered in the U.S. Congress. Any passage of climate control legislation or other regulatory initiatives by the IMO, the European Union, the United States, or other countries where we operate, or any treaty adopted at the international level to succeed the Kyoto Protocol, that restrict emissions of greenhouse gases could require us to make significant financial expenditures, including capital expenditures to upgrade our vessels, that we cannot predict with certainty at this time. In addition, even without such regulation, our business may be indirectly affected to the extent that climate change results in sea level changes or more intense weather events.

Vessel Security Regulations

Since the terrorist attacks of September 11, 2001, there have been a variety of initiatives intended to enhance vessel security. On November 25, 2002, the Maritime Transportation Act of 2002 (or MTSA) came into effect. To implement certain portions of the MTSA, in July 2003, the U.S. Coast Guard issued regulations requiring the implementation of certain security requirements aboard vessels operating in waters subject to the jurisdiction of the United States. Similarly, in December 2002, amendments to the SOLAS Convention created a new chapter of the convention dealing specifically with maritime security. The new chapter became effective in July 2004 and imposes various detailed security obligations on vessels and port authorities, most of which are contained in the ISPS Code. The ISPS Code is designed to protect ports and international shipping against terrorism. After July 1, 2004, to trade internationally, a vessel must attain an International Ship Security Certificate (or ISSC) from a recognized security organization approved by the vessel's flag state.

Among the various requirements are:

on-board installation of automatic identification systems to provide a means for the automatic transmission of safety-related information from among similarly equipped ships and shore stations, including information on a ship's identity, position, course, speed and navigational status;

on-board installation of ship security alert systems, which do not sound on the vessel but only alerts the authorities on shore;

the development of vessel security plans;

ship identification number to be permanently marked on a vessel's hull;

a continuous synopsis record kept onboard showing a vessel's history including, the name of the ship and of the state whose flag the ship is entitled to fly, the date on which the ship was registered with that state, the ship's identification number, the port at which the ship is registered and the name of the registered owner(s) and their registered address; and

compliance with flag state security certification requirements.

The U.S. Coast Guard regulations, intended to align with international maritime security standards, exempt non-U.S. vessels from obtaining U.S. Coast Guard-approved MTSA vessel security plans provided such vessels have on board an ISSC that attests to the vessel's compliance with the SOLAS Convention security requirements and the ISPS Code.

Our Manager has developed Security Plans, appointed and trained Ship and Office Security Officers and each of our vessels in our Fleet complies with the requirements of the ISPS Code, the SOLAS Convention and the MTSA.

Other Regulation

Our LNG vessels may also become subject to the 2010 HNS Convention, if it is entered into force. The Convention creates a regime of liability and compensation for damage from hazardous and noxious substances (or HNS), including liquefied gases. The 2010 HNS Convention sets up a two-tier system of compensation composed of compulsory insurance taken out by shipowners and an HNS Fund which comes into play when the insurance is insufficient to satisfy a claim or does not cover the incident. Under the 2010 HNS Convention, if damage is caused by bulk HNS, claims for compensation will first be sought from the shipowner up to a maximum of 100 million Special Drawing Rights (or SDR). If the damage is caused by packaged HNS or by both bulk and packaged HNS, the maximum liability is 115 million SDR. Once the limit is reached, compensation will be paid from the HNS Fund up to a maximum of 250 million SDR. The 2010 HNS Convention has not been ratified by a sufficient number of countries to enter into force, and we cannot estimate the costs that may be needed to comply with any such requirements that may be adopted with any certainty at this time.

In-House Inspections

Our Manager carries out ship audits and inspections of the ships on a regular basis; both at sea and while the vessels are in port. The results of these inspections, which are conducted both in port and underway, result in a report containing recommendations for improvements to the overall condition of the vessel, maintenance, safety and crew welfare. Based in part on these evaluations, our Manager has created and implemented a program of continual maintenance for our vessels and their systems.

Inspection by Classification Societies

Every large, commercial seagoing vessel must be "classed" by a classification society. A classification society certifies that a vessel is "in class," signifying that the vessel has been built and maintained in accordance with the rules of the classification society and the vessel's country of registry and the international conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.

For maintenance of the class certificate, regular and special surveys of hull, machinery, including the electrical plant and any special equipment classed, are required to be performed by the classification society, to ensure continuing compliance. Vessels are dry-docked at least once during a five-year class cycle for inspection of the underwater parts and for repairs related to inspections. Vessels under five years of age can waive dry docking in order to increase available days and decrease capital expenditures, provided the vessel is inspected underwater. If any defects are found, the classification surveyor will issue a "recommendation" which must be rectified by the shipowner within prescribed time limits. The classification society also undertakes on request of the flag state other surveys and checks that are required by the regulations and requirements of that flag state. These surveys are subject to agreements made in each individual case and/or to the regulations of the country concerned.

Most insurance underwriters make it a condition for insurance coverage that a vessel be certified as "in class" by a classification society, which is a member of the International Association of Classification Societies (the IACS). In 2012, the IACS issued draft harmonized Common Structure Rules that align with IMO goal standards, and are expected to be adopted in 2013. All of the vessels in our Fleet are certified by Lloyds Register, have been awarded ISM certification and are currently "in class."

Our Manager carries out inspections of the ships on a regular basis; both at sea and while the vessels are in port. The results of these inspections, which are conducted both in port and underway, result in a report containing recommendations for improvements to the overall condition of the vessel, maintenance, safety and crew welfare. Based in part on these evaluations we create and implement a program of continual maintenance and improvement for our vessels and their systems.

Safety, Management of Ship Operations and Administration

Safety is our top operational priority. Our vessels are operated in a manner intended to protect the safety and health of the crew, the general public and the environment. We actively manage the risks inherent in our business and are committed to preventing incidents that threaten safety, such as groundings, fires and collisions. We are also committed to reducing emissions and waste generation. We have established key performance indicators to facilitate regular monitoring of our operational performance. We set targets on an annual basis to drive continuous improvement, and we review performance indicators monthly to determine if remedial action is necessary to reach our targets. Our Manager's shore staff performs a full range of technical, commercial and business development services for us. This staff also provides administrative support to our operations in finance, accounting and human resources.

Risk of Loss and Liability Insurance

The operation of any vessel, including LNG carriers, has inherent risks. These risks include mechanical failure, personal injury, collision, property loss, vessel or cargo loss or damage and business interruption due to political circumstances in foreign countries or hostilities. In addition, there is always an inherent possibility of marine disaster, including explosion, spills and other environmental mishaps, and the liabilities arising from owning and operating vessels in international trade. We believe that our present insurance coverage is adequate to protect us against the accident related risks involved in the conduct of our business and that we maintain appropriate levels of environmental damage and pollution insurance coverage consistent with standard industry practice. However, not all risks can be insured, and there can be no guarantee that any specific claim will be paid, or that we will always be able to obtain adequate insurance coverage at reasonable rates.

We have obtained hull and machinery insurance on all our vessels against marine and war risks, which include the risks of damage to our vessels, salvage or towing costs, and also insure against actual or constructive total loss of any of our vessels. However, our insurance policies contain deductible amounts for which we will be responsible. We have also arranged additional total loss coverage for each vessel. This coverage, which is called disbursements increased value coverage, provides us additional coverage in the event of the total loss of a vessel. The agreed deductible on each vessel averages $250,000.

We have also obtained loss of hire insurance to protect us against loss of income in the event one of our vessels cannot be employed due to damage that is covered under the terms of our hull and machinery insurance. Under our loss of hire policies, our insurer will pay us the daily rate agreed in respect of each vessel for each day, in excess of a certain number of deductible days, for the time that the vessel is out of service as a result of damage, for a maximum of 120 days. The number of deductible days varies from 14 days to 120 days, depending on the type of damage, machinery or hull damage. The number of deductible days for the vessels in our Fleet is 14 days per vessel.

Protection and indemnity insurance, which covers our third-party legal liabilities in connection with our shipping activities, is provided by a mutual protection and indemnity association, or P&I club. This includes third-party liability and other expenses related to the injury or death of crew members, passengers and other third-party persons, loss or damage to cargo, claims arising from collisions with other vessels or from contact with jetties or wharves and other damage to other third-party property, including pollution arising from oil or other substances, and other related costs, including wreck removal. Subject to the capping discussed below, our coverage, except for pollution, is unlimited. Our current protection and indemnity insurance coverage for pollution is $1 billion per vessel per incident. The thirteen P&I clubs that comprise the International Group of Protection and Indemnity Clubs insure approximately 90% of the world's commercial tonnage and have entered into a pooling agreement to reinsure each association's liabilities. Each P&I club has capped its exposure in this pooling agreement so that the maximum claim covered by the pool and its reinsurance would be approximately $5.45 billion per accident or occurrence. We are a member of the North of England P&I Club. As a member of these P&I clubs, we are subject to a call for additional premiums based on the clubs' claims record, as well as the claims record of all other members of the P&I clubs comprising the International Group. However, our P&I clubs have reinsured the risk of additional premium calls to limit our additional exposure. This reinsurance is subject to a cap, and there is the risk that the full amount of the additional call would not be covered by this reinsurance.

C. ORGANIZATIONAL STRUCTURE

We were formed on May 29, 2013 as a Marshall Islands limited partnership. We own (i) a 100% limited partner interest in Dynagas Operating LP, which owns a 100% interest in our Fleet through intermediate holding companies and (ii) the non-economic general partner interest in Dynagas Operating LP through our 100% ownership of its general partner, Dynagas Operating GP LLC.

Please see Exhibit 8.1 to this Annual Report for a list of our current subsidiaries.

D. PROPERTY, PLANT AND EQUIPMENT

For a description of our Fleet, please see "Item 4. Information on the Partnership—B. Business Overview—Our Fleet."

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following management's discussion and analysis of our financial condition and results of operations should be read in conjunction with the "Selected Financial Data" and the accompanying audited consolidated financial statements and the related notes included in "Item 18. Financial Statements" of this Annual Report. Amounts relating to percentage variations in period—on—period comparisons shown in this section are derived from the actual numbers in our books and records. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. See "Item 3. Key Information—D. Risk Factors" and the section entitled "Forward-Looking Statements" at the beginning of this Annual Report. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

A. RESULTS OF OPERATIONS

Overview

We are a growth-oriented limited partnership focused on owning and operating LNG carriers. Our vessels are employed on multi-year time charters, which we define as charters of two years or more, with international energy companies, providing us with the benefits of stable cash flows and high utilization rates. We intend to leverage the reputation, expertise, and relationships of our Sponsor and our Manager, in maintaining cost-efficient operations and providing reliable seaborne transportation services to our charterers. In addition, we intend to make further vessel acquisitions from our Sponsor and from third-parties and in connection with such acquisitions, we may enter into additional financing arrangements, refinance existing arrangements that our Sponsor, or any of its affiliates, has in place for vessels that we may acquire from it, and, subject to favorable market conditions we may raise capital through public or private debt or equity offerings of our securities. There is no guarantee that we will grow the size of our Fleet or the per unit distributions that we intend to pay or that we will be able to make further vessel acquisitions from our Sponsor or third-parties.

Principal Factors Affecting Our Results of Operations

The principal factors which have affected our results and are expected to affect our future results of operations and financial position, include:

Ownership days. The number of vessels in our Fleet is a key factor in determining the level of our revenues. Aggregate expenses also increase as the size of our Fleet increases;

Charter rates. Our revenue is dependent on the charter rates we are able to obtain on our vessels. Charter rates on our vessels are based primarily on demand for and supply of LNG carrier capacity at the time we enter into the charters for our vessels, which is influenced by demand and supply for natural gas and in particular LNG as well as the supply of LNG carriers available for employment. The charter rates we obtain are also dependent on whether we employ our vessels under multi-year charters or charters with initial terms of less than two years. The vessels in our Fleet are currently employed under multiyear time charters with staggered maturities, which will make us less susceptible to cyclical fluctuations in charter rates than vessels operated on charters of less than two years. However, we will be exposed to fluctuations in prevailing charter rates when we seek to re-charter our vessels upon the expiry of their respective current charters and when we seek to charter vessels that we may acquire in the future;

Utilization of our Fleet. Historically, our Fleet has had a limited number of unscheduled off-hire days. However, an increase in annual off-hire days would reduce our utilization. The efficiency with which suitable employment is secured, the ability to minimize off-hire days and the amount of time spent positioning vessels also affects our results of operations. If the utilization pattern of our Fleet changes, our financial results would be affected;

Daily operating expenses. The level of our vessel operating expenses, including crewing costs, insurance and maintenance costs. Our ability to control our vessel operating expenses also affects our financial results. These expenses include commission expenses, crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricating oil costs, tonnage taxes and other miscellaneous expenses. In addition, factors beyond our control, such as developments relating to market premiums for insurance and the value of the U.S. dollar compared to currencies in which certain of our expenses, primarily crew wages, are paid, can cause our vessel operating expenses to increase;

Our ability to exercise the options to purchase the Optional Vessels;

The timely delivery of the vessels we may acquire in the future;

Our ability to maintain solid working relationships with our existing charterers and our ability to increase the number of our charterers through the development of new working relationships;

The performance of our charterer's obligations under their charter agreements;

The effective and efficient technical management of the vessels under our management agreements;

Our ability to obtain acceptable debt financing to fund our capital commitments;

The ability of our Sponsor to fund its capital commitments and take delivery of the Optional Vessels under construction;

Our ability to obtain and maintain regulatory approvals and to satisfy technical, health, safety and compliance standards that meet our charterer's requirements;

Economic, regulatory, political and governmental conditions that affect shipping and the LNG industry, which includes changes in the number of new LNG importing countries and regions, as well as structural LNG market changes impacting LNG supply that may allow greater flexibility and competition of other energy sources with global LNG use;

Our ability to successfully employ our vessels at economically attractive rates, as our charters expire or are otherwise terminated;

Our access to capital required to acquire additional ships and/or to implement our business strategy;

Our level of debt, the related interest expense and the timing of required payments of principal;

The level of our general and administrative expenses, including salaries and costs of consultants;

Our charterer's right for early termination of the charters under certain circumstances;

Performance of our counterparties and our charterer's ability to make charter payments to us; and

The level of any distribution on all classes of our units.

The following table illustrates our ownership days, Available Days, Revenue Earning Days, Time Charter Equivalent (or TCE) rate, daily operating expenses and Fleet Utilization for the periods presented:

	Year Ended December 31,
(expressed in United states dollars except for operational data)	2015			2014			2013
Ownership days		1,836.0			1,385.0			1,095.0
Available Days ⁽¹⁾		1,836.0			1,384.0			1,095.0
Revenue Earning Days ⁽²⁾		1,813.5			1,384.0			1,095.0
Time Charter Equivalent ⁽¹⁾	$	77,559		$	75,733		$	76,706
Daily operating expenses	$	12,660		$	12,139		$	10,876
Fleet Utilization ⁽¹⁾		99	%		100	%		100	%

⁽¹⁾ For these definitions see Important Financial and Operational Terms and Concepts and "Item 3. Key information—A. Selected Financial Data"

⁽²⁾ Revenue Earning Days are the total number of Available Days of our vessels net of unscheduled off-hire days, during a period.

See "Item 3. Key Information—D. Risk Factors" for a discussion of certain risks inherent in our business.

Important Financial and Operational Terms and Concepts

We use a variety of financial and operational terms and concepts when analyzing our performance. These include the following:

Voyage Revenues. Our time charter revenues are driven primarily by the number of vessels in our Fleet, the amount of daily charter hire that our LNG carriers earn under time charters and the number of Revenue Earning Days during which our vessels generate revenues. These factors are, in turn, affected by our decisions relating to vessel acquisitions, the amount of time that our LNG carriers spend dry-docked undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels and the levels of supply and demand in the LNG carrier charter market. Our revenues will also be affected if any of our charterers cancel a time charter or if we agree to renegotiate charter terms during the term of a charter resulting in aggregate revenue reduction. Our time charter arrangements have been contracted in varying rate environments and expire at different times. We recognize revenues from time charters over the term of the charter as the applicable vessel operates under the charter. Under time charters, revenue is not recognized during days a vessel is off-hire. Revenue is recognized from delivery of the vessel to the charterer, until the end of the time charter period. Under time charters, we are responsible for providing the crewing and other services related to the vessel's operations, the cost of which is included in the daily hire rate, except when off-hire.

Off-hire (Including Commercial Waiting Time). When a vessel is "off-hire"—or not available for service—the charterer generally is not required to pay the time charter hire rate and we are responsible for all costs. Prolonged off-hire may lead to vessel substitution or termination of a time charter. Our vessels may be out of service, that is, off-hire, for several reasons: scheduled dry-docking, special survey, vessel upgrade or maintenance or inspection, which we refer to as scheduled off-hire; days spent waiting for a charter, which we refer to as commercial waiting time; and unscheduled repairs, maintenance, operational efficiencies, equipment breakdown, accidents, crewing strikes, certain vessel detentions or similar problems, or our failure to maintain the vessel in compliance with its specifications and contractual standards or to provide the required crew, which we refer to as unscheduled off-hire. We have obtained loss of hire insurance to protect us against loss of income in the event one of our vessels cannot be employed due to damage that is covered under the terms of our hull and machinery insurance. Under our loss of hire policies, our insurer generally will pay us the hire rate agreed in respect of each vessel for each day in excess of 14 days and with a maximum period of 120 days.

Voyage Expenses. Voyage expenses primarily include port and canal charges, bunker (fuel) expenses and agency fees which are paid for by the charterer under our time charter arrangements or by us during periods of off-hire except for commissions, which are always paid for by us. All voyage expenses are expensed as incurred. We may incur voyage related expenses when positioning or repositioning vessels before or after the period of a time charter, during periods of commercial waiting time or while off-hire during a period of dry-docking. Voyage expenses can be higher when vessels trade on charters with initial terms of less than two years due to fuel consumption during idling, cool down requirements, commercial waiting time in between charters and positioning and repositioning costs. From time to time, in accordance with industry practice, we pay commissions ranging up to 1.25% of the total daily charter rate under the charters to unaffiliated ship brokers, depending on the number of brokers involved with arranging the charter. These commissions do not include the fees we pay to our Manager, which are described below under "—Management Fees."

Available Days. Available days are the total number of ownership days our vessels were in our possession during a period, less the total number of scheduled off-hire days during the period associated with major repairs, or dry-dockings.

Average Number of Vessels. Average number of vessels is the number of vessels that constituted our Fleet for the relevant period, as measured by the sum of the number of days each vessel was a part of our Fleet during the period divided by the number of ownership days in the period.

Fleet utilization. We calculate fleet utilization by dividing the number of our Revenue Earning Days by the number of our Available Days during that period. The shipping industry uses fleet utilization to measure a company's efficiency in finding employment for its vessels and minimizing the amount of days that its vessels are off-hire for reasons such as unscheduled repairs but excluding scheduled off-hires for vessel upgrades, drydockings or special or intermediate surveys.

Vessel Operating Expenses. Vessel operating expenses include crew wages and related costs, the cost of insurance, expenses for repairs and maintenance, the cost of spares and consumable stores, lubricant costs, statutory and classification expenses, forwarding and communications expenses and other miscellaneous expenses. Vessel operating expenses also include all peripheral expenses incurred while vessels perform their classification special survey and dry-docking such as spare parts, port dues, tugs, service engineer attendance etc.

Vessel operating expenses are paid by the ship-owner under time charters and are recognized when incurred. We expect that insurance costs, dry-docking and maintenance costs will increase as our vessels age. Factors beyond our control, some of which may affect the shipping industry in general—for instance, developments relating to market premiums for insurance and changes in the market price of lubricants due to increases in oil prices—may also cause vessel operating expenses to increase. In addition, a considerable portion of our vessel operating expenses, are in currencies other than the U.S. dollar, and may increase or decrease as a result of fluctuation of the U.S. dollar against these currencies.

Dry-docking. We must periodically drydock each of our vessels for inspection, repairs and maintenance and any modifications required to comply with industry certification or governmental requirements. In accordance with industry certification requirements, we drydock our vessels every 60 months until the vessel is 15 years old, after which dry-docking takes place every 30 months thereafter as required for the renewal of certifications required by classification societies. Special survey and dry-docking costs (which is mainly comprised of shipyard costs, paints and class renewal expense) are expensed as incurred. The number of dry-dockings undertaken in a given period and the nature of the work performed determine the level of dry-docking expenditures. We expense costs related to routine repairs and maintenance performed during dry-docking or as otherwise incurred. The three vessels in our Initial Fleet completed their initial scheduled special survey and dry-docking repairs in 2012. The next scheduled special survey and drydocking repairs for these vessels and the initial scheduled dry-dock for the remaining vessels in our Fleet are due in 2017 and 2018.

Depreciation. We depreciate our LNG carriers on a straight-line basis over their remaining useful economic lives. Depreciation is based on the cost of the vessel less its estimated salvage value. We estimate the useful life of the LNG carriers in our Fleet to be 35 years from their initial delivery from the shipyard, consistent with LNG industry practice. Vessel residual value is estimated based on historical market trends and represents Management's best estimate of the current selling price assuming the vessels are already of age and condition expected at the end of its useful life. The assumptions made reflect our experience, market conditions and the current practice in the LNG industry; however they required more discretion since there is a lack of historical references in scrap prices of similar types of vessels.

Interest and Finance Costs. We incur interest expense on outstanding indebtedness under our existing debt agreements which we include in interest and finance costs. Interest expense depends on our overall level of borrowings and may significantly increase when we acquire or refinance ships. Interest expense may also change with prevailing interest rates, although interest rate swaps or other derivative instruments may reduce the effect of these changes. We also incur financing and legal costs in connection with establishing debt agreements, which are deferred and amortized to interest and finance costs using the effective interest method. We will incur additional interest expense in the future on our outstanding borrowings and under future borrowings. For a description of our existing credit facilities, please see "—B. Liquidity and Capital Resources—Our Borrowing Activities."

Vessel Lives and Impairment. Vessels are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long lived asset is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals as considered necessary. Since our inception, there were no events or changes in circumstances indicating that the carrying amount of the vessels may not be recoverable and, accordingly, no impairment loss was recorded in any of the years ended December 31, 2015 and 2014.

Insurance

Hull and Machinery Insurance. We have obtained hull and machinery insurance on all our vessels to insure against marine and war risks, which include the risks of damage to our vessels, salvage and towing costs, and also insures against actual or constructive total loss of any of our vessels. However, our insurance policies contain deductible amounts for which we will be responsible. We have also arranged additional total loss coverage for each vessel. This coverage, which is called disbursements increased value coverage, provides us additional coverage in the event of the total loss or the constructive total loss of a vessel. The agreed deductible on each vessel averages $250,000.

Loss of Hire Insurance. We have obtained loss of hire insurance to protect us against loss of income in the event one of our vessels cannot be employed due to damage that is covered under the terms of our hull and machinery insurance. Under our loss of hire policies, our insurer will pay us the hire rate agreed in respect of each vessel for each day, in excess of a certain number of deductible days, for the time that the vessel is out of service as a result of damage, for a maximum of 120 days. The number of deductible days for the vessels in our Fleet is 14 days per vessel.

Protection and Indemnity Insurance. Protection and indemnity insurance, which covers our third-party legal liabilities in connection with our shipping activities, is provided by a mutual protection and indemnity association, or P&I club. This includes third-party liability and other expenses related to the injury or death of crew members, passengers and other third-party persons, loss or damage to cargo, claims arising from collisions with other vessels or from contact with jetties or wharves and other damage to other third-party property, including pollution arising from oil or other substances, and other related costs, including wreck removal. Our current protection and indemnity insurance coverage is unlimited, except for pollution, which is limited to $1 billion per vessel per incident.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. We are an "emerging growth company," as defined in the JOBS Act. We have elected to take advantage of the reduced reporting obligations, including the extended transition period for complying with new or revised accounting standards under Section 102 of the JOBS Act, and as such, the information that we provide to our unitholders may be different from information provided by other public companies and our financial statements may not be comparable to companies that comply with public company effective dates. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.

Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. For a description of all our significant accounting policies, see Note 2 to our consolidated financial statements included under "Item 18. Financial Statements" of this Annual Report.

Voyage Revenues

We recognize revenues from time charters over the term of the charter as the applicable vessel operates under the charter. Under time charters, revenue is not recognized during days a vessel is off-hire. Revenue is recognized from delivery of the vessel to the charterer, until the end of the time charter period. Under time charters, we are responsible for providing the crewing and other services related to vessel's operations, the cost of which is included in the daily hire rate, except when off-hire. Revenues are affected by charter rates and the number of days a vessel operates.

Our time charter revenues are driven primarily by the number of vessels in our Fleet, the amount of daily charter hire that our vessels earn under time charters and the number of revenue earning days during which our vessels generate revenues. These factors are, in turn, affected by our decisions relating to vessel acquisitions, the amount of time that we spend positioning our vessels, the amount of time that our vessels spend in drydock undergoing repairs, maintenance and upgrade work, the age, condition and specifications of our vessels and the levels of supply and demand in the LNG carrier charter market.

Our LNG carriers are employed through multi-year time charter contracts, which for accounting purposes are considered as operating leases and are thus recognized on a straight line basis over the term of such charter agreements, as service is performed. Revenues under our time charters are recognized when services are performed, revenue is earned and the collection of the revenue is reasonably assured.

Advance payments under time charter contracts are classified as liabilities until such time as the criteria for recognizing the revenue are met. Our revenues will be affected by the acquisition of any additional vessels in the future subject to time charters. Our revenues will also be affected if any of our charterers cancel a time charter or if we agree to renegotiate charter terms during the term of a charter resulting in aggregate revenue reduction or increase. Our time charter arrangements have been contracted in varying rate environments and expire at different times. Rates payable in the market for LNG carriers have been uncertain and volatile as has the supply and demand for LNG carriers.

Vessels Lives and Impairment

The carrying value of a vessel represents its historical acquisition or construction cost, including capitalized interest, supervision, technical and delivery cost, net of accumulated depreciation and impairment loss, if any. Expenditures for subsequent conversions and major improvements are capitalized provided that such costs increase the earnings capacity or improve the efficiency or safety of the vessels.

We depreciate the original cost, less an estimated residual value, of our LNG carriers on a straight-line basis over each vessel's estimated useful life. The carrying values of our vessels may not represent their market value at any point in time because the market prices tend to fluctuate with changes in hire rates and the cost of newbuilds. Both hire rates and newbuild costs tend to be cyclical in nature.

We review vessels for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable, which occurs when the asset's carrying value is greater than the future undiscounted cash flows the asset is expected to generate over its remaining useful life. We determine undiscounted projected net operating cash flows for each vessel and compare it to the vessel's carrying value. In developing estimates of future cash flows, we must make assumptions about future charter rates, vessel operating expenses, fleet utilization, and the estimated remaining useful life of the vessels. These assumptions are based on historical trends as well as future expectations. The projected net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated charter rate for the unfixed days. If the estimated future undiscounted cash flows of an asset exceed the asset's carrying value, no impairment is recognized even though the fair value of the asset may be lower than its carrying value. If the estimated future undiscounted cash flows of an asset is less than the asset's carrying value and the fair value of the asset is less than its carrying value, the asset is written down to its fair value. Historically, there was no indication of impairment for any of the six vessels in our Fleet.

We determine the fair value of our vessels based on our estimates and assumptions and by making use of available market data and taking into consideration third-party valuations. As of December 31, 2015 and 2014, the aggregate charter-free market value of our vessels substantially exceeded their aggregate carrying value as of the same date. We employ our LNG carriers on fixed-rate charters with major companies. These charters typically have original terms of two or more years in length. Consequently, while the market value of a vessel may decline below its carrying value, the carrying value of a vessel may still be recoverable based on the future undiscounted cash flows the vessel is expected to obtain from servicing its existing and future charters.

Depreciation on our LNG carriers is calculated using an estimated useful life of 35 years, commencing at the date the vessel was originally delivered from the shipyard. However, the actual life of a vessel may be different than the estimated useful life, with a shorter actual useful life resulting in an increase in the depreciation and potentially resulting in an impairment loss. The estimated useful life of our LNG carriers takes into account design life, commercial considerations and regulatory restrictions. Our estimates of future cash flows involve assumptions about future hire rates, vessel utilization, operating expenses, dry-docking expenditures, vessel residual values and the remaining estimated life of our vessels. Our estimated hire rates are based on rates under existing vessel charters and an estimated charter rate for the unfixed periods. Our estimates of vessel utilization, including estimated off-hire time are based on historical experience of trading our vessels and our projections of future chartering prospects. Our estimates of operating expenses and dry-docking expenditures are based on our historical operating and dry-docking costs and our expectations of future inflation and operating requirements. Vessel residual values are based on our estimation over our vessels sale price at the end of their useful life, being a product of a vessel's lightweight tonnage and an estimated scrap rate and the estimated resale price of certain equipment and material. The remaining estimated lives of our vessels used in our estimates of future cash flows are consistent with those used in the calculation of depreciation.

Certain assumptions relating to our estimates of future cash flows are more predictable by their nature in our experience, including estimated revenue under existing charter terms, on-going operating costs and remaining vessel life. Certain assumptions relating to our estimates of future cash flows require more discretion and are inherently less predictable, such as future hire rates beyond the firm period of existing charters and vessel residual values, due to factors such as the volatility in vessel hire rates and the lack of historical references in scrap prices of similar type of vessels. We believe that the assumptions used to estimate future cash flows of our vessels are reasonable at the time they are made. We can make no assurances, however, as to whether our estimates of future cash flows, particularly future vessel hire rates or vessel values, will be accurate. If we conclude that a vessel is impaired, we recognize a loss in an amount equal to the excess of the carrying value of the asset over its fair value at the date of impairment. The fair value at the date of the impairment becomes the new cost basis and will result in a lower depreciation expense than for periods before the vessel impairment.

The table set forth below indicates the carrying value of each of our vessels as of December 31, 2015 and 2014.

					Carrying Value (in millions of US dollars)
Vessel	Capacity (cbm)		Year Built/ Purchased		December 31, 2015		December 31, 2014
Clean Energy		149,700		2007	$	138.6	$	143.1
Ob River		149,700		2007		138.5		142.9
Amur River		149,700		2008		149.0		153.6
Arctic Aurora		155,000		2014		201.5		206.7
Yenisei River		155,000		2014		188.7		193.6
Lena River		155,000		2015		219.9		-
TOTAL		914,100			$	1,036.2	$	839.9

As of December 31, 2015 and 2014, the Partnership has not identified any indicators of potential impairment to the carrying value of its long-lived assets. As such, the Partnership was not required and did not perform an impairment test. Even if such indicators were present, the market value of each vessel individually and in the aggregate substantially exceeds the respective carrying value of each vessel as of December 31, 2015 and 2014 and no impairment loss would be recorded to the Partnership's consolidated financial statements in any of the years ended December 31, 2015 and 2014. We refer you to the risk factor entitled "Vessel values may fluctuate substantially and, if these values are lower at a time when we are attempting to dispose of vessels, we may incur a loss" and the discussion herein under the heading "Item 3. Key Information—D. Risk Factors —Risks relating to our Partnership."

Our estimates of basic market value assume that our vessels are all in good and seaworthy condition without need for repair and if inspected would be certified in class without notations of any kind. Our estimates are based on information available from various industry sources, including:

reports by industry analysts and data providers that focus on our industry and related dynamics affecting vessel values;

news and industry reports of similar vessel sales;

news and industry reports of sales of vessels that are not similar to our vessels where we have made certain adjustments in an attempt to derive information that can be used as part of our estimates;

approximate market values for our vessels or similar vessels that we have received from shipbrokers, whether solicited or unsolicited, or that shipbrokers have generally disseminated;

vessel sale prices and values of which we are aware through both formal and informal communications with ship-owners, shipbrokers, industry analysts and various other shipping industry participants and observers.

As we obtain information from various industry and other sources, our estimates of basic market value are inherently uncertain. In addition, vessel values are highly volatile; as such, our estimates may not be indicative of the current or future basic market value of our vessels or prices that we could achieve if we were to sell them.

Depreciation

We depreciate our vessels on a straight-line basis over their estimated useful lives, after considering their estimated residual values, based on the assumed value of the scrap premium steel available for recycling after demolition. Useful economic live of each vessel in our Fleet is estimated to be 35 years from their initial delivery from the shipyard. Up to September 30, 2014, we used an average scrap rate of $717 per lightweight ton (or 12% of the initial vessel cost of each vessel), which, effective October 1, 2014, was adjusted to $685 per lightweight ton per LNG carrier. This assumption is reflective of current and historical market trends and current practice in the LNG industry. The decrease in the estimated scrap rate will increase the total depreciation expense we will record for the remainder of the useful life of each vessel. The effect of this change in accounting estimate, which did not require retrospective adoption as per ASC 250 "Accounting Changes and Error Corrections", had a $152,000 and $38,000 impact on our net income for each of the years ended December 31, 2015 and 2014 and an immaterial impact on our earnings per common unit, basic and diluted for the years then ended. A decrease in the useful life of a vessel or in its residual value would have the effect of increasing the annual depreciation charge. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations become effective.

Recent Accounting Pronouncements

For a discussion on Recent Accounting Pronouncements, see Note 2 to our consolidated financial statements included in this Annual Report.

Results of Operations

Year ended December 31, 2015 compared to the year ended December 31, 2014

Voyage Revenues. Voyage revenues increased by $38.1 million, or 35.6%, to $145.2 million in the year ended December 31, 2015, compared to $107.1 million for the year ended December 31, 2014. This growth in revenues is primarily associated with the increase in the average number of vessels comprising our Fleet, from 3.8 vessels in the year ended December 31, 2014, to 5.0 in the year ended December 31, 2015, followed by an increase in Revenue Earning Days from 1,384.0 to 1,813.5, respectively, in the periods discussed, both of which came as a result of our Fleet expansion.

Voyage Expenses—including related party. In the year ended December 31, 2015, voyage expenses increased to $2.8 million, compared to $2.3 million for the year ended December 31, 2014, representing an increase of $0.5 million or 23.4%. Voyage expenses in each of the years ended December 31, 2015 and 2014, primarily relate to voyage commissions charged both by affiliated and unaffiliated parties. The increase in voyage expenses is consistent with our increased operating revenues, as commissions are incurred as revenues are earned.

Vessels' Operating Expenses. Vessels' operating expenses increased by 38.3%, or $6.4 million, to $23.2 million during the year ended December 31, 2015, from $16.8 million during the year ended December 31, 2014. The increase in operating expenses is primarily attributable to the $5.6 million incremental operating costs associated with the Arctic Aurora and the Yenisei River contribution to Fleet operations for a full year in 2015 versus a fractioned period in 2014, and at a lesser extent associated with the operating costs incurred as a result of the Lena River acquisition late in 2015 and other increases in vessel operational costs.

General and administrative expenses—including related party. General and administrative expenses decreased by 7.5%, or $0.1 million, to $1.8 million during the year ended December 31, 2015, from $1.9 million during the year ended December 31, 2014. General and administrative expenses are mainly comprised of legal, consultancy, audit, executive services, administrative services and Board of Directors fees as well as other miscellaneous expenditures, essential to conduct our business.

Management Fees. We incurred an aggregate of $4.9 million, or $2,652 per LNG carrier per day in management fees for the year ended December 31, 2015, compared to an aggregate of $3.6 million, or $2,575 per LNG carrier per day in management fees for the year ended December 31, 2014. The 36.6%, or $1.3 million, increase in management fees is attributable by $1.2 million to the increase in Fleet calendar days as a result of the increase in the average number of vessels that comprised our Fleet during 2015, compared to 2014, and by $0.1 million to the annual 3% increase in daily management fees pursuant to our Management Agreements.

Depreciation. Depreciation expense increased by 36.8%, or $6.6 million, to $24.4 million in the year ended December 31, 2015, compared to $17.8 million in the corresponding period in 2014. This increase is primarily attributable to the ownership and operation for a full year of the Arctic Aurora and the Yenisei River that we acquired back in 2014 from our Sponsor and the acquisition of the Lena River late in 2015, that increased our Fleet ownership days from 1,385 in 2014 to 1,836 in 2015, and at a lesser extent to the decrease in the estimated scrap rate, effective the fourth quarter of 2014, discussed elsewhere in this Annual Report, which increased period's depreciation expense by $152,000.

Interest and Finance Costs. Interest and finance costs increased by 92.6%, to $28.0 million, during the year ended December 31, 2015, from $14.5 million during the year ended December 31, 2014. This increase is predominantly driven from the increase in debt expense that increased by 94.4%, or $12.6 million, to $25.9 million during the year ended December 31, 2015, from $13.3 million during the year ended December 31, 2014. Such increase is directly associated with the higher levels of weighted average interest accruing in 2015 on our debt agreements (indicatively 4.5% in 2015 compared to 3.8% in 2014) and the increase in weighted average outstanding indebtedness in the year ended December 31, 2015, as compared to the corresponding period of 2014, which was the result of the debt agreements we entered into in order to finance the three vessels acquisitions from our Sponsor in 2014 and 2015.

Year ended December 31, 2014 compared to the year ended December 31, 2013

Voyage Revenues. Voyage revenues increased by $21.4 million, or 25.0%, to $107.1 million in the year ended December 31, 2014, compared to $85.7 million for the year ended December 31, 2013. This growth in revenues is the direct result of the increased number of vessels in our Fleet following the acquisitions from our Sponsor in 2014 of the Arctic Aurora and the Yenisei River , which increased charter revenues earned by approximately $23.2 million . This increase was offset by $1.4 million non-cash charges related to accelerated time charter amortization on one of our charters and the decrease in other voyage income by $0.4 million.

Voyage Expenses—including related party. In the year ended December 31, 2014, voyage expenses increased to $2.3 million, compared to $1.7 million for the year ended December 31, 2013, representing an increase of $0.6 million or 34.8%. This increase is almost exclusively attributed to the increase in commissions charged both by affiliated and unaffiliated parties during the year ended December 31, 2014, consistent with our increased charter revenues, as commissions are incurred as revenues are earned.

Vessels' Operating Expenses. Vessels' operating expenses increased by 41.2%, or $4.9 million, to $16.8 million during the year ended December 31, 2014 from $11.9 million during the year ended December 31, 2013. The increase in operating expenses is primarily attributable to the $3.7 million incremental operating costs associated with the Arctic Aurora and the Yenisei River acquisitions in 2014, increase in crew expenses by approximately $0.3 million, increase in stores and spares by approximately $0.6 million and other increases in vessel operational costs.

General and administrative expenses—including related party. General and administrative expenses increased by 404.1%, or $1.6 million, to $2.0 million during the year ended December 31, 2014, from $0.4 million during the year ended December 31, 2013. This increase reflects our operation for a full year as a public company, since our IPO in November 2013. General and administrative expenses are mainly comprised of legal, consultancy, audit, executive services, administrative services and Board of Directors fees as well as other miscellaneous expenditures, essential to conduct our business.

Management Fees. We incurred an aggregate of $3.6 million, or $2,575 per LNG carrier per day in management fees for the year ended December 31, 2014, compared to an aggregate of $2.7 million, or $2,500 per vessel per day in management fees for the year ended December 31, 2013. The 30.3%, $0.8 million, increase in management fees is attributable by $0.7 million to the increase in the average number of vessels that operated during 2014, compared to 2013, following our Fleet expansion, and by $0.1 million to the annual 3% increase in daily management fees pursuant to our Management Agreements.

Depreciation. Depreciation expense increased by 31.2%, or $4.2 million, to $17.8 million in the year ended December 31, 2014, compared to $13.6 million in the corresponding period in 2013. This increase is primarily attributable to our Fleet expansion in 2014 that increased Fleet ownership days from 1,095 in 2013 to 1,385 in 2014 and at a lesser extent to the decrease in the estimated scrap rate, effective the fourth quarter of 2014, discussed elsewhere in this Annual Report, which increased period's depreciation expense by $38,000.

Interest and Finance Costs. Interest and finance costs increased by 49.2%, to $14.5 million, during the year ended December 31, 2014, from $9.7 million during the year ended December 31, 2013. Interest expense increased by 61.7% to $13.3 million during the year ended December 31, 2014, from $8.2 million during the year ended December 31, 2013. Such increase in debt interest expense is primarily driven by the higher levels of weighted average interest accruing in 2014 on our debt agreements compared to the previous year (indicatively 3.8% in 2014 compared to 2.4% in 2013). Such increase was counterbalanced by the $0.3 million decrease in the amortization and write-off of financing fees, attributable to the full repayment of all loans outstanding at the IPO closing date.

Interest Income. Interest income of approximately $0.2 million for the year ended December 31, 2014 primarily arose from our restricted and other cash deposits associated with our debt agreements.

B. LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Cash Needs

Our principal sources of funds are operating cash flows, borrowings under our 2019 Notes, $200 Million Term Loan, our $340 Million Senior Credit Facility and our $30 Million Revolving Credit Facility and equity contributions by our unitholders. Our liquidity requirements relate to servicing our debt and funding capital expenditures and working capital. We frequently monitor our capital needs by projecting our upcoming income, expenses and debt obligations, and seek to maintain adequate cash reserves to compensate for any budget overruns. Our short-term liquidity requirements relate to funding working capital, including vessel operating expenses and payments under our management agreements. Our long-term liquidity requirements relate to funding capital expenditures, including the acquisition of additional vessels and the repayment of our long-term debt.

In addition to paying distributions to our unitholders, our other liquidity requirements relate to servicing our debt, funding potential investments (including the equity portion of investments in the Optional Vessels or other third-party acquisitions), funding working capital and maintaining cash reserves against fluctuations in operating cash flows. Because we distribute all of our available cash, we expect that we will rely upon external financing sources, including bank borrowings and the issuance of debt and equity securities, to fund acquisitions and other expansion capital expenditures. Cash and cash equivalents are held in U.S. dollars. We have not made use of derivative instruments since July 2012, when all of our swaps matured.

We may exercise our options under the Omnibus Agreement to purchase the Optional Vessels during specified periods. To the extent we exercise any of these options, we will incur additional payment obligations. As of the date of this Annual Report, we have not secured any other financing in connection with the potential acquisition of the Optional Vessels since it is uncertain if and when such purchase options will be exercised.

Working capital is equal to current assets minus current liabilities, including the current portion of long-term debt. Our working capital deficit was $25.5 million as of December 31, 2015, compared to a working capital deficit of $18.9 million as of December 31, 2014. The deficit increase was mainly due to the financing obligations imposed under our new $200 Million Term Loan and other working capital variations between compared periods.

We believe that our current sources of funds and those that we anticipate to internally generate for a period of at least the next twelve months, will be sufficient to fund the operations of our Fleet, including the normal working capital requirements, serve our principal and interest debt scheduled repayments and make at least the required distribution on our Series A Preferred Units and minimum quarterly distribution on our common and subordinated units in accordance with our Partnership Agreement.

Cash

As of December 31, 2015, we had cash of $49.3 million (including minimum cash liquidity requirements imposed by our lenders) which increased by $13.3 million, or 37.1%, compared to $35.9 million, as of December 31, 2014, attributable to the excess of the $20.5 million increase in cash generated from operating activities on a year to year basis following the expansion of our Fleet, which was primarily used to serve our financing activities, including cash distributions towards our unitholders.

Equity Offerings

On November 18, 2013, we completed our IPO of 8,250,000 common units at $18.00 per unit and raised gross proceeds of approximately $148.5 million. The net proceeds of this offering, including the underwriting discount and offering costs of $2.7 million, were approximately $136.9 million.

On June 18, 2014, we completed our underwritten public offering of 4,800,000 common units at $22.79 common per unit, and on the same date, the underwriters in the offering exercised their option to purchase an additional 720,000 common units at the same public offering price. The proceeds of the offering were used to finance a portion of the purchase price of the Arctic Aurora .

On July 20, 2015, we completed our underwritten public offering of the Series A Preferred Units at $25.00 per unit. The proceeds of this offering were used to partially finance the Lena River acquisition .

Our Borrowing Activities

As of December 31, 2015, we had $688.3 million of indebtedness outstanding under our debt agreements and had access to $30.0 million of available borrowing capacity under our $30 million Sponsor facility. As of December 31, 2015, we were in compliance with all the financial and liquidity covenants contained in our debt agreements.

$30 Million Revolving Credit Facility

On November 18, 2013, concurrently with the consummation of our IPO, we entered into an interest free $30.0 million revolving credit facility with our Sponsor, with an original term of five years from the closing date, to be used for general partnership purposes. As of December 31, 2013, $5.5 million was outstanding under the facility, which was repaid early in January 2014. No amounts have been drawn under the respective facility since then.

$340 Million Senior Secured Revolving Credit Facility

On June 19, 2014, we entered into an agreement with an affiliate of Credit Suisse Securities (USA) LLC, or Credit Suisse, for a new $340 million senior secured credit facility, or our $340 Million Senior Credit Facility, to refinance $214.1 million then outstanding under our 2013 Senior Credit Facility and to fund a portion of the purchase price for the Arctic Aurora and the related charter. This facility is secured by a first priority or preferred cross-collateralized mortgage on each of the Amur River, the Ob River , the Clean Energy and the Arctic Aurora , a specific assignment of the existing charters and a first assignment of earnings and insurances in relation to the vessels. Under this facility, our subsidiaries that directly own the vessels that serve as security under this facility serve as the borrowers and we and Dynagas Equity Holding Ltd. and Dynagas Operating LP, our wholly-owned subsidiaries, serve as guarantors. The facility bears interest at LIBOR plus a margin and is payable in consecutive equal quarterly payments of $5.0 million that commenced on June 30, 2014 and a balloon payment at maturity in March 2021.

During the term of this facility, Mr. George Prokopiou, our Chairman, and his family is required to own or control, directly or indirectly, at least 30% of our share capital entitled to vote and 100% of the ownership interests in our General Partner.

$200 Million Term Loan Facility

On December 17, 2015, two of our wholly-owned vessel owning subsidiaries, Navajo Marine Limited, or Navajo Marine, and Solana Holding Ltd., or Solana Holding, entered, on a joint and several basis, into a facility agreement with a group of lenders and ABN Amro NV, as agent, for a senior secured term loan facility of up to $200 million, or our $200 Million Term Loan Facility. A substantial part of the proceeds from this facility were used to partially finance the Lena River acquisition, while the unused portion of the proceeds, will be used for working capital purposes. The facility has a five year maturity profile and is split in two vessel tranches of $100.0 million, one for each vessel owned by Navajo Marine and Solana Holding, respectively. The $200 Million Term Loan Facility bears interest at LIBOR plus a margin. Each tranche is repayable in 20 consecutive quarterly installments of approximately $1.56 million each and a balloon payment of $68.8 million at maturity, such balloon payment and regular installments to be reduced pro-rata for a tranche of less than $100 million. The $200 Million Term Loan Facility is guaranteed by us and is secured by a first priority cross-collateralized mortgage on each of the Yenisei River and the Lena River , a first priority specific assignment of the existing time charters of the vessels, a first priority assignment of all insurances and earnings of the vessels and an assignment of any subsequent time charter of a duration of more than twelve months.

The $200 Million Term Loan Facility contains customary general undertakings that require us to limit shareholder loans with respect to the borrowers up to a maximum amount, to restrict additional indebtedness with respect to the borrowers, to procure that the Sponsor maintains, directly or indirectly, at least 30% of the outstanding voting interests in us. Like the terms of our $340 Million Senior Secured Credit Facility and our 2019 Notes, the $200 Million Term Loan Facility restricts us from paying any distributions if an event of default occurs.

Senior Unsecured Notes due 2019

On September 15, 2014, we issued $250.0 million aggregate principal amount of our 6.25% Senior Unsecured Notes due 2019, or our 2019 Notes. The 2019 Notes bear interest at the rate of 6.25% per year, payable quarterly in arrears on the 30th day of January, April, July and October of each year, commencing on October 30, 2014. The 2019 Notes will be our unsubordinated unsecured obligations. The 2019 Notes will rank senior to any of our future subordinated debt and rank equally in right of payment with all of our existing and future unsecured and unsubordinated debt. The 2019 Notes will effectively rank junior to our existing and future secured debt, to the extent of the value of the assets securing such debt as well as to existing and future debt and other liabilities of our subsidiaries. The 2019 Notes were issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. The 2019 Notes are listed on the New York Stock Exchange under the symbol "DLNG 19." The net proceeds of the 2019 Notes were used to finance the majority of the purchase price of the Yenisei River .

If a Change of Control (as defined in the Indenture for the 2019 Notes) occurs, holders of the 2019 Notes have the right, at their option, to require us to purchase any or all of such holders' 2019 Notes at a purchase price of 101% of the principal amount of the 2019 Notes to be purchased, plus accrued and unpaid interest.

In addition, if an event of default or an event or circumstance which, with the giving of any notice or the lapse of time, would constitute an event of default under the 2019 Notes has occurred and is continuing, or we are not in compliance with certain financial covenants under the indenture, then none of the Partnership or any subsidiary will be permitted to declare or pay any dividends or return any capital to its equity holders (other than the Partnership or a wholly-owned subsidiary of the Partnership) or authorize or make any other distribution, payment or delivery of property or cash to its equity holders (other than the Partnership or a wholly-owned subsidiary of the Partnership), or redeem, retire, purchase or otherwise acquire, directly or indirectly, for value, any interest of any class or series of its equity interests (or acquire any rights, options or warrants relating thereto but not including convertible debt) now or hereafter outstanding and held by persons other than the Partnership or any wholly-owned subsidiary, or repay any subordinated loans to equity holders (other than the Partnership or a wholly-owned subsidiary of the Partnership) or set aside any funds for any of the foregoing purposes.

Credit Facilities Repaid in Full

2013 Senior Secured Revolving Credit Facility

On November 14, 2013, in connection with the closing of the IPO, we entered into an agreement with an affiliate of Credit Suisse Securities for a senior secured revolving credit facility of up to $262.1 million, or our 2013 Senior Credit Facility, of which $214.1 million was drawn upon closing of the IPO, which, together with the net proceeds of the IPO, was used to repay all of our existing outstanding indebtedness at that time. We refer to this credit facility as our 2013 Senior Credit Facility. This facility was secured by a first priority or preferred cross-collateralized mortgage on each of the Clean Force (currently renamed the Amur River) , Clean Energy and Ob River , a first priority assignment of all charters, earnings, insurances and requisition compensation and corporate guarantees. As of December 31, 2013, there was $214.1 million outstanding under this facility and on June 23, 2014 it was repaid in full with a portion of the proceeds under the $340 Million Senior Credit Facility.

Debt Covenants

Our debt arrangements contain customary financial and other covenants that require us to maintain:

a maximum ratio of total consolidated liabilities of the Partnership's consolidated market value adjusted total assets;

a minimum interest coverage ratio;

certain levels of consolidated minimum liquidity;

a maximum ratio expressed as a percentage of total borrowings to total book assets;

a certain minimum net worth level;

a minimum asset coverage ratio, being the ratio of the aggregate of the vessels' market values and the net realizable value of any additional security over the outstanding amount of the facility; and

hull and machinery and war risks insurance equal to the greater of (i) 120% of the outstanding borrowings under this facility and (ii) the market value of the collateral vessels.

The $200 Million Term Loan Facility imposes certain additional cash related restrictions that require the borrowing entities to:

maintain certain minimum liquidity levels on a per vessel basis; and

to maintain and transfer funds to a cash collateral reserve account for each vessel to the extent that each vessel remains under its current time charterparty or until the expiry thereof and one of the borrowing entities does not enter into a replacement or subsequent time charter contract with a minimum firm term until the credit facility maturity date at a minimum specified daily time charter rate per day. To the extent a borrowing entity enters into such a charterparty, the funds will be released from each vessel's reserve account.

Estimated Maintenance and Replacement Capital Expenditures

Our Partnership Agreement requires our Board of Directors to deduct from operating surplus each quarter estimated maintenance and replacement capital expenditures, as opposed to actual maintenance and replacement capital expenditures in order to reduce disparities in operating surplus caused by fluctuating maintenance and replacement capital expenditures, such as dry-docking and vessel replacement. Because of the substantial capital expenditures we are required to make to maintain our Fleet, currently, our annual estimated maintenance and replacement capital expenditures for purposes of estimating maintenance and replacement capital expenditures will be $16.9 million per year, which is composed of $4.1 million for dry-docking and $12.8 million, including financing costs, for replacing our vessels at the end of their useful lives. The $12.8 million for future vessel replacement is based on assumptions and estimates regarding the remaining useful lives of our vessels, a long term net investment rate equivalent to our current expected long-term borrowing costs, vessel replacement values based on current market conditions and residual value of the vessels at the end of their useful lives based on current steel prices. The actual cost of replacing the vessels in our Fleet will depend on a number of factors, including prevailing market conditions, hire rates and the availability and cost of financing at the time of replacement. Our Board of Directors, with the approval of the conflicts committee, may determine that one or more of our assumptions should be revised, which could cause our Board of Directors to increase the amount of estimated maintenance and replacement capital expenditures. We may elect to finance some or all of our maintenance and replacement capital expenditures through the issuance of additional common units which could be dilutive to existing unitholders.

Cash Flows

The following table summarizes our net cash flows from operating, investing and financing activities and our cash and cash equivalents for the years ended December 31, 2015 and 2014:

	Year Ended December 31,
	2015			2014
Net cash provided by operating activities	$	96,944		$	76,443
Net cash used in investing activities		(205,045	)		(404,530	)
Net cash provided by financing activities		120,445			334,359
Cash and cash equivalents at beginning of year		11,949			5,677
Cash and cash equivalents at end of year	$	24,293		$	11,949

Net Cash Provided by Operating Activities.

Net cash flows provided by operating activities increased by $20.5 million, or 26.8%, to $96.9 million for the year ended December 31, 2015, compared to $76.4 million for the year ended December 31, 2014. The increase is primarily attributable to net operating cash flows that the Arctic Aurora , the Yenisei River and, to a lesser extent, the Lena River contributed to the Partnership during the year ended December 31, 2015 and our increased charter revenue pre-collections as of December 31, 2015 that increased net cash from operating activities by $5.7 million.

Net cash flows provided by operating activities increased by $32.2 million, or 72.9%, to $76.4 million for the year ended December 31, 2014, compared to $44.2 million for the year ended December 31, 2013. The increase is primarily attributable to (i) the $21.4 million period increase in charter revenues due to the enlargement of our Fleet following the Arctic Aurora and the Yenisei River acquisitions during the second and third quarters of 2014 , partially counterbalanced by higher operational and interest costs associated with these acquisitions, (ii) higher charter revenues earned on a cash basis on one of our Initial Fleet vessels during the year ended December 31, 2014, (iii) the significant decrease by approximately $5.7 million in cash settlements performed during the year ended December 31, 2014 towards our Manager compared to the prior year, (iv) our increased charter revenue pre-collections as of December 31, 2014 following our Fleet expansion compared to the reduced pre-collections of the corresponding period of 2013 that contributed to an $4.5 million in net cash from operating activities, and (v) other non-cash and operating assets and liabilities variations between compared periods.

Net Cash Used in Investing Activities.

Net cash used in investing activities of $205,045 as of December 31, 2015, relates to the cash aspect of the Lena River acquisition transaction, materialized on December 17, 2015.

Net cash used in investing activities of $404,530 as of December 31,2014, is directly associated with the acquisitions from our Sponsor of the Arctic Aurora and the Yenisei River, materialized in the second and third quarters of 2014.

Net Cash Used in Financing Activities.

Net cash provided by financing activities of $120.4 million for the year ended December 31, 2015 consisted of the $133.3 million drawn down under our $200 Million Term Loan Facility and the $72.4 million net proceeds in connection with the issuance of our Series A Preferred Units, that were both used to finance the Lena River acquisition, counterbalanced by (i) increase in restricted cash by $1.0 million as per the minimum liquidity requirements of our $200 Million Term Loan Facility, (ii) distributions paid to all classes of unitholders amounting to $62.2 million, (iii) regular quarterly instalments on our $340 Million Credit Facility of $20.0 million, and (iv) payment of deferred finance costs amounting to $2.1 million in connection with the closing of the abovementioned facility.

Net cash provided by financing activities of $334.4 million for the year ended December 31, 2014, consisted mainly of the $120.5 million net proceeds from our June 2014 follow-on offering of common units and accompanying $0.1 million proceeds from the issuance of a number of general partner units to allow the Sponsor to maintain its general partner interests in us, the $590.0 million proceeds from the $340 Million Senior Credit Facility and the issuance of our 2019 Notes, offset by the $2.0 million increase in restricted cash as per the minimum liquidity requirements of our $340 Million Senior Credit Facility, the payment of cash distributions to our unitholders during the year of $43.0 million, the scheduled and full repayments during the year on our existing and previous debt agreements by approximately $229.1 million, the $88.1 million preferential deemed dividend in connection with the Optional Vessel acquisitions discussed elsewhere in this Annual Report, the full repayment of the $5.5 million outstanding under our Sponsor facility, the $1.9 million payments we incurred in connection with IPO and other filing costs and, finally, the $6.6 million cash expenditures we incurred concurrently with our entering into our the $340 Million Senior Credit Facility and 2019 Notes.

Distributions

Distributions on Common and Subordinated Units

On February 12, 2015, we paid a cash distribution for the fourth quarter of 2014 of $0.4225 per unit to all common and subordinated unitholders of record as of February 5, 2015. On May 12, 2015, we paid a cash distribution for the first quarter of 2015 of $0.4225 per unit to all common and subordinated unitholders of record as of May 5, 2015. On August 13, 2015, we paid a cash distribution for the second quarter of 2015 of $0.4225 per unit to all common and subordinated unitholders of record as of August 6, 2015. On November 12, 2015, we paid a cash distribution for the third quarter of 2015 of $0.4225 per unit to all common and subordinated unitholders of record as of November 5, 2015.On February 12, 2016, we paid a cash distribution for the fourth quarter of 2015 of $0.4225 per unit to all common and subordinated unitholders of record as of February 5, 2016.

Distributions on Series A Preferred Units

On November 12, 2015, we paid a cash distribution for the period from July 20, 2015, to November 12, 2015 of $0.70 per unit to all Series A Preferred unitholders of record as of November 5, 2015. On February 12, 2016, we paid a cash distribution for the period from November 12, 2015 to February 12, 2016, of $0.5625 per unit to all Series A Preferred unitholders of record as of February 5, 2016.

General Partner Distributions

During the year ended December 31, 2015, we paid our General Partner and holder of the incentive distribution rights in the Partnership, an amount of $130,000 in aggregate.

The declaration and payment of distributions, if any, is always be subject to the discretion of our Board of Directors.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

None.

D. TREND INFORMATION

Historically spot and short term charter hire rates for LNG carriers have been uncertain and volatile as has the supply and demand for LNG carriers. An excess of LNG carriers first became evident in 2004 before reaching a peak in the second quarter of 2010 when spot and short term charter hire rates together with utilization reached historic lows. Due to a lack of newbuilding orders placed between 2008 and 2010, this trend then reversed from the third quarter of 2010, such that the demand for LNG shipping was not being met by available supply in 2011 and the first half of 2012. Spot and short-medium term charter hire rates together with fleet utilization reached historic highs as a result. What turned the tide for LNG shipping demand from the 2Q 2011 was the unprecedented rise in Japanese LNG demand following the Fukishima nuclear leak.

Charter rates for LNG vessels started declining from 2013 as fleet growth picked up while there was only marginal addition to liquefaction capacity with one LNG plant becoming operational in 2013 in Angola. The downward pressure on charter rates increased in 2014 and 2015 because 38 and 28 vessels were delivered, respectively, while demand for LNG was subdued due to stiff competition from low priced crude. Moreover, demand from traditional Asian buyers such as Japan and South Korea remained flat due to a weaker macroeconomic environment and greater preference for coal in power production, and in the case of Japan a switch back to nuclear power.

In 2015, the LNG fleet increased in size by 6% rising from 392 to 417 ships by December 2105 with a combined capacity of 63.4 million cubic metres (cbm). Supply growth has outpaced demand growth and, as a result freight rates have been under pressure. Specifically short-term rates (one to three years) for LNG steam turbine vessels plunged from US$131,000 per day in 2012 to US$28,000 per day in 2015. Long term rates (in excess of three years) for steam turbine vessels in 2015 were on a par with 2014. The 2015 average long-term charter rate for a vessel with a capacity of 155,000 cbm was US$ 55,000/day.

E. OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

F. CONTRACTUAL OBLIGATIONS

The following table sets forth our contractual obligations and their maturity dates as of December 31, 2015:

	Payments due by period
Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands of Dollars)
Long Term Debt	$	688,333	$	28,333	$	56,667	$	398,333	$	205,000
Interest on long term debt (1)		125,887		30,468		57,906		35,690		1,823
Management Fees & commissions payable to the Manager (2)		39,681		8,232		15,347		13,897		2,205
Executive Services fee (3)		1,690		587		1,103		—		—
Administrative Services fee (4)		40		40		—		—		—
Total	$	855,631	$	67,660	$	131,023	$	447,920	$	209,028

(1)

Our long-term bank debt outstanding as of December 31, 2015 bears variable interest at a margin over LIBOR. The calculation of interest payments has been made assuming interest rates based on the 3-month period LIBOR, the LIBOR specific to our loan agreements as of December 31, 2015 and our applicable margin rate.

(2)	Under the terms of the Management Agreements, we currently pay a management fee of $2,732 per day which is subject to an annual increase of 3% and further annual increases to reflect material unforeseen costs increases of providing the management services, by an amount to be agreed between us and our Manager, which amount will be reviewed and approved by our conflicts committee. The Management Agreements also provide for commissions of 1.25% of charter-hire revenues arranged by the Manager. The agreements will terminate automatically after a change of control of the applicable shipping subsidiary and/or of the owner's ultimate parent, in which case an amount equal to fees of at the least 36 months and not more than 60 months, will become payable to the Manager.
(3)	On March 21, 2014, we entered into the Executive Services Agreement with our Manager, with retroactive effect to the date of the closing of our IPO, pursuant to which our Manager provides us with the services of our executive officers, who report directly to our Board of Directors. Under the Executive Services Agreement, our Manager is entitled to an executive services fee of €538,000 per annum, for the initial five year term, payable in equal monthly installments. The agreement has an initial term of five years and will automatically be renewed for successive five year terms unless terminated earlier. The calculation of the contractual services fee set forth in the table above assumes an exchange rate of €1.000 to $1.0906, the EURO/USD exchange rate as of December 31, 2015 and does not include any incentive compensation which our Board of Directors may agree to pay.
(4)	On December 30, 2014 and effective as of the IPO closing date, we entered into the Administrative Services Agreement with our Manager, pursuant to which the Partnership is provided with certain financial, accounting, reporting, secretarial and information technology services, for a monthly fee of $10,000, plus expenses, payable in quarterly installments. The Agreement can be terminated upon 120 days' notice granted either by the Partnership's Board or by the Manager as per the provisions of the agreement.

Capital Commitments

Possible Acquisitions of Other Vessels

Although we do not currently have in place any agreements relating to acquisitions of other vessels (other than our right to purchase the Optional Vessels subject to the provisions of the Omnibus Agreement), we assess potential acquisition opportunities on a regular basis.

Pursuant to the Omnibus Agreement that we have entered into with our Sponsor and our General Partner, in addition to the Optional Vessels, we also have the right, but not the obligation, to purchase any LNG carriers acquired or placed under contracts with an initial term of four or more years, for so long as the Omnibus Agreement is in full force and effect. Subject to the terms of our loan agreements, we could elect to fund any future acquisitions with equity or debt or cash on hand or a combination of these forms of consideration. Any debt incurred for this purpose could make us more leveraged and subject us to additional operational or financial covenants.

G. SAFE HARBOR

See the section entitled "Forward Looking Statements" at the beginning of this Annual Report.

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The following provides information about each of our directors and senior management. The business address for these individuals is 23, Rue Basse, 98000 Monaco.

Name	Age	Position
George Prokopiou	69	Appointed Director and Chairman of the Board of Directors
Tony Lauritzen	39	Chief Executive Officer and Appointed Director
Michael Gregos	44	Chief Financial Officer
Levon Dedegian	64	Class III Director
Alexios Rodopoulos	68	Class II Director
Evangelos Vlahoulis	69	Class I Director

Certain biographical information about each of our directors and executive officers is set forth below.

George Prokopiou. Mr. George Prokopiou has served as our Chairman of our Board of Directors since our inception. Since entering the shipping business in 1974, Mr. Prokopiou has managed a shipping fleet consisting in excess of 250 vessels and is among other, the founder of Dynacom Tankers Management, Sea Traders and Dynagas Ltd., our Manager. Dynacom was founded in 1991 to manage tankers and Sea Traders SA was founded in 1974 to manage bulk carriers. Since 2002, companies controlled by Mr. Prokopiou have built more than 93 vessels at shipyards in South Korea, Japan and China. Mr. Prokopiou holds a civil engineering degree from the National Technical University of Athens. Mr. Prokopiou has also served as Chairman of the North of England P&I Association. He is Chairman of the Greek committee of Bureau Veritas, as well as member of the Greek committees of Germanischer Lloyd, Det Norske Veritas, Lloyd's Register and ABS. In 2005 Dynacom was awarded Tanker Company of the Year award in 2005 by Lloyd's List.

Tony Lauritzen. Mr. Tony Lauritzen has served as our Chief Executive Officer since our inception. Mr. Lauritzen has served on our Board of Directors since our inception. Mr. Lauritzen has been the commercial manager of our Sponsor's LNG activities from 2006 to date. He joined the company when the first vessel was delivered in 2007. He worked for the shipowner and shipmanager Bernhard Schulte Shipmanagement Ltd. from 2004 until 2007 where he was project manager with a focus on the gas shipping segment. Prior to that, he worked for Westshore Shipbrokers AS in the offshore shipbroking segment. He holds a Master of Science in Shipping Trade and Finance from Cass Business School, London from 2003 and a Master of Arts in Business and Finance from Heriot Watt University, Edinburgh from 2002. Mr. Lauritzen is married to Marina Kalliope Prokopiou, daughter of our Chairman George Prokopiou.

Michael Gregos. Mr. Michael Gregos has served as our Chief Financial Officer since our inception. From 2010 until 2014, Mr. Gregos served on the board of Ocean Rig UDW Inc. (NASDAQ: ORIG). Mr. Gregos has served as commercial manager of the activities of Dynacom Tankers Management since 2009. From 2007 to 2009, Mr. Gregos served as Chief Operating Officer of OceanFreight Inc. a shipping transportation company listed on NASDAQ. Prior to that, Mr. Gregos was commercial manager of the activities of Dynacom Tankers Management. Mr. Gregos has also worked for Oceania Maritime Agency, a shipping transportation company in Connecticut, USA and ATE Finance the corporate finance arm of Agricultural Bank of Greece responsible for the implementation of initial public offerings in the Greek equities market. He is a graduate of Queen Mary University in London and holds an M.Sc. in Shipping, Trade and Finance from City University.

Levon A. Dedegian. Mr. Levon A. Dedegian has served as one of our directors since the closing of our IPO in November 2013 and also serves as Chairman of our conflicts committee. Mr. Dedegian has been involved in shipping since 1975 with various companies and positions. From 1978 to 1984, he served as general manager of Sea Traders. In 1985, he joined S.S.R.S. Ltd., a member of the Manley Hopkins Group of Companies. In 1987 he was transferred to Hong Kong, where he stayed until 1988 as a Managing Director of each of Gapco Trading and Agencies Limited, Bridge Energy ASA and Elf Agriculture. He was relocated to Greece at the end of 1988 as Managing Director of the Greek office of P. Wigham Richardson Shipbrokers and in 1989 he rejoined Sea Traders and Dynacom Tankers Management as general manager where he remained until December 31, 2009. Mr. Dedegian is a graduate of Pierce College (the American College of Greece) and holds a Bsc in Business Administration and Economics.

Alexios Rodopoulos. Mr. Alexios Rodopoulos has served as one of our directors since the closing of our IPO in November 2013 and also serves as Chairman of our Audit Committee. Mr. Rodopoulos is an independent shipping business consultant, operating through his family-owned company, Rodofin Business Consultants Ltd. From 1999 until 2011 Mr. Rodopoulos served as the Head of Shipping (Piraeus) of Royal Bank of Scotland (RBS). Mr. Rodopoulos is a graduate of the Economic University of Athens, Greece.

Evangelos Vlahoulis. Mr. Evangelos Vlahoulis has served as one of our directors since the closing of our IPO in November 2013 and also serves as Chairman of the Compensation Committee. Since 2005, Mr. Vlahoulis has served as Chief Executive Officer of Finship S.A. which provides maritime financing services including to Deutsche Bank in connection with their shipping activities in Greece. From 1984 until 2005 Mr. Vlahoulis served as the representative for Greek shipping of Deutsche Schiffsbank (the predecessor to Commercebank AB). Since October 2015, Mr. Vlachoulis serves as a consultant for the Greek branch of DVB bank. Mr. Vlahoulis is a graduate of London University and holds a BA in Economics.

Reimbursement of Expenses of Our General Partner

Our General Partner does not receive compensation from us for any services it provides on our behalf, although it is entitled to reimbursement for expenses incurred on our behalf. In addition, we reimburse our Manager for expenses incurred pursuant to the management and administrative services agreement. Please see "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions."

Executive Compensation

Our executive officers, who report directly to our Board of Directors, are provided to us by our Manager under an Executive Services Agreement with retroactive effect from the closing date of our IPO. Under the agreement, our Manager is entitled to an executive services fee of €538,000 per annum, for the initial five year term, payable in equal monthly installments and automatically renews for successive five year terms unless terminated earlier.

B. COMPENSATION OF DIRECTORS

Our chief executive officer who also serves as our director does not receive additional compensation for his service as director. Each non-management director receives compensation for attending meetings of our Board of Directors, as well as committee meetings. Non-management directors receive director fees of approximately $135,000 per year, in aggregate. In addition, each director is reimbursed for out-of-pocket expenses in connection with attending meetings of the Board of Directors or other committees. Each director is fully indemnified by us for actions associated with being a director to the extent permitted under Marshall Islands law.

C. BOARD PRACTICES

General

Pursuant to the terms of our Partnership Agreement, our General Partner has delegated to our Board of Directors the authority to oversee and direct our operations, management and policies on an exclusive basis, and such delegation will be binding on any successor general partner of the Partnership. Our General Partner is wholly-owned by our Sponsor. Our executive officers, who are employed by us, manage our day-to-day activities consistent with the policies and procedures adopted by our Board of Directors.

Our board consists of five members, two of whom are appointed by our General Partner in its sole discretion and three of whom are elected by our common unitholders. Our Board of Directors has determined that all of the directors, other than Mr. George Prokopiou and Mr. Tony Lauritzen, satisfy the independence standards established by the NYSE, as applicable to us. Directors appointed by our General Partner serve as directors for terms determined by our General Partner. Directors elected by our common unitholders are divided into three classes serving staggered three-year terms: the Class I Elected Director shall be elected to serve for a one year term expiring on the date of the succeeding annual meeting, the Class II Elected director shall be elected to serve for a two-year term expiring on the second succeeding annual meeting and (c) the Class III Elected Director shall be elected to serve for a three-year term expiring on the third succeeding annual meeting. At each annual meeting of unitholders, directors will be elected to succeed the class of directors whose terms have expired by a plurality of the votes of the common unitholders. Directors elected by our common unitholders will be nominated by the Board of Directors or by any limited partner or group of limited partners that holds at least 15% of the outstanding common units.

Each outstanding common unit is entitled to one vote on matters subject to a vote of common unitholders. However, to preserve our ability to be exempt from U.S. federal income tax under Section 883 of the Code, if at any time, any person or group owns beneficially more than 4.9% of any class of units then outstanding, any such units owned by that person or group in excess of 4.9% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to our board), determining the presence of a quorum or for other similar purposes under our Partnership Agreement, unless otherwise required by law. The voting rights of any such unitholders in excess of 4.9% will effectively be redistributed pro rata among the other common unitholders holding less than 4.9% of the voting power of all classes of units entitled to vote. Our General Partner, its affiliates and persons who acquired common units with the prior approval of our Board of Directors will not be subject to this 4.9% limitation except with respect to voting their common units in the election of the elected directors.

Committees

We have an audit committee that, among other things, reviews our external financial reporting function, engages our external auditors and oversees our internal audit activities and procedures and the adequacy of our internal accounting controls. Our audit committee is comprised of two directors, Mr. Evangelos Vlahoulis and Mr. Alexios Rodopoulos. Our Board of Directors has determined that Mr. Vlahoulis and Mr. Rodopoulos satisfy the independence standards established by the NYSE. Mr. Rodopoulos qualifies as an "audit committee expert" for purposes of SEC rule and regulations.

We also have a conflicts committee comprised of two members of our Board of Directors. The conflicts committee is available at the board's discretion to review specific matters that the board believes may involve conflicts of interest. The conflicts committee will determine if the resolution of the conflict of interest is fair and reasonable to us. The members of the conflicts committee may not be officers or employees of us or directors, officers or employees of our general partner or its affiliates, and must meet the independence standards established by the NYSE to serve on a conflicts committee of a Board of Directors and certain other requirements. Any matters approved by the conflicts committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners, and not a breach by our directors, our general partner or its affiliates of any duties any of them may owe us or our unitholders. The members of our conflicts committee are currently Mr. Levon A. Dedegian and Mr. Alexios Rodopoulos. For additional information about the conflicts committee, please see "Item 7. Major Unitholders and Related Party Transactions—B. Related Party Transactions—Conflicts of Interest and Fiduciary Duties."

We also have a compensation committee comprised of two members of our Board of Directors. The members of our compensation committee are currently Mr. Evangelos Vlahoulis and Mr. Levon Dedegian. The compensation committee is responsible for carrying out the Board's responsibilities relating to compensation of our executive officers and for providing such other guidance with respect to compensation matters as the Committee deems appropriate.

Please see "Item 16G. Corporate Governance."

D. EMPLOYEES

As of December 31, 2015, we did not employ any onshore or offshore staff. Our Manager has provided and continues to provide us with commercial and technical management services, including all necessary crew-related services, to our vessel owning subsidiaries pursuant to the Management Agreements. Please see "Item 7. Major Unitholders and Related Party Transactions — B. Related Party Transactions — Vessel Management." The services of our executive officers and other employees are provided to us by our Manager pursuant to an Executive Services Agreement and an Administrative Services Agreement, in return of a monthly and an annual fee, respectively. Please see "Item 7. Major Unitholders and Related Party Transactions — B. Related Party Transactions — Administrative Services Agreement & Executive Services Agreement."

E. UNIT OWNERSHIP

"Item 7. Major Unitholders and Related Party Transactions—A. Major Unitholders."

ITEM 7.

MAJOR UNITHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR UNITHOLDERS

The following table sets forth the beneficial ownership of our common units and subordinated units as of April 15, 2016 by each person that we know to beneficially own more than 5% of our outstanding common or subordinated units. The number of units beneficially owned by each person is determined under SEC rules and the information is not necessarily indicative of beneficial ownership for any other purpose:

	Common Units Beneficially Owned					Subordinated Units Beneficially Owned					Percentage of Total Common and Subordinated Units
Name of Beneficial Owner	Number		Percent			Number		Percent			Beneficially Owned
Dynagas Holding Ltd. ⁽¹⁾		610,000		3.0	%		14,985,000		100	%		43.9	%
Kayne Anderson Capital Advisors LP ⁽²⁾		3,928,533		19.2	%		—		—			11.1	%
Clearbridge Investments, LLC ⁽³⁾		1,235,900		6.0	%		—		—			3.5	%
Zimmer Partners, LP ⁽⁴⁾		1,177,668		5.7	%		—		—			3.3	%
All executives, officers and directors as a group ⁽⁵⁾		*		*			—		—			*

___________________

(1)	Dynagas Holding Ltd. is beneficially owned by the Prokopiou Family, including George Prokopiou and his daughters Elisavet Prokopiou, Johanna Prokopiou, Marina Kalliope Prokopiou, and Maria Eleni Prokopiou, which collectively have a business address at 23, Rue Basse, 98000 Monaco.
(2)	Based on information contained in the Schedule 13G/A that was filed with the SEC on January 11, 2016 by Kayne Anderson Capital Advisors LP and the other reporting persons named therein.
(3)	Based on information contained in the Schedule 13G that was filed with the SEC on February 16, 2016 by Clearbridge Investments, LLC.
(4)	Based on information contained in the Schedule 13G/A that was filed with the SEC on January 23, 2015 by Zimmer Partners, LP, and includes ownership information of other reporting persons therein.
(5)	Neither any member of our Board of Directors or executive officer individually, nor all of them taken as a group, hold more than 1% of our outstanding common units apart from Mr. George Prokopiou, whose ownership interests are separately presented in the above table.

As of April 15, 2016, we had two unitholders of record located in the United States, which held an aggregate of 19,895,000 common units, representing 97.0% of our outstanding common units. We believe that the units held by CEDE & CO., a nominee if the Depository Trust Company and one of the two aforementioned United States unitholders, include common units beneficially owned by both holders in the United States and non-U.S. beneficial owners.

According to a Schedule 13G/A filed with the Commission on January 11, 2016, Goldman Sachs Asset Management, LP reduced its holdings in us from 3,134,183 common units, as of February 2015, to 351,196 common units.

B. RELATED PARTY TRANSACTIONS

From time to time we have entered into agreements and have consummated transactions with certain related parties. We may enter into related party transactions from time to time in the future. In connection with our IPO, we established a conflicts committee, comprised entirely of independent directors, to evaluate any transaction or other matter referred or disclosed to the conflicts committee in which a conflict of interest or potential conflict of interests exists or arises.

Omnibus Agreement

On November 18, 2013, we, and certain of our subsidiaries, entered into the Omnibus Agreement with our Sponsor and our General Partner. On April 12, 2016, we amended and restated the Omnibus Agreement, to, among other things, include as Optional Vessels our Sponsor's minority ownership interest in the five entities that respectively own each of the Additional Optional Vessels. References herein to the "Omnibus Agreement" refer to the Omnibus Agreement as currently in effect. The following discussion describes certain provisions of the Omnibus Agreement.

Noncompetition

Under the Omnibus Agreement, our Sponsor has agreed, and has caused its affiliates (other than us, and our subsidiaries) to agree, not to acquire, own, operate or contract for any LNG carrier operating under a charter with an initial term of four or more years. We refer to these LNG carriers, together with any related contracts, and our Sponsor's ownership interest in the Additional Optional Vessels, as "Four-Year LNG carriers" and to all other LNG carriers, together with any related contracts, as "Non-Four-Year LNG carriers." The restrictions in this paragraph will not prevent our Sponsor or any of its controlled affiliates (including us and our subsidiaries) from:

(1)

acquiring, owning, operating or chartering any Non-Four-Year LNG carriers;

(2)

(i) acquiring or owning one or more Four-Year LNG carrier(s) (other than with respect to the Sponsor's ownership interest in the entities that own the Additional Optional Vessels, which is covered in (ii) below) if such Dynagas Holding Entity (as defined in the Omnibus Agreement) offers to sell such Four-Year LNG carrier to us for the acquisition price plus any administrative costs in accordance with the procedures set forth in the Omnibus Agreement (and we do not fulfill our obligation to purchase such Four-Year LNG carrier in accordance with the terms of the Omnibus Agreement) and (ii) owning any Optional Interests (as defined in the Omnibus Agreement) in the entities that own the Additional Optional Vessels at any time on or after the time at which such interests are treated as a Four-Year LNG carrier pursuant to the Omnibus Agreement, if the related Dynagas Holding Entities (as applicable), offer to sell such Optional Interests to us for the pro rata portion of the acquisition price relating to the corresponding LNG carrier owned by such entity plus any administrative costs in accordance with the procedures set forth in the Omnibus Agreement (and we do not fulfill our obligation to purchase such Optional Interests in accordance with the terms of the Omnibus Agreement);

(3)

operating or chartering an LNG carrier under a charter with a term of four or more years if such Dynagas Holding Entity (other than in the case of an Additional Optional Vessel) offers to sell such LNG carrier to us for fair market value (i) promptly after the time it becomes a Four-Year LNG carrier and (ii) at each renewal or extension of that charter if such renewal or extension is for a term of four or more years, in each case in accordance with the procedures set forth in the Omnibus Agreement;

(4)

acquiring and owning a controlling interest in one or more Four-Year LNG carriers as part of the acquisition of an interest in business or package of assets that owns, operates or charters such Four-Year LNG carriers; provided, however; if a majority of the value of the business or assets acquired is attributable to Four-Year LNG carriers, as determined in good faith by our Sponsor's board of directors, the Dynagas Holding Entity must offer to sell such Four-Year LNG carrier(s) to us for their fair market value plus any administrative costs in accordance with the procedures set forth in the Omnibus Agreement (for the avoidance of doubt, nothing herein shall prohibit the acquisition and owning of one or more Four-Year LNG carriers as part of the acquisition of a minority interest in a business or package of assets that owns, operates or charters Four-Year LNG carriers);

(5)

acquiring a non-controlling interest in any company, business or pool of assets;

(6)

acquiring, owning, operating or chartering any Four-Year LNG carrier if we do not fulfill our obligation to purchase such Four-Year LNG carrier in accordance with the terms of the Omnibus Agreement;

(7)

acquiring, owning, operating or chartering any Four-Year LNG carrier that is subject to the offers to us described in paragraphs (2), (3) and (4) above pending our determination whether to accept such offers and pending the closing of any offers we accept;

(8)

providing vessel management services relating to any LNG carrier;

(9)

acquiring and owning any Four-Year LNG carrier as part of a financing arrangement, including by way of a sale leaseback transaction, which is accounted for as a financial lease under United States generally accepted accounting principles; or

(10)

acquiring, owning, operating or chartering any Four-Year LNG carrier if we have previously advised our Sponsor that we consent to such acquisition, operation or charter.

If our Sponsor or any of its controlled affiliates acquires, owns, operates or contracts for Four-Year LNG carriers pursuant to any of the exceptions described above, it may not subsequently expand that portion of its business other than pursuant to those exceptions.

Under the Omnibus Agreement we are not be restricted from acquiring, operating or chartering Non-Four-Year LNG carriers.

Upon a change of control (as such term is set forth in the Omnibus Agreement) of us or our General Partner, the noncompetition provisions of the Omnibus Agreement will terminate immediately. Upon a change of control of our Sponsor (as such term is set forth in the Omnibus Agreement), the noncompetition provisions of the Omnibus Agreement applicable to our Sponsor will terminate at the time that is the later of (1) the date of the change of control of our Sponsor and (2) the date on which all of our outstanding subordinated units have converted to common units. In addition, on the date on which a majority of our directors ceases to consist of directors that were (1) appointed by our General Partner prior to our first annual meeting of unitholders and (2) recommended for election by a majority of our appointed directors, the noncompetition provisions applicable to our Sponsor shall terminate immediately.

Rights to Purchase Optional Vessels

The Omnibus Agreement provides us with the right, subject to certain conditions, to purchase the Initial Optional Vessels and our Sponsor's ownership interest in the entities that respectively own the Additional Optional Vessels, from our Sponsor at a purchase price to be determined pursuant to the terms and conditions of the Omnibus Agreement. These purchase rights expire 24 months following the respective delivery of each Optional Vessel from the shipyard (or in the case of the Clean Ocean and the Clean Planet , until March 31, 2017, and in the case of our Sponsor's ownership interest in the entities that own the Additional Optional Vessels, within 24 months following the expiration, without acceptance, of our 30-day option to purchase such interests pursuant to the Omnibus Agreement, so long as such Additional Optional Vessels are employed under a long-term charter of four or more years upon their respective delivery dates). If we are unable to agree with our Sponsor on the purchase price of any of the Initial Optional Vessels or our Sponsor's ownership interest in the entities that respectively own the Additional Optional Vessels, as the case may be, the respective purchase price will be determined by an independent appraiser, such as an investment banking firm, broker or firm generally recognized in the shipping industry as qualified to perform the tasks for which such firm has been engaged, and we will have the right, but not the obligation, to purchase such assets at such price. The independent appraiser will be mutually appointed by our Sponsor and our conflicts committee. Please see "Risk Factors—Our Sponsor may be unable to service its debt requirements and comply with the provisions contained in the credit agreements secured by the Optional Vessels. If our Sponsor fails to perform its obligations under its loan agreements, our business and expected plans for growth may be materially affected."

Rights of First Offer on LNG carriers

Under the Omnibus Agreement, we and our subsidiaries have granted to our Sponsor the right of first offer on any proposed sale, transfer or other disposition of any LNG carrier owned by us. Under the Omnibus Agreement, our Sponsor has agreed (and will cause their subsidiaries to agree) to grant a similar right of first offer to us for any Four-Year LNG carriers they own (including our Sponsor's ownership interests in the Additional Optional Vessels). These rights of first offer will not apply to (a) with respect to the Sponsor, a sale, transfer or other disposition of assets between or among any of its subsidiaries (other than us) and with respect to us, a sale, transfer or other disposition of assets between or among any of our subsidiaries (other than the Sponsor, if applicable), or pursuant to the terms of any contract or other agreement with a contractual counterparty existing at the time of the closing of our IPO or (b) a merger with or into, or sale of substantially all of the assets to, an unaffiliated third-party.

Prior to engaging in any negotiation regarding any LNG carrier's disposition with respect to a Four-Year LNG carrier with a non-affiliated third-party, we or our Sponsor, as the case may be, will deliver a written notice to the other relevant party setting forth the material terms and conditions of the proposed transaction. During the 30-day period after the delivery of such notice, we and our Sponsor will negotiate in good faith to reach an agreement on the transaction. If we do not reach an agreement within such 30-day period, we or our Sponsor, as the case may be, will be able within the next 180 calendar days to sell, transfer, dispose or re-contract the LNG carrier to a third-party (or to agree in writing to undertake such transaction with a third-party) on terms generally no less favorable to us or our Sponsor as the case may be, than those offered pursuant to the written notice.

Upon a change of control of us or our General Partner, the right of first offer provisions of the Omnibus Agreement will terminate immediately.

Upon a change of control of our Sponsor, the right of first offer provisions applicable to our Sponsor under the Omnibus Agreement will terminate at the time that is the later of the date of the change of control and the date on which all of our outstanding subordinated units have converted to common units. On the date on which a majority of our directors ceases to consist of directors that were (1) appointed by our General Partner prior to our first annual meeting of unitholders and (2) recommended for election by a majority of our appointed directors, the provisions related to the rights of first offer granted to us by our Sponsor shall terminate immediately.

For purposes of the Omnibus Agreement a "change of control" means, with respect to any "applicable person", any of the following events: (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the applicable person's assets to any other person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the applicable person; (b) the consolidation or merger of the applicable person with or into another person pursuant to a transaction in which the outstanding voting securities of the applicable person are changed into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding voting securities of the applicable person are changed into or exchanged for voting securities of the surviving person or its parent and (ii) the holders of the voting securities of the applicable person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding voting securities of the surviving person or its parent immediately after such transaction; and (c) a "person" or "group" (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), other than our Sponsor or its Affiliates with respect to the General Partner, being or becoming the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding voting securities of the applicable person, except in a merger or consolidation which would not constitute a change of control under clause (b) above.

Indemnification

Under the Omnibus Agreement, our Sponsor indemnifies us for a period of five years from the closing of the IPO against certain environmental and toxic tort liabilities with respect to the assets contributed or sold to us to the extent arising prior to or at the time they were contributed or sold to us.

Liabilities resulting from a change in law after the closing of our IPO are excluded from the environmental indemnity. There is an aggregate cap of $5 million on the amount of indemnity coverage provided by our Sponsor for environmental and toxic tort liabilities. No claim may be made unless the aggregate dollar amount of all claims exceeds $500,000, in which case our Sponsor is liable for claims only to the extent such aggregate amount exceeds $500,000.

Our Sponsor also indemnifies us for liabilities related to:

certain defects in title to our Sponsor's assets contributed or sold to us and any failure to obtain, prior to the time they were contributed or sold to us, certain consents and permits necessary to conduct, own and operate such assets, which liabilities arise within three years after the closing of our IPO (or, in the case of the Optional Vessels which we have rights to purchase, within three years after our purchase of them, if applicable); and

tax liabilities attributable to the operation of the assets contributed or sold to us prior to the time they were contributed or sold.

Amendments

The Omnibus Agreement may not be amended without the prior approval of the conflicts committee of our Board of Directors if the proposed amendment will, in the reasonable discretion of our Board of Directors, adversely affect holders of our common units.

Vessel Acquisitions

On June 23, 2014, pursuant to a share purchase agreement, we acquired 100% of the ownership interests in the entity that owns and operates the Arctic Aurora , which is currently operating under a time charter with Statoil with an initial term of five years, for an aggregate purchase price of $235.0 million. We purchased only the Arctic Aurora and the related time charter. All of the other assets and liabilities relating to the Sponsor entity that owns the Arctic Aurora remained with our Sponsor and did not form part of the purchase price. We funded the acquisition of the Arctic Aurora using the net proceeds of our underwritten public offering of common units completed in June 2014 and a portion of the proceeds of the $340 Million Senior Credit Facility.

On September 22, 2014, pursuant to a share purchase agreement, we acquired 100% of the ownership interests in the entity that owns and operates the Yenisei River , which is currently operating under a time charter with Gazprom with an initial term of five years, for an aggregate purchase price of $257.5 million. We purchased only the Yenisei River and the related time charter. All of the other assets and liabilities relating to the Sponsor entity that owns the Yenisei River remained with our Sponsor and did not form part of the purchase price. We funded the acquisition of the Yenisei River using the net proceeds of our underwritten public offering of the 2019 Notes completed in September 2014 and cash on hand.

On December 21, 2015, pursuant to a share purchase agreement, we acquired 100% of the ownership interests in the entity that owns and operates the Lena River , which is currently operating under a time charter with Gazprom with an initial term of five years, for an aggregate purchase price of $240.0 million. We purchased only the Lena River and the related time charter. All of the other assets and liabilities relating to the Sponsor entity that owns the Lena River remained with our Sponsor and did not form part of the purchase price. We funded the acquisition of the Lena River using the net proceeds we received from our offering of Series A Preferred Units, borrowings under our $200 Million Term Loan Facility, and cash on hand. At the closing date of the transaction, the Sponsor provided us a $35.0 million interest free credit financing in respect of unsettled amounts in connection with the acquisition that remained outstanding as of December 31, 2015, and repaid early in 2016.

Vessel Management

Our Manager provides us with commercial and technical management services for our Fleet and certain corporate governance and administrative and support services, pursuant to identical agreements with our wholly-owned vessel owning subsidiaries, or the Management Agreements. Our Manager is wholly-owned by Mr. George Prokopiou, our Chairman of the Board, and has been providing these services for the vessels in our Fleet for over ten years. In addition, our Manager performs the commercial and technical management of each of the Optional Vessels, which also includes the supervision of the construction of these vessels. Through our Manager, we have had a presence in LNG shipping for over ten years, and during that time we believe our Manager has established a track record for efficient, safe and reliable operation of LNG carriers.

We currently pay our Manager a technical management fee of $2,732 per day for each vessel, prorated for the calendar days we own each vessel, for providing the relevant vessel owning subsidiaries with services, including engaging and providing qualified crews, maintaining the vessel, arranging supply of stores and equipment, arranging and supervising periodic dry-docking, cleaning and painting and ensuring compliance with applicable regulations, including licensing and certification requirements.

In addition, we pay our Manager a commercial management fee equal to 1.25% of the gross charter hire, ballast bonus which is the amount paid to the ship owner as compensation for all or a part of the cost of positioning the vessel to the port where the vessel will be delivered to the charterer, or other income earned during the course of the employment of our vessels, during the term of the management agreements, for providing the relevant vessel-owning subsidiary with services, including chartering, managing freight payment, monitoring voyage performance, and carrying out other necessary communications with the shippers, charterers and others. In addition to such fees, we pay for any capital expenditures, financial costs, operating expenses and any general and administrative expenses, including payments to third-parties, in accordance with the Management Agreements.

We incurred an aggregate expense of approximately $6.7 million to our Manager in connection with the management of our Fleet under the Management Agreements for the year ended December 31, 2015. We incurred an aggregate expense of approximately $4.9 million to our Manager in connection with the management of our Fleet under the Management Agreements for the year ended December 31, 2014.

The term of the Management Agreements with our Manager will expire on December 31, 2020, and will renew automatically for successive eight-year terms thereafter unless earlier terminated. The technical management fee of $2,500 per day for each vessel was fixed until December 31, 2013 and thereafter increases annually by 3%, subject to further annual increases to reflect material unforeseen costs of providing the management services, by an amount to be agreed between us and our Manager, which amount will be reviewed and approved by our conflicts committee.

Under the terms of the Management Agreements, we may terminate the Management Agreements upon written notice if our Manager fails to fulfill its obligations to us under the Management Agreements. The Management Agreements terminate automatically following a change of control in us. If the Management Agreements are terminated as a result of a change of control in us, then we will have to pay our Manager a termination penalty. For this purpose a change of control means (i) the acquisition of fifty percent or more by any individual, entity or group of the beneficial ownership or voting power of the outstanding shares of us or our vessel owning subsidiaries, (ii) the consummation of a reorganization, merger or consolidation of us and/or our vessel owning subsidiaries or the sale or other disposition of all or substantially all of our assets or those of our vessel owning subsidiaries and (iii) the approval of a complete liquidation or dissolution of us and/or our vessel owning subsidiaries. Additionally, the Management Agreements may be terminated by our Manager with immediate effect if, among other things, (i) we fail to meet our obligations and/or make due payments within ten business days from receipt of invoices, (ii) upon a sale or total loss of a vessel (with respect to that vessel), or (iii) if we file for bankruptcy.

100

Pursuant to the terms of the Management Agreements, liability of our Manager to us is limited to instances of negligence, gross negligence or willful default on the part of our Manager. Further, we are required to indemnify our Manager for liabilities incurred by our Manager in performance of the Management Agreements, except in instances of negligence, gross negligence or willful default on the part of our Manager.

Additional LNG carriers that we acquire in the future may be managed by our Manager or other unaffiliated management companies.

Administrative Services Agreement

Under the terms and conditions of our Administrative Services Agreement, we pay our Manager a monthly fee of $10,000, plus all costs and expenses, in exchange for the provision of certain financial, accounting, reporting, secretarial and information technology services. The agreement is considered to be in effect until terminated (a) by the Board of Directors upon 120 days' written notice for any reason in its sole discretion, or (b) by Dynagas upon 120 days' written notice if: (i) there is a change of control of the Partnership or General Partner; (ii) a receiver is appointed for all or substantially all of the property of the Partnership; (iii) an order is made to wind up the Partnership; (iv) a final judgment, order or decree that materially and adversely affects the ability of the Partnership to perform under this Agreement shall have been obtained or entered against the Partnership, and such judgment, order or decree shall not have been vacated, discharged or stayed; or (v) the Partnership makes a general assignment for the benefit of its creditors, files a petition in bankruptcy or for liquidation, is adjudged insolvent or bankrupt, commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation under any law or statute or of any jurisdiction applicable thereto or if any such proceeding shall be commenced.

During the year ended December 31, 2015, we incurred expenses of approximately $0.1 million relating to the administrative services under the Administrative Services Agreement.

Executive Services Agreement

On March 21, 2014, we entered into an executive services agreement with our Manager with retroactive effect from the IPO closing date, pursuant to which our Manager provides to us the services of our executive officers, who report directly to our Board of Directors. Under the agreement, our Manager is entitled to an executive services fee of €538,000 per annum, for the initial five year term, payable in equal monthly installments and automatically renews for successive five year terms unless terminated earlier.

Contribution Agreement

On October 29, 2013, we entered into a contribution and conveyance agreement, or the Contribution Agreement, with our Sponsor, our General Partner, Dynagas Operating GP LLC, Dynagas Operating LP and Dynagas Equity Holding Ltd. Pursuant to this agreement, our Sponsor made a capital contribution to us of all of the issued and outstanding shares, or the Vessel Interests, of Dynagas Equity Holding Ltd., the sole owner of all of the shares of the entities owning the vessels in our Fleet, in exchange for all of our common units and subordinated units, and we, in turn, made a capital contribution of such Vessel Interests to Dynagas Operating LP, our wholly-owned subsidiary.

$30 Million Revolving Credit Facility

In connection with the closing of the IPO, our Sponsor provided us with a $30.0 million revolving credit to be used for general partnership purposes, including working capital. This revolving credit facility is interest free and has a term of five years. The loan may be drawn and prepaid in whole or in part at any time during its term. As of December 31, 2015, no amounts were outstanding under the facility.

101

CONFLICTS OF INTEREST AND FIDUCIARY DUTIES

Conflicts of interest exist and may arise in the future as a result of the relationships between our General Partner and its affiliates, including Dynagas Holding Ltd., on the one hand, and us and our unaffiliated limited partners, on the other hand. Our General Partner has a fiduciary duty to make any decisions relating to our management in a manner beneficial to us and our unitholders. Similarly, our Board of Directors has fiduciary duties to manage us in a manner beneficial to us, our General Partner and our limited partners. Certain of our officers and directors are also officers of our Sponsor or its affiliates and have fiduciary duties to our Sponsor or its affiliates that may cause them to pursue business strategies that disproportionately benefit our Sponsor or its affiliates or which otherwise are not in the best interests of us or our unitholders. As a result of these relationships, conflicts of interest may arise between us and our unaffiliated limited partners on the one hand, and our Sponsor and its affiliates, including our General Partner, on the other hand. The resolution of these conflicts may not be in the best interest of us or our unitholders.

Our partnership affairs are governed by our Partnership Agreement and the Partnership Act. The provisions of the Partnership Act resemble provisions of the limited partnership laws of a number of states in the United States, most notably Delaware. We are not aware of any material difference in unitholder rights between the Partnership Act and the Delaware Revised Uniform Limited Partnership Act. The Partnership Act also provides that it is to be applied and construed to make it uniform with the Delaware Revised Uniform Limited Partnership Act and, so long as it does not conflict with the Partnership Act or decisions of the Marshall Islands courts, interpreted according to the non-statutory law or "case law" of the courts of the State of Delaware. There have been, however, few, if any, court cases in the Marshall Islands interpreting the Partnership Act, in contrast to Delaware, which has a fairly well-developed body of case law interpreting its limited partnership statute. Accordingly, we cannot predict whether Marshall Islands courts would reach the same conclusions as courts in Delaware. For example, the rights of our unitholders and fiduciary responsibilities of our General Partner and its affiliates under Marshall Islands law are not as clearly established as under judicial precedent in existence in Delaware. Due to the less-developed nature of Marshall Islands law, our public unitholders may have more difficulty in protecting their interests or seeking remedies in the face of actions by our General Partner, its affiliates or our controlling unitholders than would unitholders of a limited partnership organized in the United States.

Our Partnership Agreement contains provisions that modify and limit the fiduciary duties of our General Partner and our directors to the unitholders under Marshall Islands law. Our Partnership Agreement also restricts the remedies available to unitholders for actions taken by our General Partner or our directors that, without those limitations, might constitute breaches of fiduciary duty.

Neither our General Partner nor our Board of Directors will be in breach of their obligations under the Partnership Agreement or their duties to us or the unitholders if the resolution of the conflict is:

approved by our conflicts committee, although neither our General Partner nor our Board of Directors are obligated to seek such approval;

approved by the vote of a majority of the outstanding common units, excluding any common units owned by our General Partner or any of its affiliates, although neither our General Partner nor our Board of Directors is obligated to seek such approval;

on terms no less favorable to us than those generally being provided to or available from unrelated third-parties, but neither our General Partner nor our Board of Directors is required to obtain confirmation to such effect from an independent third-party; or

fair and reasonable to us, taking into account the totality of the relationships between the parties involved, including other transactions that may be particularly favorable or advantageous to us.

Our General Partner or our Board of Directors may, but are not required to, seek the approval of such resolution from the conflicts committee of our Board of Directors or from the common unitholders. If neither our General Partner nor our Board of Directors seeks approval from the conflicts committee, and our Board of Directors determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in the third and fourth bullet points above, then it will be presumed that, in making its decision, our Board of Directors, including the board members affected by the conflict, acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. When our Partnership Agreement requires someone to act in good faith, it requires that person to reasonably believe that he is acting in the best interests of the partnership, unless the context otherwise requires. See "Item 6. Directors, Senior Management and Employees—C. Board Practices." for information about the composition and formation of the conflicts committee of our Board of Directors.

102

Conflicts of interest could arise in the situations described under the heading "Item 3. Key Information—D. Risk Factors —Risks Relating to Conflicts of Interest," among others.

Fiduciary Duties

Our General Partner and its affiliates are accountable to us and our unitholders as fiduciaries. Fiduciary duties owed to unitholders by our General Partner and its affiliates are prescribed by law and the Partnership Agreement. The Partnership Act provides that Marshall Islands partnerships may, in their partnership agreements, restrict or expand the fiduciary duties owed by our General Partner and its affiliates to the limited partners and the Partnership. Our directors are subject to the same fiduciary duties as our General Partner, as restricted or expanded by the Partnership Agreement.

Our Partnership Agreement contains various provisions restricting the fiduciary duties that might otherwise be owed by our General Partner or by our directors. We have adopted these provisions to allow our General Partner and our directors to take into account the interests of other parties in addition to our interests when resolving conflicts of interest. We believe this is appropriate and necessary because our officers and directors have fiduciary duties to our Sponsor, as well as to our unitholders. These modifications disadvantage the common unitholders because they restrict the rights and remedies that would otherwise be available to unitholders for actions that, without those limitations, might constitute breaches of fiduciary duty, as described below. The following is a summary of:

the fiduciary duties imposed on our General Partner and our directors by the Partnership Act;

material modifications of these duties contained in our Partnership Agreement; and

certain rights and remedies of unitholders contained in the Partnership Act.

Marshall Islands law fiduciary duty standards

Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a Partnership Agreement providing otherwise, would generally require a General Partner and the directors of a Marshall Islands limited partnership to act for the partnership in the same manner as a prudent person would act on his own behalf. The duty of loyalty, in the absence of a provision in a Partnership Agreement providing otherwise, would generally prohibit a General Partner or the directors of a Marshall Islands limited partnership from taking any action or engaging in any transaction where a conflict of interest is present.

103

Partnership Agreement modified standards

Our Partnership Agreement contains provisions that waive or consent to conduct by our General Partner and its affiliates and our directors that might otherwise raise issues as to compliance with fiduciary duties under the laws of the Marshall Islands. For example, our Partnership Agreement provides that when our General Partner is acting in its capacity as our General Partner, as opposed to in its individual capacity, it must act in "good faith" and will not be subject to any other standard under the laws of the Marshall Islands. In addition, when our General Partner is acting in its individual capacity, as opposed to in its capacity as our General Partner, it may act without any fiduciary obligation to us or the unitholders whatsoever. These standards reduce the obligations to which our General Partner and our Board of Directors would otherwise be held. Our Partnership Agreement generally provides that affiliated transactions and resolutions of conflicts of interest not involving a vote of unitholders and that are not approved by our conflicts committee of our Board of Directors must be:

on terms no less favorable to us than those generally being provided to or available from unrelated third-parties; or

If our Board of Directors does not seek approval from the conflicts committee, and our Board of Directors determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in the bullet points above, then it will be presumed that, in making its decision, our Board of Directors acted in good faith, and in any proceeding brought by or on behalf of any limited partner or the partnership, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. These standards reduce the obligations to which our Board of Directors would otherwise be held.

In addition to the other more specific provisions limiting the obligations of our General Partner and our directors, our Partnership Agreement further provides that our General Partner and our officers and directors, will not be liable for monetary damages to us or our limited partners for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that our General Partner or our officers or directors engaged in actual fraud or willful misconduct.

104

Rights and remedies of unitholders

The provisions of the Partnership Act resemble the provisions of the limited partnership act of Delaware. For example, like Delaware, the Partnership Act favors the principles of freedom of contract and enforceability of Partnership Agreements and allows the Partnership Agreement to contain terms governing the rights of the unitholders. The rights of our unitholders, including voting and approval rights and our ability to issue additional units, are governed by the terms of our Partnership Agreement.

As to remedies of unitholders, the Partnership Act permits a limited partner to institute legal action on behalf of the partnership to recover damages from a third-party where a General Partner or a Board of Directors has refused to institute the action or where an effort to cause a General Partner or a Board of Directors to do so is not likely to succeed. These actions include actions against a General Partner for breach of its fiduciary duties or of the Partnership Agreement.

In becoming one of our limited partners, a common unitholder effectively agrees to be bound by the provisions in the Partnership Agreement, including the provisions discussed above. The failure of a limited partner or transferee to sign a Partnership Agreement does not render the Partnership Agreement unenforceable against that person.

Under the Partnership Agreement, we must indemnify our General Partner and our directors and officers to the fullest extent permitted by law, against liabilities, costs and expenses incurred by our General Partner or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that these persons engaged in actual fraud or willful misconduct. We also must provide this indemnification for criminal proceedings when our General Partner or these other persons acted with no reasonable cause to believe that their conduct was unlawful. Thus, our General Partner and our directors and officers could be indemnified for their negligent acts if they met the requirements set forth above. To the extent that these provisions purport to include indemnification for liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, in the opinion of the Securities and Exchange Commission, such indemnification is contrary to public policy and therefore unenforceable.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8.

FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Please see "Item 18. Financial Statements" below for additional information required to be disclosed under this item.

Legal Proceedings

From time to time we may be subject to legal proceedings and claims in the ordinary course of our business, principally personal injury and property casualty claims. These claims, even if lacking merit, could result in the expenditure of significant financial and managerial resources. We are not aware of any legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on us.

Our Cash Distribution Policy

Rationale for Our Cash Distribution Policy

Our cash distribution policy reflects a judgment that our unitholders will be better served by our distributing our available cash rather than retaining it because, in general, we plan to finance any expansion capital expenditures from external financing sources. Our cash distribution policy is consistent with the terms of our Partnership Agreement, which requires that we distribute all of our available cash quarterly. Available cash is generally defined to mean, for each quarter cash generated from our business less the amount of cash reserves established by our Board of Directors at the date of determination of available cash for the quarter to provide for the proper conduct of our business (including reserves for our future capital expenditures and anticipated future credit needs subsequent to that quarter), comply with applicable law, any of our debt instruments or other agreements; and provide funds for distributions to our unitholders and to our General Partner for any one or more of the next four quarters, plus, if our Board of Directors so determines, all or any portion of the cash on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.

105

Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that unitholders will receive quarterly distributions from us. Our cash distribution policy is subject to certain restrictions and may be changed at any time. Set forth below are certain factors that influence our cash distribution policy:

Our unitholders have no contractual or other legal right to receive distributions other than the obligation under our Partnership Agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of our Board of Directors to establish reserves and other limitations.

We are and will be subject to restrictions on distributions under our existing financing arrangements as well as under any new financing arrangements that we may enter into in the future. Our financing arrangements contain financial and other covenants that must be satisfied prior to paying distributions in order to declare and pay such distributions. If we are unable to satisfy the requirements contained in any of our financing arrangements or are otherwise in default under any of those agreements, it could have a material adverse effect on our financial condition and our ability to make cash distributions to our unitholders notwithstanding our cash distribution policy.

We are required to make substantial capital expenditures to maintain and replace our Fleet. These expenditures may fluctuate significantly over time, particularly as our vessels near the end of their useful lives. In order to minimize these fluctuations, our Partnership Agreement requires us to deduct estimated, as opposed to actual, maintenance and replacement capital expenditures from the amount of cash that we would otherwise have available for distribution to our unitholders. In years when estimated maintenance and replacement capital expenditures are higher than actual maintenance and replacement capital expenditures, the amount of cash available for distribution to unitholders will be lower than if actual maintenance and replacement capital expenditures were deducted.

Although our Partnership Agreement requires us to distribute all of our available cash, our Partnership Agreement, including provisions contained therein requiring us to make cash distributions may be amended. During the subordination period, with certain exceptions, our Partnership Agreement may not be amended without the approval of non-affiliated common unitholders. After the subordination period has ended, our Partnership Agreement may be amended with the approval of a majority of the outstanding common units. Our Sponsor owns approximately 610,000 of our common units and all of our subordinated units, representing approximately 43.9% of the outstanding common and subordinated units in aggregate.

Even if our cash distribution policy is not modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our Board of Directors, taking into consideration the terms of our Partnership Agreement.

106

Under Section 57 of the Marshall Islands Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets.

We may lack sufficient cash to pay distributions to our unitholders due to decreases in total operating revenues, decreases in hire rates, the loss of a vessel or increases in operating or general and administrative expenses, principal and interest payments on outstanding debt, taxes, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs. See "Item 3. Key Information—D. Risk Factors" for a discussion of these factors.

Our ability to make distributions to our unitholders depends on the performance of our subsidiaries and their ability to distribute cash to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable limited partnership and limited liability company laws in the Marshall Islands and other laws and regulations.

Distributions on our Units

Series A Preferred Unit Distributions

Series A Preferred Unitholders are entitled under our Partnership Agreement to receive cumulative cash distributions when, as and if declared by our Board of Directors, out of legally available funds for such purpose. Distributions on Series A Preferred Units are cumulative and accrue at the distribution rate of 9.0%.

Minimum Quarterly Distribution

Common unitholders are entitled under our Partnership Agreement to receive a minimum quarterly distribution of $0.365 per unit, or $1.46 per unit per year, prior to any distribution on the subordinated units but prior to any distribution on the Series A Preferred Units, to the extent we have sufficient cash on hand to pay the distribution, after establishment of cash reserves and payment of fees and expenses.

There is no guarantee that we will pay the minimum quarterly distribution on the common units, subordinated units and general partner units in any quarter. Even if our cash distribution policy is not modified or revoked, the amount of distributions paid under our policy and the decision to make any distribution is determined by our Board of Directors, taking into consideration the terms of our Partnership Agreement. We will be prohibited from making any distributions to unitholders if it would cause an event of default, or an event of default is then existing, under our financing arrangements. Please read "Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources" for a discussion of the restrictions contained in our debt agreements and lease arrangements that may restrict our ability to make distributions.

For information on our distributions for the year ended December 31, 2015, please see "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources."

Subordination Period

General

During the subordination period, the common units will have the right to receive distributions of available cash from operating surplus in an amount equal to the minimum quarterly distribution of $0.365 per unit, plus any arrearages in the payment of the minimum quarterly distribution on the common units from prior quarters, before any distributions of available cash from operating surplus may be made on the subordinated units. Distribution arrearages do not accrue on the subordinated units. The purpose of the subordinated units is to increase the likelihood that during the subordination period there will be available cash from operating surplus to be distributed on the common units.

107

Incentive Distribution Rights

Incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved. Our General Partner currently holds the incentive distribution rights. The incentive distribution rights may be transferred separately from our general partner interest, subject to restrictions in the Partnership Agreement. Except for transfers of incentive distribution rights to an affiliate or another entity as part of our general partner's merger or consolidation with or into, or sale of substantially all of its assets to such entity, the approval of a majority of our common units (excluding common units held by our general partner and its affiliates), voting separately as a class, generally is required for a transfer of the incentive distribution rights to a third-party prior to December 31, 2016. Any transfer by our general partner of the incentive distribution rights would not change the percentage allocations of quarterly distributions with respect to such rights.

The following table illustrates the percentage allocations of the additional available cash from operating surplus among the unitholders, our General Partner and the holders of the incentive distribution rights up to the various target distribution levels. The amounts set forth under "Marginal Percentage Interest in Distributions" are the percentage interests of the unitholders, our General Partner and the holders of the incentive distribution rights in any available cash from operating surplus we distribute up to and including the corresponding amount in the column "Total Quarterly Distribution Target Amount," until available cash from operating surplus we distribute reaches the next target distribution level, if any. The percentage interests shown for the unitholders, our General Partner and the holders of the incentive distribution rights for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests shown for our General Partner include its 0.1% General Partner interest only and assume that our General Partner has contributed any capital necessary to maintain its 0.1% General Partner interest.

	Marginal Percentage Interest in Distributions
	Total Quarterly Distribution Target Amount			Unitholders		General Partner		Holders of IDRs
Minimum Quarterly Distribution		$	0.365		99.9%		0.1%		0.0%
First Target Distribution	up to $0.420				99.9%		0.1%		0.0%
Second Target Distribution	above $0.420 up to $0.456				85.0%		0.1%		14.9%
Third Target Distribution	Above $0.456 up to $0.548				75.0%		0.1%		24.9%
Thereafter	above $0.548				50.0%		0.1%		49.9%

B. SIGNIFICANT CHANGES

Not applicable.

ITEM 9.

THE OFFER AND LISTING.

A. OFFER AND LISTING DETAILS

Our common units started trading on NASDAQ under the symbol "DLNG" on November 13, 2013. On December 30, 2014, we voluntarily transferred the listing of our common units to the NYSE. Our common units continue to trade under the ticker symbol "DLNG." The following table sets forth the high and low prices for the common units since the date of listing for the periods indicated.

Exhibit 4.15

Private & Confidential

Date 17 ^th December 2015

NAVAJO MARINE LIMITED and

SOLANA HOLDING LTD.

as joint and several Borrowers

and

DYNAGAS LNG PARTNERS LP

as Corporate Guarantor

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Part A of Schedule 1

as Lenders

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Part B of Schedule 1

as Arrangers

and

ABN AMRO BANK N.V.

as Agent and Security Trustee

- and -

ABN AMRO BANK N.V.

as Account Bank

-and-

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Schedule 2

as Swap Banks

- and -

THE BANKS AND FINANCIAL INSTITUTIONS

listed in Part C of Schedule 1

as Bookrunners

__________________________________

LOAN AGREEMENT

__________________________________

relating to a loan facility of up to US$200,000,000

to re-finance the acquisition of two LNG

carriers

INCE & CO

Piraeus

INDEX

Clause		Page

1	INTERPRETATION	1
2	LOAN FACILITY	19
3	POSITION OF THE LENDERS ETC.	19
4	DRAWDOWN	21
5	INTEREST	22
6	INTEREST PERIODS	24
7	DEFAULT INTEREST	25
8	REPAYMENT AND PREPAYMENT	26
9	CONDITIONS PRECEDENT	29
10	REPRESENTATIONS AND WARRANTIES	30
11	GENERAL UNDERTAKINGS	33
12	CORPORATE UNDERTAKINGS	36
13	INSURANCE	40
14	SHIP COVENANTS	46
15	SECURITY COVER	49
16	PAYMENTS AND CALCULATIONS	51
17	APPLICATION OF RECEIPTS	53
18	APPLICATION OF EARNINGS	54
19	EVENTS OF DEFAULT	56
20	FEES AND EXPENSES	60
21	INDEMNITIES	61
22	NO SET-OFF OR TAX DEDUCTION	63
23	ILLEGALITY, ETC	64
24	INCREASED COSTS	65

25	SET‑OFF	66
26	TRANSFERS AND CHANGES IN LENDING OFFICES	67
27	VARIATIONS AND WAIVERS	69
28	NOTICES	70
29	SUPPLEMENTAL	72
30	JOINT AND SEVERAL LIABILITY	72
31	LAW AND JURISDICTION	73
SCHEDULE 1 LENDERS AND COMMITMENTS		75
SCHEDULE 2 SWAP BANKS		75
SCHEDULE 3 DRAWDOWN NOTICE		78
SCHEDULE 4 CONDITION PRECEDENT DOCUMENTS		79
SCHEDULE 5 TRANSFER CERTIFICATE		82
SCHEDULE 6 FORM OF COMPLIANCE CERTIFICATE		86
SCHEDULE 7 MANDATORY COST		87
EXECUTION PAGE		89

THIS LOAN AGREEMENT is made on 17 ^th December 2015

BETWEEN :

(1)	NAVAJO MARINE LIMITED and SOLANA HOLDING LTD. each being a corporation incorporated and existing under the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 as joint and several Borrowers ;

(2)	DYNAGAS LNG PARTNERS LP a limited partnership incorporated and existing under the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960, as Corporate Guarantor;

(3)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Part A of Schedule 1, as Lenders ;

(4)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Part B of Schedule 1, as mandated lead Arrangers ;

(5)	ABN AMRO BANK N.V. acting through its office at Daalsesingel 71 (PAC EA8550), 3511 SW Utrecht, The Netherlands, as Agent .

(6)	ABN AMRO BANK N.V. acting through its office at Daalsesingel 71 (PAC EA8550), 3511 SW Utrecht, The Netherlands, as Security Trustee.

(7)	ABN AMRO BANK N.V. acting through its office at office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands, as Account Bank .

(8)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Schedule 2, as Swap Banks; and

(9)	THE BANKS AND FINANCIAL INSTITUTIONS listed in Part C of Schedule 1, as Bookrunners.

WHEREAS

(A)

The Lenders have agreed to make available to the Borrowers a facility of up to $200,000,000 in up to two Tranches (each Tranche to be drawn in two Advances) for the purpose of re-financing the purchase price of the Ships, being two LNG carriers owned by the Borrowers and of providing working capital.

(B)	The Borrowers may, if they wish, from time to time hedge their exposure under this Agreement to interest rate fluctuations by entering into interest rate swap transactions with the Swap Banks (but not otherwise).

IT IS AGREED as follows:

1	INTERPRETATION

1.1	Definitions. Subject to Clause 1.5, in this Agreement:

" Account Bank " means ABN AMRO Bank N.V. acting through its office at Coolsingel 93, 3012 AE Rotterdam, The Netherlands;

" Accounts Pledge " means a deed of pledge of the Earnings Accounts, the Retention Accounts and the Debt Service Reserve Accounts, in such form as the Lenders may approve or require;

" Advance " means the principal amount of each borrowing by the Borrowers under this Agreement;

" Affected Lender " has the meaning given in Clause 5.5;

" Agency Agreement Assignment " means, in relation to a Ship, a first priority general assignment of the Approved Management Agreement relating to that Ship in such form as the Lenders may approve or require and in the plural means both of them;

" Agency and Trust Deed " means the agency and trust deed executed or to be executed between the Obligors, the Shareholder, the Lenders, the Agent, the Security Trustee, the Account Bank and the Swap Banks in such form as the Lenders may approve or require;

" Agent " means ABN AMRO Bank N.V. acting through its office at Daalsesingel 71 (PAC EA8550), 3511 SW Utrecht, The Netherlands, or any successor appointed under clause 5 of the Agency and Trust Deed;

" Approved Manager " means Dynagas Ltd., a corporation organised and existing under the laws of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia and having its place of business at 97 Poseidonos Avenue & 2 Foivis Street, 166 75 Glyfada, Athens, Greece or any other company which the Agent may, with the authorisation of the Lenders, approve from time to time as the commercial, technical and operational agent of either Ship;

" Approved Management Agreement " means, in respect of each Ship, the agreement made or to be made, in a form acceptable to the Lenders, between the Approved Manager and the Borrower which is the owner of that Ship in respect of the commercial, technical and operational agency of that Ship;

" Approved Manager's Undertaking " means, in respect of each Ship, a letter of undertaking executed by the Approved Manager in favour of the Security Trustee in the terms required by the Security Trustee agreeing certain matters in relation to the Approved Manager serving as the agent of that Ship and subordinating its rights against that Ship and the Borrower which is the owner thereof to the rights of the Creditor Parties under the Finance Documents, in such form as the Agent, may approve or require and in the plural means both of them;

" Approved Broker " means each of:

(a)

E.A. Gibson Shipbrokers Limited ;

(b)

Loretzen & Stemoco S.A.;

(c)

Fearnleys A/S;

(d)

H Clarkson & Co. Ltd. ;

(e)

Arrow Sale & Purchase (UK) Ltd.; and

(f)

Simpson Spence & Young,

and any other ship sale and purchase broker as the Agent may approve as an "Approved Broker" from time to time with the approval of all Lenders, and in the plural, means all of them;

" Approved Flag " means, in relation to a Ship, the Marshall Islands flag or such other flag as all the Lenders may, in their sole and absolute discretion, approve as the flag on which that Ship shall be registered;

" Approved Flag State " means, in relation to a Ship, the Marshall Islands or any other country in which all the Lenders may in their sole and absolute discretion, approve that that Ship be registered;

" Availability Period " means (i) in respect of each Tranche A Advance A and Tranche B Advance A, the period commencing on the date of this Agreement and (ii) in respect of each Tranche A Advance B and Tranche B Advance B, the period commencing on 4 January 2016, and ending, in each case, on:

(a)

the Final Availability Date; or

(b)

if earlier, the date on which the Total Commitments are fully borrowed, cancelled or terminated;

" Borrower " means each of Borrower A and Borrower B and in the plural means both of them;

" Borrower A " means Solana Holding Ltd., a company incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

" Borrower B " means Navajo Marine Limited, a company incorporated in the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

" Breakage Costs" means, in the case of any prepayment of the whole or any part of the Loan on a day other than the last day of an Interest Period applicable to the whole of the amount prepaid, such amount as shall be certified by the Agent, based on a certificate from any Lender whose Contribution is being repaid as being necessary to compensate that Lender, in whole or in part, for any loss (including, without limitation, loss of profit (other than loss of Margin)), penalty or expense incurred or to be incurred by that Lender on account of funds borrowed in order to make, fund or match its Commitment or Contribution (or any part thereof);

" Business Day " means a day on which banks are open in Athens, London, Frankfurt, Hamburg, Amsterdam, Oslo and in respect of a day on which a payment is required to be made under a Finance Document, also in New York City;

" Change of Control Event " means the occurrence after the date of this Agreement of any of the following:

(i)

the Corporate Guarantor ceasing to be listed on the NYSE or another internationally recognised stock exchange;

(ii)

The Permitted Holders collectively, ceasing to be the beneficial owners of at least 30% of the Corporate Guarantor;

(iii)

The Permitted Holders ceasing to be the beneficial owners of Dynagas Holding Ltd. representing 100% of the voting rights of Dynagas GP LLC; or

(iv)

Dynagas GP LLC ceasing to be the general partner of the Corporate Guarantor;

(v)

a Borrower ceasing to be 100% owned and controlled by the Shareholder;

(vi)

the Shareholder ceasing to be 100% owned and controlled by Dynagas Operating LP; or

(vii)

Dynagas Operating LP ceasing to be 100% owned and controlled by the Corporate Guarantor;

" Charterparty Assignment " means, in respect of each Required Charterparty and any other charterparty referred to in Clause 14.17 and/or Clause 14.18, an assignment thereof in such form as the Lenders may approve or require, and in the plural means all of them;

" Commitment " means, at any time, in relation to a Lender, the amount set opposite its name in Schedule 1, or, as the case may require, the amount specified in the relevant Transfer Certificate, as that amount may be reduced, cancelled or terminated in accordance with this Agreement (and " Total Commitments " means, at any time, the aggregate of the Commitments of all the Lenders);

" Compliance Certificate " means a certificate substantially in the form set out in Schedule 6 signed by the chief financial officers of the Obligors;

" Confirmation " and " Early Termination Date ", in relation to any continuing Designated Transaction, have the meanings given in the Master Agreement under which that Designated Transaction has been carried out;

" Contractual Currency " has the meaning given in Clause 21.4;

" Contribution " means, in relation to a Lender, the part of the Loan which is owing to that Lender;

" Corporate Guarantee " means the guarantee of the Borrowers' obligations under this Agreement and the other Finance Documents to be given by the Corporate Guarantor in such form as the Lenders may approve or require;

" Corporate Guarantor " means Dynagas LNG Partners LP a limited partnership incorporated and existing under the laws of the Marshall Islands whose registered office is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960;

" Creditor Party " means the Agent, the Security Trustee, any Swap Bank or any Lender, whether as at the date of this Agreement or at any later time;

" Debt Service Reserve Account " means, with respect to each Borrower, an account opened or to be opened in the name of that Borrower with the Account Bank which is designated by the Agent in writing as a Debt Service Reserve Account for the purposes of this Agreement and in the plural means both of them ;

" Designated Transaction " means a Transaction which fulfils the following requirements:

(a)

it is entered into by the Borrowers pursuant to a Master Agreement with a Swap Bank; and

(b)

its purpose is the hedging of the Borrowers' exposure under this Agreement to fluctuations in LIBOR arising from the funding of the Loan (or any part thereof) for a period expiring no later than the final Repayment Date;

" Dollars " and " $ " means the lawful currency for the time being of the United States of America;

" Drawdown Date " means, in relation to an Advance, the date requested by the Borrowers for such Advance to be made, or (as the context requires) the date on which such Advance is actually made;

" Drawdown Notice " means a notice in the form set out in Schedule 3 (or in any other form which the Agent approves or requires);

" Dynagas " means Dynagas Ltd., a corporation incorporated in Liberia and having its registered office at 80 Broad Street, Monrovia, Liberia;

" Earnings " means, in relation to a Ship, all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Borrower owning that Ship or the Security Trustee and which arise out of the use or operation of that Ship, including (but not limited to):

(a)

all freight, hire and passage moneys, compensation payable to the Borrower owning that Ship or the Security Trustee in the event of requisition of a Ship for hire, remuneration for salvage and towage services, demurrage and detention moneys and damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of that Ship;

(b)

all moneys which are at any time payable under Insurances in respect of loss of earnings; and

(c)

if and whenever a Ship is employed on terms whereby any moneys falling within paragraphs (a) or (b) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to that Ship;

"Earnings Account " means, with respect to each Borrower, an account opened or to be opened in the name of that Borrower with the Account Bank which is designated by the Agent in writing as an Earnings Account for the purposes of this Agreement and in the plural means both of them ;

"EBITDA" means, at any time, in respect of the preceding four financial quarters, the aggregate amount of consolidated pre-tax profits of the Group before interest, depreciation and amortisation;

" Environmental Claim " means:

(a)

any claim by any governmental, judicial or regulatory authority which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or

(b)

any claim by any other person which relates to an Environmental Incident or to an alleged Environmental Incident,

and " claim " means a claim for damages, compensation, fines, penalties or any other payment of any kind 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 of Environmentally Sensitive Material from a Ship; or

(b)

any incident in which Environmentally Sensitive Material is released from a vessel other than a Ship and which involves a collision between a Ship and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Ship is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Ship or either Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or

(c)

any other incident in which Environmentally Sensitive Material is released otherwise than from a Ship and in connection with which a Ship is actually or potentially liable to be arrested and/or where either Borrower and/or any operator or manager of a Ship is at fault or allegedly at fault or otherwise liable to any legal or administrative action;

" Environmental Law " means any law relating to pollution or protection of the environment, to the carriage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material;

" Environmentally Sensitive Material " means oil, oil products 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;

" Event of Default " means any of the events or circumstances described in Clause 19.1;

" FATCA" means:

(a)

sections 1471 to 1474 of the US Internal Revenue Code of 1986 (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 paragraph (a) above; or

(c)

any agreement pursuant to the implementation of paragraphs (a) or (b) above 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 January 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 2015; or

(c)

in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 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 to a Finance Document that is entitled to receive payments free from any FATCA Deduction;

" Final Availability Date " means 31 January 2016, or such later date as all the Lenders may agree with the Borrowers.

" Finance Documents " means:

(a)

this Agreement;

(b)

the Master Agreements;

(c)

the Agency and Trust Deed;

(d)

the Corporate Guarantee;

(e)

the Charterparty Assignments;

(f)

the General Assignments;

(g)

the Mortgages;

(h)

the Negative Pledges;

(i)

the Accounts Pledge;

(j)

the Approved Manager's Undertakings;

(k)

the Agency Agreement Assignments;

(l)

the Master Agreement Assignments;

(m)

the letters referred to in Clause 20.1; and

(n)

any other document (whether creating a Security Interest or not) which is executed at any time by an Obligor or any other person as security for, or to establish any form of subordination or priorities arrangement in relation to, any amount payable to the Lenders under this Agreement or any of the documents referred to in this definition;

" Financial Indebtedness " means, in relation to a person (the " debtor "), a liability of the debtor:

(a)

for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor;

(b)

under any loan stock, bond, note or other security issued by the debtor;

(c)

under any acceptance credit, guarantee or letter of credit facility made available to the debtor;

(d)

under a financial lease, a deferred consideration arrangement for the purchase of an asset or provision of services or any other agreement having the commercial effect of a borrowing or raising of money by the debtor;

(e)

under any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or

(f)

under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within (a) to (e) if the references to the debtor referred to the other person;

" General Assignment " means in relation to a Ship, a first priority general assignment of the Earnings, the Insurances and any Requisition Compensation of that Ship in such form as the Lenders may approve or require and in the plural means both of them;

" Group " means the Obligors and any subsidiary of any of them;

" Group Member " means any member of the Group;

" Insurances " means, in relation to a Ship:

(a)

all policies and contracts of insurance, including entries of such Ship in any protection and indemnity or war risks association, which are effected in respect of such Ship, her Earnings or otherwise in relation to her; and

(b)

all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium;

" Interest Expense " means, at any time, for the preceding four financial quarters, the aggregate interest which was payable by the Group Members on any Financial Indebtedness during such period;

" Interest Period " means, in relation to an Advance, a period determined in accordance with Clause 6;

" ISM Code " means, in relation to its application to each Borrower, its Ship and its operation:

(a)

'The International Safety Management Code for the Safe Operation of Ship and for Pollution Prevention', currently known or referred to as the 'ISM Code', adopted by the Assembly of the International Maritime Organisation by Resolution A.741(18) on 4 November 1993 and incorporated on 19 May 1994 into chapter IX of the International Convention for the Safety of Life at Sea 1974 (SOLAS 1974); and

(b)

all further resolutions, circulars, codes, guidelines, regulations and recommendations which are now or in the future issued by or on behalf of the International Maritime Organisation or any other entity with responsibility for implementing the ISM Code, including without limitation, the 'Guidelines on implementation or administering of the International Safety Management (ISM)

Code by Administrations' produced by the International Maritime Organisations pursuant to Resolution A.788(19) adopted on 25 November 1995,

as the same may be amended, supplemented or replaced from time to time;

" ISM Code Documentation " includes:

(a)

the document of compliance (DOC) and safety management certificate (SMC) issued pursuant to the ISM Code in relation to the Ships or either of them within the periods specified by the ISM Code; and

(b)

all other documents and data which are relevant to the ISM SMS and its implementation and verification which the Agent may require; and

(c)

any other documents which are prepared or which, are otherwise relevant to establish and maintain the Ships' or the Borrowers' compliance with the ISM Code which the Agent may require;

" ISM SMS " means the safety management system for each Ship which is required to be developed, implemented and maintained under the ISM Code;

" ISPS Code " means the International Ship and Port Facility Security Code constituted pursuant to resolution A.924(22) of the International Maritime Organisation ("IMO") now set out in Chapter XI-2 of the Safety of Life at Sea Convention (SOLAS) 1974 (as amended) and the mandatory ISPS Code as adopted by a Diplomatic Conference of the IMO on Maritime Security in December 2002 and includes any amendments or extensions to it and any regulation issued pursuant to it but shall only apply insofar as it is applicable law in the relevant Ship's flag state and any jurisdiction on which such Ship is operated;

" ISPS Code Documentation " includes:

(a)

the International Ship Security Certificate issued pursuant to the ISPS Code in relation to each Ship within the period specified in the ISPS Code; and

(b)

all other documents and data which are relevant to the ISPS Code and its implementation and verification which the Agent may require;

" Lender " means, subject to Clause 26.6:

(a)

a bank or financial institution listed in Schedule 1 and acting through its branch indicated in Schedule 1 (or through another branch notified to the Borrowers under Clause 26.12) unless it has delivered a Transfer Certificate or Certificates covering the entire amounts of its Commitment and its Contribution; and

(b)

the holder for the time being of a Transfer Certificate;

" Latest Accounts " means, in respect of any fiscal quarter or year of the Group, the latest quarterly reports, annual reports or financial statements required to be prepared pursuant to clause 11.5;

" LIBOR " means, for an Interest Period, the rate equal to the offered quotation for deposits in USD in an amount comparable with the amount in relation to which LIBOR is to be determined for a period equal to, or as near as possible equal to, the relevant period which appears at or about 11 a.m. (London time) on the relevant Quotation Date on such service as may be nominated by ICE Benchmark Administration Limited as the information vendor

for the purpose of displaying the ICE Benchmark Administration Limited's Interest Settlement Rates for USD (the " Screen Rate "), or, (i) if no such rate is available for dollars for the Interest Period of the Loan, that part of the Loan or any relevant sum, the Reference Bank Rate or (ii) if such rate, or the Reference Bank Rate, is less than zero, then LIBOR means zero;

" Loan " means the principal amount for the time being outstanding under this Agreement;

" Major Casualty " means any casualty to the Ship in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $1,500,000 or the equivalent in any other currency;

" Majority Lenders " means:

(a)

before the end of the Availability Period, Lenders whose Commitments exceed 66.65 per cent. of the Total Commitments; and

(b)

after the end of the Availability Period,, Lenders whose Contributions exceed 66.65 per cent. of the Loan;

" Mandatory Cost " means in relation to any period a percentage calculated for such period at an annual rate determined by the application of the formula set out in schedule 7;

" Margin " means two point five per cent. (2.5%) per annum;

"Market Value" means, in respect of each Ship, the market value thereof determined from time to time in accordance with Clause 15.2;

" Master Agreement " means each of the master agreements (on the 2002 ISDA (Multicurrency - Crossborder) form and including the Schedule thereto) made or to be made between the Borrowers and the Swap Banks and includes all Designated Transactions from time to time entered into and Confirmations from time to time exchanged thereunder and in the plural means all of them;

" Master Agreement Assignment " means, in respect of each Master Agreement, the first priority assignment thereof in favour of the Security Trustee executed or to be executed by the Borrowers, in such form as the Lenders may approve or require and in the plural means all of them;

" Material Adverse Event " means any event or occurrence which in the reasonable opinion of the Majority Lenders has had, or could be expected to have, a material adverse effect on (i) the business, operations, property, condition (financial or otherwise) or prospects of any Security Party and/or the Group taken as a whole, (ii) the ability of any Security Party to perform its obligations under any Finance Documents or (iii) the validity, enforceability, effectiveness or ranking of any Security Interest granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Creditor Party under any of the Finance Documents;

" Maturity Date " means, in respect of each Tranche, the final Repayment Date in respect thereof under Clause 8.2;

" Maximum Amount " means, in respect of each Tranche, an amount equal to 50% of the Market Value of the Ship in respect of which that Tranche is to be advanced as at the Drawdown Date of the first Advance in respect of that Tranche;

" Mortgage " means, in relation to a Ship, the first preferred ship mortgage on the Ship under the Approved Flag and deed of covenant collateral thereto (if applicable) in such form as the Lenders may approve or require and in the plural means both of them;

" Negative Pledge " means, in relation to a Borrower, the negative pledge of the shares of and in that Borrower required to be executed by the Shareholder in favour of the Security Trustee in such form as the Lenders may approve or require and in the plural means both of them;

" Negotiation Period " has the meaning given in Clause 5.8;

" Net Worth " means by reference to the Latest Accounts, the Total Assets less Total Liabilities of the Group;

" Notifying Lender " has the meaning given in Clause 23.1 or Clause 24.1 as the context requires;

" Obligor " means each of the Borrowers and the Corporate Guarantor, and in the plural means all of them;

" Party " means a party to this Agreement;

" Payment Currency " has the meaning given in Clause 21.4;

" Permitted Holders " means George Prokopiou, Elisavet Prokopiou, Johanna Prokopiou, Marina Kalliope Prokopiou and Maria Eleni Prokopiou;

" Permitted Security Interests " means:

(a)

Security Interests created by the Finance Documents;

(b)

liens for unpaid crew's wages in accordance with usual maritime practice;

(c)

liens for salvage;

(d)

liens arising by operation of law for not more than 2 months' prepaid hire under any charter in relation to the Ship not prohibited by this Agreement;

(e)

liens arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of a Ship, provided such liens do not secure amounts more than 30 days overdue (unless the overdue amount is being contested by the relevant Borrower in good faith by appropriate steps) and subject, in the case of liens for repair or maintenance, to Clause 14.14(g); and

(f)

any right of pledge and/or set-off under and pursuant to the general banking conditions ( Algemene Bankvoorwaarden ) of ABN AMRO Bank N.V.

provided that if the aggregate obligations at any time secured by Security Interests described in items (b) to (f) inclusive exceed $2,000,000 in aggregate, then Security Interests securing such excess shall not be Permitted Security Interests;

" Pertinent Jurisdiction ", in relation to a company, means:

(a)

England and Wales;

(b)

the country under the laws of which the company is incorporated or formed;

(c)

a country to whose laws any Finance Document is subject;

(d)

a country in which the company's central management and control is or has recently been exercised;

(e)

a country in which the overall net income of the company is subject to corporation tax, income tax or any similar tax;

(f)

a country in which assets of the company (other than Securities issued by, or loans to, related companies) having a substantial value are situated, in which the company maintains a permanent place of business, or in which a Security Interest created by the company must or should be registered in order to ensure its validity or priority; and

(g)

a country the courts of which have jurisdiction to make a winding up, administration or similar order in relation to the company or which would have such jurisdiction if their assistance were requested by the courts of a country referred to in paragraphs (b) or (c) above;

" Potential Event of Default " means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Majority Lenders and/or the satisfaction of any other condition, would constitute an Event of Default;

" Quotation Date " means, in relation to any Interest Period (or any other period for which an interest rate is to be determined under any provision of a Finance Document), the day falling 3 Business Days before the first day of that Interest Period or other period;

" 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 the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period;

" Reference Banks " means the principal offices of each of ABN AMRO Bank NV and of DNB Bank ASA, or such other banks as may be appointed by the Agent in consultation with the Borrowers;

" Related Company " of any company is a company which is controlled by that company from time to time;

" Relevant Tranche " means, in relation to a Ship, the Tranche which is drawn down in respect of that Ship;

" Repayment Date " means a date on which a repayment is required to be made under Clause 8;

" Required Charterparty " means

(a)

in respect of Ship A, the time charterparty dated 2 August 2011 made between Borrower A and Gazprom Global LNG Limited of England at a minimum charter hire of $86,000 per day up to October 2018;

(b)

in respect of Ship B, the time charterparty dated 2 August 2011 made between Borrower B and Gazprom Global LNG Limited of England at a minimum charter hire of $86,000 per day up to July 2018;

" Requisition Compensation " includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of "Total Loss";

" Restricted Person " means a person that is (i) listed on any Sanctions List or targeted by Sanctions (whether designated by name or by reason of being included in a class of person); (ii) located in, incorporated under the laws of, or, owned or controlled (directly or indirectly) by, or acting on behalf of, a person located in or organised under the laws of a country or territory that is the target of country-wide Sanctions (including, without

limitation, at the date of this Agreement Cuba, Iran, Myanmar (Burma), North Korea, Syria and Sudan) or (iii) is a target of Sanctions;

"Retention Account " means, with respect to each Borrower, an account opened or to be opened in the name of that Borrower with the Account Bank which is designated by the Agent in writing as the Retention Account with respect to that Borrower for the purposes of this Agreement and in the plural means both of them;

" Sanctions " means any economic sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by: (i) the United States government; (ii) the United Nations; (iii) the European Union or its Member States, including without limitation, the United Kingdom; (iv) Norway; (v) any country to which any Security Party, or any other member of the Group or any affiliate of any of them is bound; or (v) 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 (" HMT ") (together, " Sanctions Authorities ");

" Sanctions List " means the "Specially Designated Nationals and Blocked Persons" list issued by OFAC, the Consolidated List of Financial Sanctions Targets and Investment Ban List issued by HMT, or any similar list issued or maintained or made public by any of the Sanctions Authorities;

" Secured Liabilities " means all liabilities which the Borrowers, the Security Parties or any of them have, at the date of this Agreement or at any later time or times, under or by virtue of the Finance Documents or any judgment relating to the Finance Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country;

" Security Interest " means:

(a)

a mortgage, charge (whether fixed or floating) or pledge, any maritime or other lien or any other security interest of any kind;

(b)

the rights of the claimant under an action in rem in which the vessel concerned has been arrested or a writ has been issued or similar step taken; and

(c)

any arrangement entered into by a person (A) the effect of which is to place another person (B) in a position which is similar, in economic terms, to the position in which B would have been had he held a security interest over an asset of A;

but (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution;

" Security Party " means the Obligors, the Shareholder, the Approved Manager and any other person (except a Creditor Party) who, as a surety or mortgagor, as a party to any subordination or priorities arrangement, or in any similar capacity, executes a Finance Document;

" Security Period " means the period commencing on the date of this Agreement and ending on the date on which the Agent notifies the Borrowers, the Security Parties and the Lenders that:

(a)

all amounts outstanding under the Finance Documents have been paid;

(b)

no amount is owing or has accrued (without yet having become due for payment) under any Finance Document;

(c)

neither Borrower nor any Security Party has any future or contingent liability under Clause 20, 21 or 22 or any other provision of this Agreement or another Finance Document; and

(d)

the Agent, the Security Trustee and the Majority Lenders do not consider that there is a significant risk that any payment or transaction under a Finance Document would be set aside, or would have to be reversed or adjusted, in any present or possible future bankruptcy of a Borrower or a Security Party or in any present or possible future proceeding relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created by a Finance Document;

" Security Trustee " means ABN AMRO Bank N.V. acting through its office at Daalsesingel 71 (PAC EA8550), 3511 SW Utrecht, The Netherlands or any successor appointed under clause 5 of the Agency and Trust Deed;

" Shareholder " means Dynagas Equity Holding Limited a corporation incorporated and existing under the laws of Liberia with its registered office at 80 Broad Street, Monrovia, Liberia;

" Ship " means each of Ship A and Ship B and in the plural means both of them;

" Ship A " means the 2013-built LNG Carrier of 154,880 cbm registered in the ownership of Borrower A under the laws and flag of the Marshall Islands with the name "LENA RIVER" ;

" Ship B " means the 2013-built LNG Carrier of 154,880 cbm registered in the ownership of Borrower B under the laws and flag of the Marshall Islands with the name "YENISEI RIVER" ;

" Subsequent Qualified Charterparty " means any charterparty of a Ship which replaces a Required Charterparty on expiry thereof with the consent of all the Lenders, for a term until at least the Maturity Date in respect of the Tranche relating to that Ship, at a minimum charter hire of $55,000 per day and otherwise on terms and made with a charterer acceptable, in their discretion, to the Lenders pursuant to Clause 14.17;

" Swap Bank " means each bank or financial institution listed in Schedule 2 and in the plural means all of them;

" Swap Exposure " means, as at any relevant date, the aggregate of the amounts certified by each Swap Bank to the Agent to be the aggregate net amount in Dollars which would be payable by the Borrowers to that Swap Bank under (and calculated in accordance with)

section 6(e) (Payments on Early Termination) of the Master Agreement entered into by that Swap Bank if an Early Termination Date had occurred on the relevant date in relation to all continuing Designated Transactions entered into between the Borrowers and that Swap Bank;

" Total Assets " and " Total Liabilities " mean, respectively, the total assets and total liabilities of the Group as evidenced at any relevant time by their respective Latest Accounts, in which they shall have been calculated by reference to the meanings assigned to them in accordance with US GAAP but adjusted in the case of Total Assets for market values provided by an Approved Broker (in place of book values) at any relevant time under this Agreement;

" Total Loss " means, in relation to a Ship:

(a)

actual, constructive, compromised, agreed or arranged total loss of the Ship;

(b)

any expropriation, confiscation, requisition or acquisition of the Ship, whether for full consideration, a consideration less than her proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority, excluding a requisition for hire for a fixed period not exceeding one year without any right to an extension;

(c)

any condemnation of the Ship by any tribunal or by any person or person claiming to be a tribunal;

(d)

any arrest, capture, seizure or detention of the Ship (including any hijacking or theft) unless she is within 30 days redelivered to the full control of the Borrower;

" Total Loss Date " means, in relation to a Ship:

(a)

in the case of an actual loss of the Ship, the date on which it occurred or, if that is unknown, the date when the Ship was last heard of;

(b)

in the case of a constructive, compromised, agreed or arranged total loss of the Ship, the earliest of:

(i)

the date on which a notice of abandonment is given to the insurers; and

(ii)

the date of any compromise, arrangement or agreement made by or on behalf of the Borrower which is the owner of that Ship, with the Ship's insurers in which the insurers agree to treat the Ship as a total loss; and

(c)

in the case of any other type of total loss, on the date (or the most likely date) on which it appears to the Agent that the event constituting the total loss occurred;

" Tranche " means any of Tranche A or Tranche B and in the plural means both of them;

" Tranche A " means, subject to Clause 4.2(b), the amount of up to $100,000,000 being the aggregate of both of the Advances to be made available by the Lenders to the Borrowers in respect of Ship A;

" Tranche A Advance A " means an Advance in respect of Tranche A equal to the lesser of (i) $66,666,666.67 and (ii) two thirds of the Maximum Amount for Tranche A;

" Tranche A Advance B " means an Advance in respect of Tranche A equal to the lesser of (i) $33,333,333.33 and (ii) one third of the Maximum Amount for Tranche A;

" Tranche B " means, subject to Clause 4.2(c), the amount of up to $100,000,000 being the aggregate of both of the Advances to be made available by the Lenders to the Borrowers in respect of Ship B;

" Tranche B Advance A " means an Advance in respect of Tranche B equal to the lesser of (i) 66,666,666.67 and (ii) two thirds of the Maximum Amount for Tranche B;

" Tranche B Advance B " means an Advance in respect of Tranche B equal to the lesser of (i) $33,333,333.33 and (ii) one third of the Maximum Amount for Tranche B;

" Transaction " has the meaning given in the Master Agreements;

" Transfer Certificate " has the meaning given in Clause 26.2;

" Trust Property " has the meaning given in clause 3.1 of the Agency and Trust Deed;

"US GAAP" means generally accepted accounting principles in the United States of America; and

" US Tax Security Party " means:

(a)

a Borrower which is resident for tax purposes in the United States of America; or

(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;

1.2	Construction of certain terms. In this Agreement:

" approved " means, for the purposes of Clause 13, approved in writing by the Agent;

" asset " includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;

" company " includes any partnership, joint venture and unincorporated association;

" consent " includes an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation, permission, permit and legalisation;

" contingent liability " means a liability which is not certain to arise and/or the amount of which remains unascertained;

a Potential 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;

" document " includes a deed; also an email, letter, fax or telex;

" excess risks " means the proportion of claims for general average, salvage and salvage charges not recoverable under the hull and machinery policies in respect of the Ship in consequence of her insured value being less than the value at which the Ship is assessed for the purpose of such claims;

" expense " means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;

" law " includes any form of delegated legislation, any order or decree, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;

" legal or administrative action " means any legal proceeding or arbitration and any administrative or regulatory action or investigation;

" liability " includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

" material " means material in the sole opinion of the Security Trustee and/or the Agent;

" months " shall be construed in accordance with Clause 1.3;

" obligatory insurances " means all insurances effected, or which a Borrower is obliged to effect in relation to its Ship under Clause 13 or any other provision of this Agreement or another Finance Document;

" parent company " has the meaning given in Clause 1.4;

" person " includes any company, any state, political sub-division of a state and local or municipal authority, and any international organisation;

" policy ", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;

" protection and indemnity risks " means the usual risks covered by a protection and indemnity association managed in London, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation therein of clause 1 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;

"regulation". References to a "regulation" include any present or future regulation, rule, directive, requirement, request or guideline (whether or not having the force of law) of any Government Entity, central bank or any self-regulatory or other supra-national authority (including, without limitation, any regulation implementing or complying with (1) 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 (" Basel II "), and/or (2) " Basel III: International framework for liquidity risk measurement, standards and monitoring " and " Basel III: A global regulatory framework for more resilient banks and banking systems ", published by the Basel Committee on Banking Supervision in December 2010, in the form existing on the date of this Agreement (" Basel III ") and (3) any other law or regulation which, at any time and from time to time, implements and/or amends and/or supplements and/or re-enacts and/or supersedes, whether in whole or in part, Basel II and/or Basel III (including Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (" CRD IV ") and Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms (" CRR ")), and whether such implementation, application or compliance is by a Government Entity, a lender or any company affiliated to it). ;

" subsidiary " has the meaning given in Clause 1.4;

" successor " includes any person who is entitled (by assignment, novation, merger or otherwise) to any other person's rights under this Agreement or any other Finance Document (or any interest in those rights) or who, as administrator, liquidator or otherwise,

is entitled to exercise those rights; and in particular references to a successor include a person to whom those rights (or any interest in those rights) are transferred or pass as a result of a merger, division, reconstruction or other reorganisation of it or any other person;

" tax " includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine; and

" war risks " means the risks according to Institute War and Strike Clauses (Hull Time) (1/10/83) or (1/11/95), or equivalent conditions, including, but not limited to risk of mines, blocking and trapping, missing vessel, confiscation and all risks excluded from the standard form of English or other marine policy.

1.3	Meaning of "month". A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (" the numerically corresponding day "), but:

(a)	on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or

(b)	on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day,

and " month " and " monthly " shall be construed accordingly.

1.4	Meaning of "subsidiary". A company (S) is a subsidiary of another company (P) if:

(a)	a majority of the issued shares in S (or a majority of the issued shares in S which carry unlimited rights to capital and income distributions) are directly owned by P or are indirectly attributable to P; or

(b)	P has direct or indirect control over a majority of the voting rights attached to the issued shares of S; or

(c)	P has the direct or indirect power to appoint or remove a majority of the directors of S; or

(d)	P otherwise has the direct or indirect power to ensure that the affairs of S are conducted in accordance with the wishes of P,

and any company of which S is a subsidiary is a parent company of S.

1.5	General Interpretation.

(a)	In this Agreement:

(i)

references to, or to a provision of, a Finance Document or any other document are references to it as amended or supplemented, whether before the date of this Agreement or otherwise;

(ii)

references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Agreement or otherwise; and

(iii)

words denoting the singular number shall include the plural and vice versa.

(b)	Clauses 1.1 to 1.4 and paragraph (a) of this Clause 1.5 apply unless the contrary intention appears; and

(c)	references in Clause 1.1 to a document being in the form of a particular Schedule include references to that form with any modifications to that form which the Agent (with the authorisation of the Majority Lenders in the case of substantial modifications) approves or reasonably requires; and

(d)	the clause headings shall not affect the interpretation of this Agreement.

2	LOAN FACILITY

2.1	Amount of facility. Subject to the other provisions of this Agreement, the Lenders shall make available to the Borrowers a loan facility of up to $200,000,000 in two Tranches being:

(a)	Tranche A in two Advances in the aggregate amount of up to the lesser of (i) $100,000,000, (ii) 50% of the Market Value of Ship A as at the Drawdown Date for Tranche A Advance A; and

(b)	Tranche B in two Advances in the aggregate amount of up to the lesser of (i) $100,000,000, (ii) 50% of the Market Value of Ship B as at the Drawdown Date for Tranche B Advance A.

2.2	Lenders' participations in Loan. Subject to the other provisions of this Agreement, each Lender shall participate in each Advance in the proportion which, as at the relevant Drawdown Date, its undrawn and unreduced Commitment bears to the aggregate Commitments as at the relevant Drawdown Date.

2.3	Reduction of Commitment . For the purposes of clause 2.2:

(a)	the Commitment of the Lenders who make available Tranche A Advance A and Tranche B Advance A shall be reduced by half on drawdown of the first such Advance to be made available hereunder, and reduced to zero on drawdown of the second such Advance to be drawn down hereunder; and

(b)	the Commitment of the Lenders who make available Tranche A Advance B and Tranche B Advance B shall not exceed (i) 50% Tranche A Advance A and (ii) 50% of Tranche B Advance A.

2.4	Purpose of Loan. Each Borrower undertakes with each Creditor Party to use each Advance only for the purpose stated in the preamble to this Agreement and in accordance with the terms of Clause 4.2.

2.5

Cancellation of Commitment . The Borrowers may at any time request (by giving to the Agent at least 30 Business Days' notice in writing) the reduction of all or any part of the Total Commitments in an amount equal to $5,000,000 or a multiple of $5,000,000, and any Commitment in respect of any Tranche which is undrawn as at the Final Availability Date in respect thereof shall then be cancelled, whereupon, in each case, such cancelled part shall cease to be available, and the Commitment of each Lender shall be reduced pro rata, provided that such cancellation shall be irrevocable and at no additional cost to the Borrowers.

3	POSITION OF THE LENDERS ETC.

3.1	Interests of Lenders several. The rights of the Lenders and the Swap Banks under this Agreement and the Master Agreements are several; accordingly each Lender and each

Swap Bank shall be entitled to sue for any amount which has become due and payable by either Borrower to it under this Agreement and the Master Agreements without joining the Agent, the Security Trustee, any other Swap Bank or any other Lender as additional parties in the proceedings.

3.2	Proceedings by individual Lender. However, without the prior written consent of the Majority Lenders, no Lender may bring proceedings in respect of:

(a)	any other liability or obligation of either Borrower or a Security Party under or connected with a Finance Document; or

(b)	any misrepresentation or breach of warranty by either Borrower or a Security Party in or connected with a Finance Document.

3.3

Obligations of Lenders and Swap Banks several. The obligations of the Lenders under this Agreement and of the Swap Banks under the Master Agreements are several; and a failure of a Lender to perform its obligations under this Agreement or a failure of a Swap Bank to perform its obligations under a Master Agreement shall not result in:

(a)	the obligations of the other Lenders or the other Swap Banks being increased; nor

(b)	either Borrower, any Security Party or any other Lender or any other Swap Bank being discharged (in whole or in part) from its obligations under any Finance Document,

and in no circumstances shall a Lender or a Swap Bank have any responsibility for a failure of another Lender or another Swap Bank to perform its obligations under this Agreement or under a Master Agreement.

3.4	Parties bound by certain actions of Majority Lenders. Every Lender, the Borrowers and each Security Party shall be bound by:

(a)	any determination made, or action taken, by the Majority Lenders under any provision of a Finance Document;

(b)	any instruction or authorisation given by the Majority Lenders to the Agent or the Security Trustee under or in connection with any Finance Document;

(c)	any action taken (or in good faith purportedly taken) by the Agent or the Security Trustee in accordance with such an instruction or authorisation.

3.5	Reliance on action of Agent. However, the Borrowers and each Security Party:

(a)	shall be entitled to assume that the Majority Lenders have duly given any instruction or authorisation which, under any provision of a Finance Document, is required in relation to any action which the Agent has taken or is about to take; and

(b)	shall not be entitled to require any evidence that such an instruction or authorisation has been given.

3.6

Deadlock. If there are only two Lenders, each with an equal Contribution, all authorisations and instructions to be given in accordance with the terms of this Agreement by the Majority Lenders or the Lenders shall be given by both Lenders. If they are unable to agree the same in relation to a Material Matter, then the Lender which has proposed an instruction or authorisation (the " Proposing Lender ") may, within 15 Banking Days of the deadlock becoming apparent, give written notice to the other Lender (the " Opposing Lender ") that the Proposing Lender intends to acquire the Opposing Lender's Contribution. The Proposing Lender shall then, within 15 Banking Days of

such notice pay to the Opposing Lender the amount of its Contribution together with any Breakage Costs and accrued interest on the said amount, and the Opposing Lender shall thereupon transfer its Contribution to the Proposing Lender in accordance with Clause 26. (In this clause " Breakage Costs " means any expenses, losses or liabilities incurred by the Opposing Lender as a result of or in connection with the prepayment of its Contribution otherwise than on the last day of an Interest Period, and " Material Matter " means any authorisation or instruction relating to the enforcement, amendment or waiver of any Finance Document or any term thereof which could affect the value thereof).

3.7	Construction. In Clauses 3.4 and 3.6 references to action taken include (without limitation) the granting of any waiver or consent, an approval of any document and an agreement to any matter.

DRAWDOWN

4.1	Request for Advance. Subject to the following conditions, the Borrowers may request an Advance to be made in Dollars by ensuring that the Agent receives a completed Drawdown Notice not later than 11.00 a.m. (London time) 3 Business Days prior to the intended Drawdown Date.

4.2	Availability. The conditions referred to in Clause 4.1 are that:

(a)	the Drawdown Date has to be a Business Day during the Availability Period;

(b)	the amount of the Advances in respect of Tranche A shall be:

(i)

in respect of Tranche A Advance A, an amount equal to the lesser of (i) $66,666,666.67 and (ii) two thirds of the Maximum Amount applicable to Ship A;

(ii)

in respect of Tranche A Advance B an amount equal to the lesser of (i) $33,333,333.33 and (ii) one third of the Maximum Amount applicable to Ship A;

(c)	the amount of the Advances in respect of Tranche B shall be:

(i)

in respect of Tranche B Advance A an amount equal to the lesser of (i) $66,666,666.67 and (ii) two thirds of the Maximum Amount applicable to Ship B;

(ii)

in respect of Tranche B Advance B an amount equal to the lesser of (i) $33,333,333.33 and (ii) one third of the Maximum Amount applicable to Ship B;

(d)	the Advances in respect of each Tranche shall be applied towards re-financing debt relating to acquisition of the Ships and providing the Borrowers with working capital.

4.3	Notification to Lenders of receipt of a Drawdown Notice. The Agent shall promptly notify the Lenders that it has received a Drawdown Notice and shall inform each Lender of:

(a)	the amount of the Advance and the Drawdown Date therefor;

(b)	the amount of that Lender's participation in the Advance; and

(c)	(in respect of the first Advance for each Tranche) the duration of the first Interest Period.

4.4	Drawdown Notice irrevocable. A Drawdown Notice must be signed by a director or other authorised person of each Borrower; and once served, a Drawdown Notice cannot

be revoked without the prior written consent of the Agent, acting on the authority of the Majority Lenders.

4.5	Lenders to make available Contributions. Subject to the provisions of this Agreement, each Lender shall, on and with value on the Drawdown Date, make available to the Agent for the account of the Borrowers, the amount due from that Lender on the Drawdown Date under Clause 2.2.

4.6	Disbursement of Advance. Subject to the provisions of this Agreement, the Agent shall on each Drawdown Date pay to the Borrowers the amounts which the Agent receives from the Lenders under Clause 4.5; and that payment to the Borrowers shall be made:

(a)	to the account which the Borrowers specify in the relevant Drawdown Notice; and

(b)	in the like funds as the Agent received the payments from the Lenders.

4.7	Disbursement of Advance to third party. The payment by the Agent under Clause 4.6 shall constitute the making of the Advance and the Borrowers shall thereupon become indebted, as principal and direct obligor, to each Lender in an amount equal to that Lender's Contribution.

4.8

Restricted Persons . The Borrowers undertake that they shall not, and shall procure that no Security Party or other Group Member or any subsidiary of any of them shall, permit or authorise any other person to, directly or indirectly, use, lend, make payments of, contribute or otherwise make available, all or any part of the proceeds of the Loan or other transactions contemplated by this Agreement to fund or facilitate trade, business or other activities: (i) involving or for the benefit of any Restricted Person; or (ii) in any other manner that could result in a Borrower, any other Security Party or a Creditor Party being in breach of any Sanctions or becoming a Restricted Person

INTEREST

5.1	Payment of normal interest. Subject to the provisions of this Agreement, the Borrowers shall pay interest on each Tranche in respect of each Interest Period subject to Clause 5.3, on the last day of that Interest Period.

5.2	Normal rate of interest. Subject to the provisions of this Agreement, the rate of interest on each Advance in respect of an Interest Period shall be the aggregate of (a) the Margin, (b) LIBOR and (c) Mandatory Costs (if any) for that Interest Period.

5.3	Payment of accrued interest. In the case of an Interest Period longer than 3 months, accrued interest shall be paid every 3 months during that Interest Period and on the last day of that Interest Period.

5.4	Notification of Interest Periods and rates of normal interest. The Agent shall notify the Borrowers and each Lender of:

(a)	each rate of interest; and

(b)	the duration of each Interest Period;

as soon as reasonably practicable after each is determined.

5.5	Absence of quotations

Subject to Clause 5.6, if LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by 11:00am on the Quotation Date, the

applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

5.6	Market disruption. The following provisions of this Clause 5 apply if:

(a)

by 10.00 a.m. London time on the Quotation Date, Lenders having Contributions together amounting to more than 35 per cent. of the Loan (or, if the Loan has not been made available, Commitments amounting to more than 35 per cent. of the Total Commitments) notify the Agent that LIBOR fixed by the Agent would not accurately reflect the cost to those Lenders of funding their respective Contributions (or any part of them) during the Interest Period in the London Interbank Dollar Market at or about 11.00 a.m. (London time) on the second Business Day before the commencement of the Interest Period; or

(b)	by 10.00 a.m. London time on the Quotation Date, the Agent is notified by a Lender (the " Affected Lender ") that for any reason it is unable to obtain Dollars in the London Interbank Market in order to fund its Contribution (or any part of it) during the Interest Period; or

(c)	at or about noon on the Quotation Date for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR for dollars for the relevant Interest Period.

5.7	Notification of market disruption. The Agent shall promptly notify the Borrowers, each Lender and each Swap Bank stating the circumstances falling within Clause 5.6 which have caused its notice to be given.

5.8	Suspension of drawdown. If the Agent's notice under Clause 5.7 is served before an Advance is made, the Lenders' obligation to participate in that Advance shall be suspended while the circumstances referred to in the Agent's notice continue.

5.9

Negotiation of alternative rate of interest. If the Agent's notice under Clause 5.7 is served after the Loan is made available, the Borrowers, the Agent and the Lenders or (as the case may be) the Affected Lender and the Swap Banks shall use reasonable endeavours to agree, within the 30 days after the date on which the Agent serves its notice under Clause 5.6 (the " Negotiation Period "), an alternative interest rate or (as the case may be) an alternative basis for the Lenders or (as the case may be) the Affected Lender to fund or continue to fund their or its Contribution during the Interest Period concerned.

5.10	Application of agreed alternative rate of interest. Any alternative interest rate or an alternative basis which is agreed during the Negotiation Period shall take effect in accordance with the terms agreed.

5.11

Alternative rate of interest in absence of agreement. If an alternative interest rate or alternative basis is not agreed within the Negotiation Period, and the relevant circumstances are continuing at the end of the Negotiation Period, then the Agent shall, with the agreement of each Lender or (as the case may be) the Affected Lender, set an interest period and interest rate representing the cost of funding of the Lenders or (as the case may be) the Affected Lender in Dollars or in any available currency of their or its Contribution plus the Margin and Mandatory Costs (if any) ; and the procedure provided for by this Clause 5.11 shall be repeated if the relevant circumstances are continuing at the end of the interest period so set by the Agent.

5.12	Notice of prepayment. If the Borrowers do not agree with an interest rate set by the Agent under Clause 5.11, the Borrowers may give the Agent not less than 30 Business Days' notice of their intention to prepay the Loan at the end of the interest period set by the Agent.

5.13	Prepayment; termination of Commitments. A notice under Clause 5.12 shall be irrevocable; the Agent shall promptly notify the Lenders or (as the case may require) the Affected Lender of the Borrowers' notice of intended prepayment; and:

(a)	on the date on which the Agent serves that notice, the Total Commitments or (as the case may require) the Commitment of the Affected Lender shall be cancelled; and

(b)

on the date specified in its notice of intended prepayment, the Borrowers shall prepay, subject to the prepayment fee requirements set forth in Clause 8.15, the Loan or, as the case may be, the Affected Lender's Contribution, together with accrued interest thereon at the applicable rate plus the applicable Margin and Mandatory Costs (if any) and, if the prepayment or repayment is not made on the last day of the interest period set by the Agent, any sums payable in respect of Breakage Costs.

5.14	Application of prepayment. The provisions of Clause 8 shall apply in relation to the prepayment.

6	INTEREST PERIODS

6.1

Commencement of Interest Periods. The first Interest Period applicable to an Advance shall commence on the Drawdown Date for that Advance and each subsequent Interest Period shall commence on the expiry of the preceding Interest Period provided that the first Interest Period applicable to the second Advance of a Tranche shall end on the last day of the Interest Period applicable to such Tranche which is current on the Drawdown Date of that Advance, whereupon both of the Advances in respect of such Tranche shall be consolidated and treated as a single Advance.

6.2	Duration of normal Interest Periods. Subject to Clauses 6.3 and 6.4, each Interest Period shall be:

(a)	3, 6 or 9 months as notified by the Borrowers to the Agent (subject to availability in the London Interbank Market (as determined by the Agent)) not later than 11.00 a.m. (London time) on the Quotation Date for that Interest Period; or

(b)	3 months, if the Borrowers fail to notify the Agent by the time specified in paragraph (a) above; or

(c)	such other longer period as the Agent may, acting on the instructions of the Lenders, agree with the Borrower,

provided that the selection of Interest Periods under this Clause 6.2 shall be made in such manner as to ensure that a separate Interest Period shall be selected in respect of an amount of the Loan equal to the repayment instalment which is then due to be repaid under Clause 8.1 to expire on the Repayment Date applicable to such repayment instalment .

6.3	Duration of Interest Periods for repayment instalments. In respect of an amount due to be repaid under Clause 8 on a particular Repayment Date, an Interest Period in relation to the amount to be repaid in respect of the relevant Tranche shall end on that Repayment Date.

6.4

Non-availability of matching deposits for Interest Period selected. If, after the Borrowers have selected an Interest Period longer than 3 months, any Lender notifies the Agent by 11.00 a.m. (London time) on the third Business Day before the commencement of the Interest Period that it is not satisfied that deposits in Dollars for a period equal to the Interest Period will be available to it in the London Interbank Market when the Interest Period commences, the Interest Period shall be of 3 months

6.5	Interest Rate Hedging. The Borrowers may not hedge interest payable under this Agreement except pursuant to the Master Agreements or any of them, and then on terms that:-

(a)	no period for which interest is fixed under this Clause shall expire after the Maturity Date of a Tranche in relation to which such hedging has been effected; and

(b)	no Swap Bank may enter into a hedge with the Borrowers for a part of the Loan greater than the amount of the Loan divided by the number of Swap Banks each as at the date of that hedge.

7	DEFAULT INTEREST

7.1

Payment of default interest on overdue amounts. The Borrowers shall pay interest in accordance with the following provisions of this Clause 7 on any amount payable by the Borrowers under any Finance Document which the Agent, the Security Trustee or the other designated payee does not receive on or before the relevant date, that is:

(a)	the date on which the Finance Documents provide that such amount is due for payment; or

(b)	if a Finance Document provides that such amount is payable on demand, the date on which the demand is served; or

(c)	if such amount has become immediately due and payable under Clause 19.4, the date on which it became immediately due and payable.

7.2	Default rate of interest. Interest shall accrue on an overdue amount from (and including) the relevant date until the date of actual payment (as well after as before judgment) at the rate per annum determined by the Agent to be 2 per cent. above:

(a)	in the case of an overdue amount of principal, the higher of the rates set out at paragraphs (a) and (b) of Clause 7.3; or

(b)	in the case of any other overdue amount, the rate set out at paragraph (b) of Clause 7.3.

7.3	Calculation of default rate of interest. The rates referred to in Clause 7.2 are:

(a)	the rate applicable to the overdue principal amount immediately prior to the relevant date (but only for any unexpired part of any then current Interest Period);

(b)	the Margin and Mandatory Costs (if any) plus, in respect of successive periods of any duration (including at call) up to 3 months which the Agent may select from time to time:

(i)

LIBOR; or

(ii)

if the Agent determines that Dollar deposits for any such period are not being made available to a Lender or (as the case may be) Lenders by leading banks in the London Interbank Market in the ordinary course of business, a rate from time to time determined by the Agent by reference to the cost of funds to the Agent from such other sources as the Agent may from time to time determine.

7.4

Notification of interest periods and default rates. The Agent shall promptly notify the Lenders and the Borrowers of each interest rate determined by the Agent under Clause 7.3 and of each period selected by the Agent for the purposes of paragraph (b) of that Clause; but this shall not be taken to imply that the Borrowers are liable to pay such interest only with effect from the date of the Agent's notification.

7.5	Payment of accrued default interest. Subject to the other provisions of this Agreement, any interest due under this Clause shall be paid on the Agent's demand; and the payment shall be made to the Security Trustee for the account of the Creditor Party to which the overdue amount is due.

7.6	Compounding of default interest. Any such interest which is not paid at the end of the period by reference to which it was determined shall thereupon be compounded.

7.7	Application to Master Agreements . For the avoidance of doubt this Clause 7 does not apply to any amount payable under a Master Agreement in respect of any continuing Designated Transaction as to which section 2(e) (Default Interest, Other Amounts) of the relevant Master Agreement shall apply.

8	REPAYMENT AND PREPAYMENT

8.1

Amount of repayment instalments. The Borrowers shall repay each Tranche by 20 equal consecutive quarterly instalments of $1,562,500 each and by a final balloon instalment (a " Balloon Instalment ") of $68,750,000 Provided that if the amount of either Tranche drawn down hereunder is less than $100,000,000 each of the said repayment instalments (including the relevant Balloon Instalment) in respect of that Tranche shall be reduced pro rata.

8.2

Repayment Dates. The first instalment in respect of each Tranche shall be repaid on the date falling 3 months after the Drawdown Date of the first Advance for that Tranche and the last instalment shall be repaid on the earlier of (i) the date falling 60 months after such Drawdown Date and (ii) 31 January 2021.

8.3	Final Repayment Date. On the final Repayment Date, the Borrowers shall additionally pay to the Security Trustee for the account of the Creditor Parties all other sums then accrued or owing under any Finance Document.

8.4	Voluntary prepayment. Subject to the following conditions, the Borrowers may prepay the whole or any part of the Loan on the last day of an Interest Period.

8.5	Conditions for voluntary prepayment. The conditions referred to in Clause 8.4 are that:

(a)	a partial prepayment shall be $5,000,000 or a multiple of $5,000,000;

(b)	the Agent has received from the Borrowers at least 10 Business Days' prior written notice specifying the amount to be prepaid, the Tranche or Tranches against which it is to be applied and the date on which the prepayment is to be made;

(c)

the Borrowers have provided evidence satisfactory to the Agent that any consent required by either Borrower or any Security Party in connection with the prepayment has been obtained and remains in force, and that any requirement relevant to this Agreement which affects either Borrower or any Security Party has been complied with; and

(d)

each partial prepayment shall be applied against such Tranche or Tranches as the Borrowers may nominate, and pro rata against the repayment instalments of that Tranche or Tranches (including the respective Balloon Instalments) which are at the time being outstanding, unless the Lenders agree otherwise in writing.

8.6	Effect of notice of prepayment. A prepayment notice may not be withdrawn or amended without the prior written consent of the Agent, given with the authority of the Majority Lenders, and the amount specified in the prepayment notice shall become due

and payable by the Borrowers on the date for prepayment specified in the prepayment notice.

8.7	Notification of notice of prepayment. The Agent shall notify the Lenders promptly upon receiving a prepayment notice, and shall provide any Lender which so requests with a copy of any document delivered by the Borrowers under Clause 8.5(c).

8.8

Mandatory prepayment - Tranches. Upon the sale or Total Loss of a Ship the Borrowers shall be obliged to prepay the Loan by the greater of (i) the Tranche relating to that Ship, (ii) such amount of the Loan as would need to be prepaid to ensure that after such prepayment the Post-Payment Ratio is 145% and (iii) such amount of the Loan so that the Post-Payment Ratio equals the Pre-Payment Ratio :

(a)	in the case of a sale, on or before the date on which the sale is completed by delivery of the Relevant Ship to the buyer; or

(b)	in the case of a Total Loss, on the earlier of the date falling 120 days after the Total Loss Date and the date of receipt by the Security Trustee of the proceeds of insurance relating to such Total Loss

where:

" Pre-Payment Ratio " means the ratio of (i) the aggregate Market Values of the Ships which are subject to a Mortgage before any prepayment of the Loan under this clause and the net realisable value of any additional security previously provided under Clause 15 to (ii) the amount of the Loan immediately before any prepayment of the Loan under this clause; and

" Post-Payment Ratio " means the ratio of (i) the aggregate Market Values of the Ships which are subject to a Mortgage after any prepayment of the Loan under this clause and the net realisable value of any additional security previously provided under Clause 15 to (ii) the amount of the Loan immediately after any prepayment of the Loan under this clause.

Any amount prepaid under this clause 8.8 shall be applied firstly in repayment of the Tranche relating to the Relevant Ship, and any amount thereafter remaining shall be applied in reduction of the other Tranche, in each case firstly against the Balloon Instalment in respect thereof and thereafter in reduction of the repayment instalments in respect thereof in inverse order of their maturity.

8.9	In Clause 8.8, " Relevant Ship " means the Ship which is sold or becomes a Total Loss, or in respect of which any of the events referred to in Clause 8.8(b) occur.

8.10	Mandatory prepayment – Loan . The Borrowers shall be obliged to prepay the whole Loan, and any undrawn part of the Total Commitment shall be cancelled upon:

(a)	the circumstances referred to in Clause 23 (illegality) arising, and in accordance with that Clause; or

(b)	the written demand of the Agent (to be given by it only upon the request of the Lenders) following the occurrence of a Change of Control Event.

8.11

Amounts payable on prepayment. A prepayment shall be made together with accrued interest (and any other amount payable under Clause 8.15, Clause 21 or otherwise) in respect of the amount prepaid and, if the prepayment is not made on the last day of an Interest Period, together with any Breakage Costs.

8.12	Master Agreement, Repayments and Prepayments

(a)

Notwithstanding any provision of any Master Agreement to the contrary, in the case of a prepayment of all or part of the Loan (including, without limitation, in accordance with Clauses 8.4, 8.8 and 8.10 or under Clause 15.1) then, subject to Clause 8.12 (b), the Swap Banks shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrowers, where it would otherwise be required whether under a Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by any Transaction and/or any Master Agreement and/or to obtain or re‑establish any hedge or related trading position in any manner and with any person the relevant Swap Bank in its absolute discretion may determine and both the relevant Swap Bank's and the Borrowers' continuing obligations under any Transaction and/or Master Agreement shall, unless agreed otherwise by the relevant Swap Bank, be calculated so far as the relevant Swap Bank considers it practicable by reference to the amended repayment schedule for the Loan or a Tranche taking into account the fact that less than the full amount of the Loan or a Tranche remains outstanding.

(b)

If following a prepayment under this Agreement a Swap Bank in its absolute discretion agrees, following a written request of the Borrowers, that the Borrowers may be permitted to maintain all or part of a Transaction in an amount not wholly matched with or linked to all or part of the Loan or a Tranche, the Borrowers shall within ten (10) days of being notified by a Swap Bank of such requirement, provide the Security Trustee with, or procure the provision to the Security Trustee of, such additional security as shall in the opinion of the Swap Bank be adequate to secure the performance of such Transaction, which additional security shall take such form, be constituted by such documentation and be entered into between such parties, as the Swap Bank in its absolute discretion may approve or require, and each document comprising such additional security shall constitute a Credit Support Document (as defined the relevant Master Agreement).

(c)

The Borrowers shall on the first written demand of a Swap Bank indemnify that Swap Bank in respect of all losses, costs and expenses (including, but not limited to, legal costs and expenses) incurred or sustained by that Swap Bank as a consequence of or in relation to the effecting of any matter or transactions referred to in this Clause 8.12.

(d)

Notwithstanding any provision of a Master Agreement to the contrary, if for any reason, a Transaction has been entered into but the Loan, Advance or a Tranche to which that Transaction relates is not drawn down under this Agreement then, subject to Clause 8.12 (e), the Swap Bank which is party to that Transaction shall be entitled but not obliged (and, where relevant, may do so without the consent of the Borrowers where it would otherwise be required whether under the relevant Master Agreement or otherwise) to amend, supplement, cancel, net out, terminate, liquidate, transfer or assign all or any part of the rights, benefits and obligations created by such Transaction and/or the relevant Master Agreement and/or to obtain or re-establish any hedge or related trading position in any manner and with any person that Swap Bank in its absolute discretion may determine.

(e)

If a Transaction has been entered into but the Loan, Advance or a Tranche to which that Transaction relates is not drawn down under this Agreement and the Swap Bank which is party to that Transaction in its absolute discretion agrees, following a written request of the Borrowers, that the Borrowers may be permitted to maintain all or part of that Transaction, the Borrowers shall within ten (10) days of being notified by the relevant Swap Bank of such requirement, provide the Security Trustee with, or procure the provision to the Security Trustee of, such additional security as shall in the opinion of the Swap Bank be adequate to secure the performance of such Transaction, which additional security shall take such form, be constituted by such documentation and be entered into between such parties, as the Swap Bank in its absolute discretion may approve or require, and each document comprising such additional security shall constitute a Credit Support Document (as defined in the relevant Master Agreement) for the purposes of that Master Agreement and/or otherwise.

8.13

Without prejudice to or limitation of the obligations of the Borrowers under Clause 8.12 (c), in the event that a Swap Bank exercises any of its rights under Clauses 8.12 (a), 8.12 (b), 8.12 (d) or 8.12 (e) and such exercise results in all or part of a Transaction being terminated such termination shall be treated under the relevant Master Agreement in the same manner as if it were a Terminated Transaction (as defined in the relevant Master Agreement) effected by that Swap Bank after an Event of Default (as so defined in that Master Agreement) by the Borrowers and, accordingly, that Swap Bank shall be permitted to recover from the Borrowers a payment for early termination calculated in accordance with the provisions of the relevant Master Agreement.

8.14	No reborrowing . No amount prepaid may be reborrowed.

8.15

Prepayment fee . If, in relation to each Tranche, prior to second anniversary of the Drawdown Date of the first Advance in respect thereof, all or part of the Total Commitment in respect thereof is cancelled pursuant to Clause 8.10(b) or either of the Borrowers make any other prepayment of that Tranche pursuant to Clause 8.4, 8.8(a) and/or Clause 8.10(b), then the Borrowers shall pay to the Agent, for distribution to the Lenders, an irrevocable, non-refundable prepayment fee of 1.0% of the aggregate of the amount of the Total Commitment so cancelled and the amount of the Loan or that Tranche so prepaid.

9	CONDITIONS PRECEDENT

9.1	Documents, fees and no default. Each Lender's obligation to make an Advance is subject to the following conditions precedent:

(a)	that, on or before the service of the first Drawdown Notice, the Agent receives the documents described in Part A of Schedule 4 in form and substance satisfactory to the Lenders, the Agent and their lawyers;

(b)	that, on or before drawdown of Tranche A Advance A or Tranche B Advance A, the Agent receives the documents described in Part B of Schedule 4 in form and substance satisfactory to the Lenders, the Agent and their lawyers;

(c)	that, on or before drawdown of Tranche A Advance B or Tranche B Advance B, the Agent receives the documents described in Part C of Schedule 4 in form and substance satisfactory to the Lenders, the Agent and their lawyers;

(d)	that, on or before the service of each Drawdown Notice, the Agent has received payment of the fees payable pursuant to the fee letters referred to in Clause 20.1 and of the expenses referred to in Clause 20.2;

(e)	that both at the date of each Drawdown Notice and at each Drawdown Date:

(i)

no Event of Default or Potential Event of Default has occurred and is continuing or would result from the borrowing of the relevant Advance;

(ii)

the representations and warranties in Clause 10 and those of the Borrowers or any Security Party which are set out in the other Finance Documents are, and would be, complete, true, accurate and not misleading (whether by omission of material facts or considerations or otherwise) if repeated on each of those dates with reference to the circumstances then existing; and

(iii)

none of the circumstances contemplated by Clause 5.7 has occurred and is continuing; and

(f)	that, if the ratio set out in Clause 15.1 were applied immediately following the making of the Advance, the Borrowers would not be obliged to provide additional security or prepay part of the Loan under that Clause; and

(g)	that the Agent has received, and found to be acceptable to it, any further assurances, authorizations, opinions, consents, agreements and documents in connection with the Finance Documents which the Agent may, with the authorisation of the Majority Lenders, request by notice to the Borrowers.

9.2	Waiver of conditions precedent.

(a)

The conditions specified in this Clause 9 (Conditions Precedent) are solely for the benefit of the Lenders and may be waived on their behalf in whole or in part and with or without conditions by the Agent (acting on the instructions of the Majority Lenders unless it is a non-material matter of administrative or technical character where the Agent may act in its sole discretion);

(b)

If the Lenders, at their discretion, permit an Advance to be borrowed before certain of the conditions referred to in Clause 9.1 are satisfied, the Borrowers shall ensure that those conditions are satisfied within 5 Business days after the relevant Drawdown Date (or such longer period as the Agent may, with the authority of the Majority Lenders, specify).

10	REPRESENTATIONS AND WARRANTIES

10.1	General. Each Obligor represents and warrants to each Creditor Party on the date of this Agreement as follows.

10.2	Status. Each Obligor is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands.

10.3

Share capital and ownership. Each Borrower has an authorised share capital divided into 500 shares of no par value, all of which shares have been issued fully paid and are, or will on the first Drawdown Date be, in the case of the Borrowers, legally and beneficially owned and controlled by the Shareholder.

10.4	Corporate power. Each Obligor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:

(a)	(in respect of the Borrowers only) enter into the Approved Management Agreement in respect of its Ship and register its Ship in its name under an Approved Flag;

(b)	to execute the Finance Documents to which that Obligor is a party;

(c)	(in respect of the Borrowers only) to borrow under this Agreement, to enter into any Designated Transaction under any Master Agreement; and

(d)	to make all the payments contemplated by, and to comply with, those Finance Documents to which such Obligor is a party.

10.5	Consents in force. All the consents referred to in Clause 10.4 remain in force and nothing has occurred which makes any of them liable to revocation.

10.6	Legal validity; effective Security Interests. The Finance Documents to which each Obligor is a party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as provided for in the Finance Documents):

(a)	constitute that Obligor's legal, valid and binding obligations enforceable against that Borrower in accordance with their respective terms and priority; and

(b)	create legal, valid and binding Security Interests enforceable in accordance with their respective terms over all the assets to which they, by their terms, relate,

subject to any relevant insolvency laws affecting creditors' rights generally.

10.7	No third party Security Interests. Without limiting the generality of Clause 10.6, at the time of the execution and delivery of each Finance Document:

(a)	each Obligor will have the right to create all the Security Interests which that Finance Document purports to create; and

(b)	no third party will have any Security Interest (except for Permitted Security Interests) or any other interest, right or claim over, in or in relation to any asset to which any such Security Interest, by its terms, relates.

10.8	No conflicts. The execution by each Obligor of each Finance Document to which it is a party, and the borrowing by a Borrower of the Loan and its compliance with each Finance Document to which it is a party will not involve or lead to a contravention of:

(a)	any law or regulation; or

(b)	the constitutional documents of that Obligor; or

(c)	any contractual or other obligation or restriction which is binding on that Obligor or any of its assets.

10.9

No withholding/stamp taxes. All payments which each Obligor is liable to make under the Finance Documents may be made without deduction or withholding for or on account of any tax payable under any law of any Pertinent Jurisdiction and no stamp duty or tax is payable in respect of or on any Finance Document in order for it to be valid, binding and enforceable in accordance with its terms.

10.10

No default. No Event of Default or Potential Event of Default has occurred and is continuing.

10.11

Information. All information which has been provided in writing by or on behalf of the Borrowers or any Security Party to any Creditor Party in connection with any Finance Document satisfied the requirements of Clause 11.4; all audited and unaudited accounts which have been so provided satisfied the requirements of Clause 11.6; and there has been no material adverse change in the financial position or state of affairs of any Obligor from that disclosed in the audited accounts so provided for the financial year ending on 31 December 2014.

10.12

No litigation . No legal or administrative action involving an Obligor has been commenced or taken or, to any Obligor's knowledge, is likely to be commenced or taken which has, or is likely to have, a material adverse effect on the financial position of an Obligor, save as disclosed in writing to the Agent by the Borrowers prior to the date of this Agreement.

10.13

Compliance with certain undertakings. The Obligors are in compliance with Clauses 11.2, 11.8, 11.11, 12.3 and 12.10.

10.14

Taxes paid. Each Obligor has paid all taxes applicable to, or imposed on or in relation to that Obligor, its business or the Ship.

10.15

Ranking of Borrowers' obligations . the Borrowers' obligations to make payments under this Agreement and/or a Master Agreement rank ahead of any obligation owed by the Borrowers to any other person, except as the same may be preferred by any applicable law or regulation.

10.16

Insolvency etc. No bankruptcy, insolvency, administration or similar proceedings have been commenced against any Obligor with a view to winding up that Obligor.

10.17

ISM Code and ISPS Code compliance. Each Borrower has obtained all necessary ISM Code Documentation and ISPS Code Documentation in connection with its Ship and is in full compliance with the ISM Code and the ISPS Code.

10.18

Legal compliance . No Security Party has in any way contravened any applicable law, statute, rule or regulation (including, but not limited to, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, the Foreign Corrupt Practices Act of 1977 of the USA and all such as relate to money laundering, terrorism and/or bribery).

10.19

Money laundering . In relation to the borrowing by the Borrowers of the Loan, the performance and discharge by the Obligors of their respective obligations and liabilities under this Agreement or any of the Security Documents and the transactions and other arrangements effected or contemplated by this Agreement or any of the Security Documents to which an Obligor is a party, each Obligor is acting for its own account and that the foregoing will not involve or lead to a contravention of any law, official requirement or other regulatory measure or procedure which has been implemented to combat Money Laundering.

10.20

Anti-bribery . To the best of its knowledge and belief, none of the improper or illegal acts referred to in Clause 12.11 have occurred prior to the date of execution of this Loan Agreement

10.21

Proceeds of the Loan . All proceeds of the Loan shall be used and applied in accordance with Clause 2.4.

10.22

Restricted Persons, unlawful activity .

(i)

none of the shares in a Borrower, any Security Party or a Ship are or will be at any time during the Security Period legally and beneficially owned and controlled by a Restricted Person; and

(ii)

no Restricted Person has or will have at any time during the Security Period any legal or beneficial interest of any nature whatsoever in any of the shares of any of the Security Parties; and

(iii)

no title in any property or other assets subject to an Security Interest created by a Security Document has been obtained in breach of any existing applicable law, statute, rule or regulation

10.23

Ownership Structure . The shares of and in the Obligors are owned as described in paragraph 8 of Schedule 4, Part A.

10.24

Repetition of representations . The representations and warranties set out in this Clause 10 are complete, true, accurate and not misleading (whether by omission of any material fact or consideration or otherwise) and the same, including this Clause 10.22, shall be deemed to be repeated on the date of each Drawdown Notice, on each Drawdown Date and on the first day of each Interest Period.

11	GENERAL UNDERTAKINGS

11.1	General. Each Obligor undertakes with each Creditor Party to comply with the following provisions of this Clause 11 at all times during the Security Period except as the Agent may, with the authority of the Lenders, otherwise permit.

11.2	Title; negative pledge. Each Borrower will:

(a)

hold the legal title to, and own the entire beneficial interest in the Ship owned by it, the Insurances and Earnings, free from all Security Interests and other interests and rights of every kind, except for those created by the Finance Documents and the effect of assignments contained in the Finance Documents; and

(b)

not create or permit to arise any Security Interest (except for Permitted Security Interests) over any other asset, present or future including, but not limited to, that Borrower's rights against a Swap Bank under a Master Agreement or all or any part of such Borrower's interest in any amount payable to such Borrower by a Swap Bank under a Master Agreement.

11.3	No disposal of assets. Neither Borrower will transfer, lease or otherwise dispose of:

(a)	all or a substantial part of its assets, whether by one transaction or a number of transactions, whether related or not; or

(b)	any debt payable to it or any other right (present, future or contingent right) to receive a payment, including any right to damages or compensation.

11.4	Information provided to be accurate. All financial and other information which is provided in writing by or on behalf of an Obligor under or in connection with any Finance Document will be true and not misleading and will not omit any material fact or consideration.

11.5	Provision of financial statements. The Obligors will send to the Agent :

(a)	as soon as possible, but in no event later than 120 days after the end of each financial year of the Corporate Guarantor, starting with the financial year ending on 31 December 2015,

the consolidated audited accounts of the Corporate Guarantor and its subsidiaries, certified as to their correctness by the chief accounting officer of the Corporate Guarantor;

(b)

as soon as possible, but in no event later than 120 days after the end of each financial year of each Borrower (starting with the financial year ending on 31 December 2015) the audited accounts of each Borrower for that financial year, each certified as to their correctness by the chief accounting officer of the relevant Borrower;

(c)

as soon as possible, but in no event later than 60 days after the end of each of the 3 months periods up to 31 March, 30 June and 30 September each year, the consolidated unaudited management accounts for that 3 month period of the Corporate Guarantor together with its subsidiaries, certified as to their correctness by the chief accounting officer of the relevant Corporate Guarantor;

(d)

as soon as possible, but in no event later than 60 days after the end of each of the 3 months periods up to 31 March, 30 June and 30 September each year, (starting with the period ending on 30 June 2016) the unaudited management accounts for that 3 month period of each Borrower, each certified as to their correctness by the chief accounting officer of the relevant Borrower;

(e)

on the dates on which the accounts are or are to be delivered under this Clause 11.5 a Compliance Certificate duly and correctly completed and signed by the chief financial officers (or other authorised signatory) of the Corporate Guarantor confirming compliance with the covenants as set out in Clause 12.3 (including supporting calculations satisfactory to the Agent) as at the end of the latest financial year or quarter (as the case may be); and

(f)

promptly after each request by the Agent (acting on the instructions of any Lender), such further financial information about the Obligors and/or the Ships and/or the vessels under the agency of the Approved Manager, their operations and business, including, but not limited to, charter arrangements, Financial Indebtedness, realised and budgeted operating expenses, cash flow forecasts and loan repayments profiles, including in relation to any German § 18 KWG (Kreditwesengesetz) obligations, as the Agent (acting on the instructions of any Lender) may require.

11.6	Form of financial statements. All accounts (audited and unaudited) delivered under Clause 11.5 will:

(a)	be prepared in accordance with all applicable laws and US GAAP consistently applied;

(b)	give a true and fair view of the state of affairs of the relevant person at the date of those accounts and of its profit for the period to which those accounts relate; and

(c)	fully disclose or provide for all significant liabilities of the relevant person and its subsidiaries.

11.7	Shareholder and creditor notices. Each Obligor will send the Agent, at the same time as they are despatched, copies of all communications which are despatched to that Obligor's shareholders or creditors or any class of them.

11.8	Consents. Each Obligor will maintain in force and promptly obtain or renew, and will promptly send certified copies to the Agent of, all consents required:

(a)	for that Obligor to perform its obligations under any Finance Document to which it is party;

(b)	for the validity or enforceability of any Finance Document to which it is party;

(c)	for that Borrower to continue to own and operate its Ship,

and that Obligor will comply with the terms of all such consents.

11.9	Maintenance of Security Interests. Each Obligor will:

(a)	at its own cost, do all that it can to ensure that any Finance Document validly creates the obligations and the Security Interests which it purports to create; and

(b)

without limiting the generality of paragraph (a) above, at its own cost, promptly register, file, record or enrol any Finance Document with any court or authority in all Pertinent Jurisdictions, pay any stamp, registration or similar tax in all Pertinent Jurisdictions in respect of any Finance Document (including any duties or taxes payable by any of the Creditor Parties but excluding any FATCA Deduction) , give any notice or take any other step which, in the opinion of the Majority Lenders, is or has become necessary or desirable for any Finance Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which it creates.

11.10

Notification of litigation. Each Obligor will provide the Agent with details of any legal or administrative action involving an Obligor or a Ship, the Earnings or the Insurances as soon as such action is instituted or it becomes apparent to that Obligor that it is likely to be instituted, unless it is clear that the legal or administrative action cannot be considered material in the context of any Finance Document.

11.11

Principal place of business. Each Obligor will maintain its place of business, and keep its corporate documents and records, at the address stated at the commencement of this Agreement; and no Obligor will establish, or do anything as a result of which it would be deemed to have, a place of business in either the United Kingdom or the United States of America.

11.12

Confirmation of no default. Each Obligor will (i) in each Compliance Certificate confirm and (ii) within 2 Business Days after service by the Agent of a written request, serve on the Agent a notice which is signed by 2 directors of that Obligor and which states:

(a)	that no Event of Default or Potential Event of Default has occurred; or

(b)	that no Event of Default or Potential Event of Default has occurred, except for a specified event or matter, of which all material details are given.

11.13

Notification of default. The Obligors will notify the Agent as soon as any Obligor becomes aware of:

(a)	the occurrence of an Event of Default or a Potential Event of Default; or

(b)	any matter which indicates that an Event of Default or a Potential Event of Default may have occurred,

and will thereafter keep the Agent fully up‑to‑date with all developments.

11.14

Provision of further information. Each Obligor will, as soon as practicable after receiving the request, provide the Agent with any additional financial or other information relating:

(a)	to an Obligor, the Ships, the Insurances or the Earnings; or

(b)	to any other matter relevant to, or to any provision of, a Finance Document,

which may be requested by the Agent, the Security Trustee, a Swap Bank or any Lender at any time.

11.15

Provision of copies and translation of documents. The Obligors will supply the Agent with a sufficient number of copies of the documents referred to above to provide one copy for each Creditor Party; and if the Agent so requires in respect of any of those documents, the Obligors will provide a certified English translation prepared by a translator approved by the Agent.

11.16

Segregation and separate identity . Each Obligor will keep separate books and records, maintain separate accounts, conduct business in its own name, at all times observe all corporate and other formalities required by its constitutional documents, pay its liabilities out of its own funds, maintain adequate capital, use separate stationery, invoices and cheques and correct any known misunderstanding regarding its separate identity.

11.17

Transactions with associated companies . No Obligor will enter into any transactions with any associated company, other than on an arm's length basis, and shall observe segregation of its activities from those of other related parties and not co-mingle its assets, nor become liable for any third party obligations or pledge the Lenders' credit.

11.18

"Know your customer" . Each Obligor will promptly on any Lender's request supply to it any documentation or other evidence that is reasonably required by that Lender (whether for itself or on behalf of any person to whom that Lender may, or may intend to, transfer any of its rights or obligations under this Agreement) to enable the Lender:

(a)	to carry out and be satisfied it has complied with all necessary "know your customer" requirements that that Lender is obliged to carry out under all applicable laws and regulations pursuant to or applicable to the transactions contemplated in this Agreement; and

(b)	to comply with its obligations under all applicable laws and regulations to prevent money laundering and corruption and to conduct ongoing monitoring of the business relationship with the Obligors.

The Obligors will promptly notify the relevant Lender of any changes in any information supplied by any of them relating to any matter referred to in clause 11.18(a) or clause 11.18(b), such as:

(i)

A change in any Obligor's board of directors.

(ii)

A change in the legal or beneficial ownership of 25% or more of a Borrower's issued share capital, as well as information about a natural person acquiring a legal or beneficial interest in 25% or more of a Borrower's issued share capital.

(iii)

A change in the nature of an Obligor's business from that which it carries on at the date of this Agreement, as well as information about any Obligor starting or ceasing to carry on business in a country apart from Greece; and

(iv)

A change in the any Obligor's corporate objectives.

12	CORPORATE UNDERTAKINGS

12.1	General. Each Obligor also undertakes with each Creditor Party to comply with the following provisions of this Clause 12 at all times during the Security Period except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

12.2	Maintenance of status. Each Obligor will maintain its separate corporate existence and remain in good standing under the laws of the Marshall Islands.

12.3	Financial covenants . The Obligors will procure that:

(i)

the ratio of EBITDA to Interest Expense shall at all times be at least 3 to 1;

(ii)

at all times the ratio of Total Liabilities of the Group to Total Assets of the Group shall not be greater than 0.65 to 1;

(iii)

at all times the Net Worth of the Group shall be at least $250,000,000; and

(iv)

at all times the Group has available to it unencumbered cash (which shall include cash presented as "restricted cash" in the Latest Accounts) and/or cash equivalents in an aggregate amount of at least $25,000,000.

12.4	Most-favoured lender clause

If in connection with any Financial Indebtedness the Corporate Guarantor gives any financial covenants to any lender, then the Obligors must give immediate notice of those covenants to the Agent, and if the Agent considers those covenants to be stricter than those given to the Creditor Parties pursuant to this Agreement or the Corporate Guarantee, then the Obligors shall enter into such documentation as the Agent shall reasonably require so that identical covenants are given also to the Creditor Parties for the same period as those covenants will apply in respect of that Financial Indebtedness.

12.5	Negative undertakings. The Borrowers will not, and in relation to Clauses 12.5(b), (i) and (j), the Corporate Guarantor will not:

(a)	carry on, any business other than the ownership, chartering and operation of the Ship owned by it; or

(b)	following the occurrence of an Event of Default and while such Event of Default is continuing or if such payment would cause an Event of Default, pay any dividend or make any other form of distribution or effect any form of redemption, purchase or return of share capital; or

(c)	provide any form of credit or financial assistance to any person or enter into any transaction with or involving

(i)

a person who is directly or indirectly interested in that Borrower's share or loan capital; or

(ii)

any company in or with which such a person is directly or indirectly interested or connected,

on terms which are, in any respect, less favourable to that Borrower than those which it could obtain in a bargain made at arms' length;

(d)	open or maintain any account with any bank or financial institution except accounts with the Account Bank for the purposes of the Finance Documents;

(e)	issue, allot or grant any person a right to any shares in its capital or repurchase or reduce its issued share capital or otherwise alter its corporate structure or permit the Corporate Guarantor to take any of the actions set out in this Clause 12.4(e) in relation to itself;

(f)	acquire any asset other than the Ship owned by it;

(g)	acquire any shares or other securities other than US or UK Treasury bills and certificates of deposit issued by major North American or European banks, or enter into any transaction in a derivative;

(h)	enter into any form of amalgamation, merger or de-merger or any form of reconstruction or reorganisation;

(i)

incur any Financial Indebtedness other than (i) (in respect of each Borrower) in an aggregate amount of no more than $1,000,000 incurred in the ordinary course of owning and operating the Ship of which it is the owner and (ii) in respect of the Corporate Guarantor (aa) in an aggregate amount of no more than $5,000,000 incurred in the normal course of business or (bb) for long term debt financing and hedging in respect of vessels owned or to be acquired by any of its subsidiaries or, in relation to each Obligor, as otherwise contemplated by this Agreement; or

(j)	allow any Secured Liabilities to be subordinated to any other Financial Indebtedness incurred by an Obligor.

12.6

Inter-company Loans . Each Obligor shall procure that any Financial Indebtedness incurred from any of their respective shareholders or any other company which is controlled (directly or indirectly) by the Corporate Guarantor is so incurred on terms that (i) neither Borrower may borrow or become liable for more than $500,000 and (ii) the same is fully subordinated to the Borrowers' obligations under the Finance Documents in form and substance acceptable to the Majority Lenders.

12.7	Ownership . The Obligors shall ensure and procure that at all times after the first Drawdown Date all of the shares of and in each Borrower are wholly owned by the Shareholder.

12.8	Change of Control . The Obligors shall ensure and procure that there shall not occur a Change of Control Event.

12.9

Publicity . The Obligors shall permit, and do hereby authorise, each Creditor Party to publish and/or publicise, at their own expense their involvement in the transactions set out in this Agreement, and for that purpose to use the logo and/or trademark of any Security Party and give details of the names of the Obligors, the types and number of Ships, the amount of the Loan and the roles of each Creditor Party.

12.10

Sanctions . Each Obligor undertakes that it shall :

(i)

not be, and shall procure that any Security Party and other Group Member or any affiliate of any of them, or any director, officer, agent, employee or person acting on behalf of the foregoing is not, a Restricted Person and does not act directly or indirectly on behalf of a Restricted Person or have a course of dealings with a Restricted Person;

(ii)

and shall procure that each Security Party and each other Group Member and each affiliate of any of them shall, not use any revenue or benefit derived from any activity or dealing with a Restricted Person in discharging any obligation due or owing to the Creditor Parties;

(iii)

and shall procure that each Security Party and each other Group Member and each affiliate of any of them shall not take any action, make any omission or use (directly or indirectly) any proceeds of the Loan in a manner that is a breach of Sanctions; and/or causes (or will cause) a breach of Sanctions by any Creditor Party;

(iv)

procure that no proceeds from any activity or dealing with a Restricted Person are credited to any bank account held with any Creditor Party in its name or in the name of any other member of the Group or any affiliate of any of them;

(v)

take, and shall procure that each Security Party and each other Group Member and each affiliate of any of them has taken, reasonable measures to ensure compliance with Sanctions;

(vi)

and shall procure that each Security Party and each other Group Member 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 by any Sanctions Authority; and

(vii)

not accept, obtain or receive any goods or services from any Restricted Person, except (without limiting Clause 14.11 (b)), to the extent relating to any warranties and/or guarantees given and/or liabilities incurred in respect of an activity or dealing with a Restricted Person by a Borrower, any other Security Party or any other Group Member in accordance with this Agreement

provided that:

(A)

the Obligors shall be obliged only to ensure that the provisions of this clause apply to each Group Member only to the extent that that Group Member is bound by the relevant law or regulation in respect of the matters set out in this clause; and

(B)

if (aa) a Creditor Party is resident in Germany (" Inländer ") within the meaning of Section 2 Paragraph 15 of the German foreign trade and payments act ( Außenwirtschaftsgesetz and herein, " AWG ") and is (bb) therefore subject to Section 7 of the German foreign trade ordinance ( Außenwirtschaftsverordnung and herein , " AWV ") and would (cc) therefore not itself be permitted to give a representation or an undertaking that is given or is to be given by a Security Party with respect to sanctions under this Agreement or any other Finance Document, then such Creditor Party shall not, in the event of a breach by a Security Party of any such representation or undertaking, be entitled to invoke or declare an Event of Default or vote for a cancellation of the Total Commitments and/or repayment of the Loan in accordance with Clause 19.4 ( Acceleration ).

The undertakings in clauses 4.8 and 12.10, the ship covenant in clause 14.11 (b) and the representations in clause 10.22 (i) and (ii) shall not apply for the benefit of any Creditor Party which is resident in Germany (" Inländer ") within the meaning of Section 2 Para. 15 of the AWG to the //extent that the enforcement of such provision by that Creditor Party would (a) violate, conflict with or incur liability under EU Regulation (EC) 2271/96 or (b) violate or conflict with section 7 of the AWV in connection with section 4 paragraph (1)(a)(3) of the AWG or any similar anti-boycott statute in force in the Federal Republic of Germany.

12.11

Anti-bribery. Each Obligor shall ensure that neither it nor any of its respective affiliates, officers, directors, employees or agents acting on its behalf will offer, give, insist on, receive or solicit any illegal payment or improper advantage to influence the action of any person in connection with any of its business.

12.12

FATCA Information

(a)

Subject to paragraph (c) below, each party to a Security Document shall, within ten Business Days of a reasonable request by another party to a Security Document:

(i)

confirm to that other party whether it is:

(A)

a FATCA Exempt Party; or

(B)

not a FATCA Exempt Party; and

(ii)

supply to the requesting party such forms, documentation and other information relating to its status under FATCA as the requesting party reasonably requests for the purposes of the requesting party 's compliance with FATCA.

(b)

If a party to a Security Document confirms to another party pursuant to 12.12 (a)(i) above 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.

(c)

subclause (a) above shall not oblige any Creditor Party to do anything which would or might in its reasonable opinion constitute a breach of:

(i)

any law or regulation;

(ii)

any policy of that Creditor Party;

(iii)

any fiduciary duty; or

(iv)

any duty of confidentiality.

(d)

If a party to a Security Document fails to confirm its status or to supply forms, documentation or other information requested in accordance with subclause (a) above (including, for the avoidance of doubt, where paragraph (c) above applies), then such Party shall be treated for the purposes of the Finance Documents (and payments under them) as if it is not a FATCA Exempt Party until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.

INSURANCE

13.1	General. Each Borrower undertakes with each Creditor Party to comply with the following provisions of this Clause 13 at all times during the Security Period (after its Ship has become subject to a Mortgage) except as the Agent may, with the authority of the Majority Lenders, otherwise permit.

13.2	Maintenance of obligatory insurances. Each Borrower shall keep the Ship owned by it insured at its own expense against:

(a)	fire and usual marine risks (including hull and machinery and excess risks);

(b)	war risks (including acts of terrorism and piracy, and confiscation); and

(c)	protection and indemnity risks (which cover shall include freight, demurrage and defence) in excess of the limit of cover for oil pollution liability risks included within the protection and indemnity risks; and

(d)

any other risks against which the Security Trustee considers, having regard to practices and other circumstances prevailing at the relevant time, it would in the opinion of the Security Trustee be reasonable for that Borrower to insure and which are specified by the Security Trustee by notice to that Borrower.

13.3	Terms of obligatory insurances. Each Borrower shall effect such insurances on its Ship:

(a)	in Dollars, at its own cost;

(b)

in the case of fire and usual marine risks and war risks, in an amount on an agreed value basis at least the greatest of (i) if both Ships are then subject to a Mortgage, such amount which, when aggregated with the amount for which the other Ship is insured, is equal to 120 per cent. of the aggregate of the Loan and the Swap Exposure, or, if only one Ship is subject to a Mortgage, the aggregate of the Tranche relating thereto and the Swap Exposure and (ii) the Market Value of its Ship;

(c)

in the case of oil pollution liability risks, for an aggregate amount equal to the highest level of cover from time to time available under basic protection and indemnity club entry (with the international group of protection and indemnity clubs) and the international marine insurance market (currently $1,000,000,000);

(d)	in relation to protection and indemnity risks in respect of the full value and tonnage of the Ship owned by it;

(e)	on approved terms;

(f)	in favour of approved assured;

(g)	with approved deductibles; and

(h)	through approved brokers and with approved insurance companies and/or underwriters or, in the case of war risks and protection and indemnity risks, in approved war risks and protection and indemnity risks associations.

13.4	Further protections for the Creditor Parties. In addition to the terms set out in Clause 13.3, each Borrower shall procure that the obligatory insurances shall:

(a)

(except in relation to risks referred to in Clause 13.2(c)) name (or be amended to name) the Security Trustee as additional named assured for its rights and interests, warranted no operational interest and with full waiver of rights of subrogation against the Security Trustee, but without the Security Trustee thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance;

(b)	name the Security Trustee as sole loss payee with such directions for payment as the Security Trustee may specify;

(c)	provide that all payments by or on behalf of the insurers under the obligatory insurances to the Security Trustee shall be made without set‑off, counterclaim or deductions or condition whatsoever;

(d)

provide that the insurers shall waive, to the fullest extent permitted by English law, their entitlement (if any) (whether by statute, common law, equity, or otherwise) to be subrogated to the rights and remedies of the Security Trustee in respect of any rights or interests (secured or not) held by or available to the Security Trustee in respect of the Secured Liabilities, until the Secured Liabilities shall have been fully repaid and discharged, except that the insurers shall not be restricted by the terms of this paragraph

(d) from making personal claims against persons (other than the Borrowers or any Creditor Party) in circumstances where the insurers have fully discharged their liabilities and obligations under the relevant obligatory insurances;

(e)	provide that such obligatory insurances shall be primary without right of contribution from other insurances which may be carried by the Security Trustee;

(f)	provide that the Security Trustee may make proof of loss if the Borrowers fail to do so; and

(g)

provide that if any obligatory insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Security Trustee, or if any obligatory insurance is allowed to lapse for non‑payment of premium, such cancellation, charge or lapse shall not be effective with respect to the Security Trustee for 30 days (or 7 days in the case of war risks) after receipt by the Security Trustee of prior written notice from the insurers of such cancellation, change or lapse.

13.5	Renewal of obligatory insurances. Each Borrower shall:

(a)	at least 21 days before the expiry of any obligatory insurance:

(i)

notify the Security Trustee of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom that Borrower proposes to renew that insurance and of the proposed terms of renewal; and

(ii)

in case of any substantial change in insurance cover, obtain the Majority Lenders' approval to the matters referred to in paragraph (i) above;

(b)	at least 14 days before the expiry of any obligatory insurance, renew the insurance; and

(c)	procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal notify the Security Trustee in writing of the terms and conditions of the renewal.

13.6

Copies of policies; letters of undertaking. Each Borrower shall ensure that all approved brokers provide the Security Trustee with copies of all policies relating to the obligatory insurances which they effect or renew and of a letter or letters or undertaking in a form required by the Majority Lenders and including undertakings by the approved brokers that:

(a)	they will have endorsed on each policy, immediately upon issue, a loss payable clause and a notice of assignment complying with the provisions of Clause 13.4;

(b)	they will hold such policies, and the benefit of such insurances, to the order of the Security Trustee in accordance with the said loss payable clause;

(c)	they will advise the Security Trustee immediately of any material change to the terms of the obligatory insurances;

(d)

they will notify the Security Trustee, not less than 14 days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from that Borrower or its agents and, in the event of their receiving instructions to renew, they will promptly notify the Security Trustee of the terms of the instructions; and

(e)	they will not set off against any sum recoverable in respect of a claim relating to the Ship under such obligatory insurances any premiums or other amounts due to them or any

other person whether in respect of the Ship or otherwise, they waive any lien on the policies or, any sums received under them, which they might have in respect of such premiums or other amounts, and they will not cancel such obligatory insurances by reason of non‑payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Ship forthwith upon being so requested by the Security Trustee.

13.7	Copies of certificates of entry. Each Borrower shall ensure that any protection and indemnity and/or war risks associations in which the Ship owned by it is entered provide the Security Trustee with:

(a)	a certified copy of the certificate of entry for that Ship;

(b)	a letter or letters of undertaking in such form as may be required by the Security Trustee; and

(c)

where required to be issued under the terms of insurance/indemnity provided by a Borrower's protection and indemnity association, a certified copy of each United States of America voyage quarterly declaration (or other similar document or documents) made by such Borrower in relation to the Ship in accordance with the requirements of such protection and indemnity association; and

(d)	if applicable, a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Ship.

13.8	Deposit of original policies. Each Borrower shall ensure that all policies relating to obligatory insurances are deposited with the approved brokers through which the insurances are effected or renewed.

13.9	Payment of premiums. Each Borrower shall punctually pay all premiums or other sums payable in respect of the obligatory insurances and produce all relevant receipts when so required by the Security Trustee.

13.10

Guarantees. Each Borrower shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect.

13.11

Restrictions on employment. Neither Borrower shall employ the Ship, nor permit her to be employed, outside the cover provided by any obligatory insurances.

13.12

Compliance with terms of insurances. Neither Borrower shall do or omit to do (or permit to be done or not to be done) any act or thing which would or might render any obligatory insurance invalid, void, voidable or unenforceable or render any sum payable thereunder repayable in whole or in part; and, in particular:

(a)

each Borrower shall take all necessary action and comply with all requirements which may from time to time be applicable to the obligatory insurances, and (without limiting the obligation contained in Clause 13.7(c) above) ensure that the obligatory insurances are not made subject to any exclusions or qualifications to which the Security Trustee has not given its prior approval;

(b)	neither Borrower shall make any changes relating to the classification or classification society or manager or operator of the Ship owned by it approved by the underwriters of the obligatory insurances;

(c)

each Borrower shall make all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Ship owned by it is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation); and

(d)

neither Borrower shall employ the Ship owned by it, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the obligatory insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify.

13.13

Alteration to terms of insurances. Neither Borrower shall either make or agree to any alteration to the terms of any obligatory insurance or waive any right relating to any obligatory insurance without the prior written consent of the Security Trustee.

13.14

Settlement of claims. Neither Borrower shall settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Security Trustee to collect or recover any moneys which at any time become payable in respect of the obligatory insurances.

13.15

Provision of copies of communications. Each Borrower shall provide the Agent, at the time of each such communication, copies of all written communications between that Borrower and:

(a)	the approved brokers; and

(b)	the approved protection and indemnity and/or war risks associations; and

(c)	the approved insurance companies and/or underwriters, which relate directly or indirectly to:

(i)

that Borrower's obligations relating to the obligatory insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and

(ii)

any credit arrangements made between that Borrower and any of the persons referred to in paragraphs (a) or (b) above relating wholly or partly to the effecting or maintenance of the obligatory insurances.

13.16

Provision of information. In addition, each Borrower shall promptly provide the Agent (or any persons which it may designate) with any information which the Agent (or any such designated person) requests for the purpose of:

(a)	obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the obligatory insurances effected or proposed to be effected; and/or

(b)	effecting, maintaining or renewing any such insurances as are referred to in Clause 13.17 or dealing with or considering any matters relating to any such insurances,

and the Borrowers shall, forthwith upon demand, indemnify the Security Trustee in respect of all fees and other expenses incurred by or for the account of the Security Trustee in connection with any such report as is referred to in paragraph (a) above.

13.17

Mortgagee's interest. The Security Trustee shall be entitled from time to time to effect, maintain and renew in such amounts, on such terms, through such insurers and generally in such manner as the Majority Lenders may from time to time consider appropriate:

(a)

a mortgagee's interest marine insurance (in an amount of no less than 120% of the aggregate of the Loan and the Swap Exposure (if any) at any relevant time) providing for the indemnification of the Creditor Parties for any losses under or in connection with any Finance Document which directly or indirectly result from loss of or damage to a Ship or a liability of a Ship or of a Borrower, being a loss or damage which is prima facie covered by an obligatory insurance but in respect of which there is a non-payment (or reduced payment) by the underwriters by reason of, or on the basis of an allegation concerning:

(i)

any act or omission on the part of a Borrower, of any operator, charterer, manager or sub-manager of a Ship or of any officer, employee or agent of a Borrower or of any such person, including any breach of warranty or condition or any non-disclosure relating to such obligatory insurance;

(ii)

any act or omission, whether deliberate, negligent or accidental, or any knowledge or privity of a Borrower, any other person referred to in paragraph (i) above, or of any officer, employee or agent of that Borrower or of such a person, including the casting away or damaging of a Ship and/or a Ship being unseaworthy; and/or

(iii)

any other matter capable of being insured against under a mortgagee's interest marine insurance policy whether or not similar to the foregoing;

(b)

a mortgagee's interest additional perils policy (in an amount of no less than 120% of the aggregate of the Loan and the Swap Exposure (if any) at any relevant time) providing for the indemnification of the Creditor Parties against, among other things, any possible losses or other consequences of any Environmental Claim, including the risk of expropriation, arrest or any form of detention of a Ship, the imposition of any Security Interest over a Ship and/or any other matter capable of being insured against under a mortgagee's interest additional perils policy whether or not similar to the foregoing

and the Borrowers shall upon demand fully indemnify the Creditor Parties in respect of all premiums and other expenses which are incurred in connection with or with a view to effecting, maintaining or renewing any such insurance or dealing with, or considering, any matter arising out of any such insurance.

13.18

Review of insurance requirements. The Agent shall be entitled to review the requirements of this Clause 13 from time to time in order to take account of any changes in circumstances after the date of this Agreement which are, in the opinion of the Majority Lenders, significant and capable of affecting either Borrower or either Ship and its insurance (including, without limitation, changes in the availability or the cost of insurance coverage or the risks to which the Borrowers may be subject), and may appoint insurance consultants in relation to this review at the cost of the Borrowers.

13.19

Modification of insurance requirements. The Agent shall notify the Borrowers of any proposed modification under Clause 13.18 to the requirements of this Clause 13 which the Majority Lenders consider appropriate in the circumstances, and such modification shall take effect on and from the date it is notified in writing to the Borrowers as an amendment to this Clause 13 and shall bind the Borrowers accordingly.

13.20

Compliance with mortgagee's instructions. The Agent shall be entitled (without prejudice to or limitation of any other rights which it may have or acquire under any Finance Document) to require a Ship to remain at any safe port or to proceed to and remain at any safe port designated by the Agent until the Borrowers implement any amendments to the terms of the obligatory insurances and any operational changes required as a result of a notice served under Clause 13.19.

13.21

Insurance report. The Agent may (and upon the request of a Lender, will) from time to time obtain, at the cost of the Borrowers, an opinion from an independent insurance consultant who is acceptable to the Lenders on such matters relating to the insurances for the Ships or either of them as the Agent may require.

14	SHIP COVENANTS

14.1

General. Each Obligor also undertakes with each Creditor Party to comply with the following provisions of this Clause 14 at all times during the Security Period except as the Agent, with the authority of the Majority Lenders or, in relation to Clauses 14.2 and 14.3(b), of the Lenders, may otherwise permit (such permission to be in writing in relation to Clauses 14.2, 14.3(b) and 14.14(e)).

14.2

Ship's name and registration. Each Borrower shall keep the Ship owned by it registered in its name under the Approved Flag; shall not do or allow to be done anything as a result of which such registration might be cancelled or imperilled; and shall not change the name or port of registry of the Ship owned by it.

14.3	Repair and classification. Each Borrower shall keep the Ship owned by it in a good and safe condition and state of repair:

(a)	consistent with first‑class ship ownership and management practice;

(b)

so as to maintain the highest class applicable to vessels of the same age, type and specification as the Ship at Lloyd's Register of Shipping (or an equivalent IACS classification society acceptable to the Agent in its sole discretion) free of overdue recommendations, adverse notations and conditions; and

(c)

so as to comply with all laws and regulations applicable to vessels registered at ports in the Approved Flag State or to vessels trading to any jurisdiction to which that Ship may trade from time to time, including but not limited to the ISM Code and the ISPS Code and the ISM Code Documentation and the ISPS Code Documentation.

14.4	Class record etc. Each Borrower shall, upon the written request of the Agent, instruct the classification society of the Ship owned by it to do all or any of the following:

(a)

to send to the Agent, following receipt of a written request from the Agent, certified true copies of all original class records held by the classification society in relation to that Ship;

(b)

to allow the Agent (or its agents), at any time and from time to time, to inspect the original class and related records of that Borrower and that Ship at the offices of the classification society and to take copies of them.

14.5	Modification. Neither Borrower shall make any modification or repairs to, or replacement of, its Ship or equipment installed on her which would or might materially alter the structure, type or performance characteristics of that Ship or materially reduce her value.

14.6

Removal of parts. Neither Borrower shall remove any material part of its Ship or any item of equipment installed on either Ship unless the part or item so removed is forthwith replaced by a suitable part or item which is in the same condition as or better condition than the part or item removed, is free from any Security Interest or any right in favour of any person other than the Security Trustee and becomes on installation on the relevant Ship the property of the relevant Borrower and subject to the security constituted by the Mortgage Provided that a Borrower may install equipment owned by a third party if the equipment can be removed without any risk of damage to the Ship owned by it.

14.7

Technical Survey . Without prejudice to the Borrowers' obligations pursuant to Clause 14.8, each Borrower shall promptly following the request of the Agent (such request to be made no more than twice in any calendar year), submit the Ship owned by it for a technical survey by an independent surveyor or surveyors appointed by the Agent. All fees and expenses incurred in relation to the appointment of the surveyor or surveyors and the preparation and issue of all technical reports pursuant to this Clause 14.7 shall be for the account of the Borrowers.

14.8	Surveys. Each Borrower shall submit the Ship owned by it regularly to all periodical or other surveys which may be required for classification purposes and, if so required by the Agent provide the Security Trustee, with copies of all survey reports.

14.9

Inspection. Each Borrower shall permit the Agent (by surveyors or other persons appointed by it for that purpose) to board the Ship owned by it at all reasonable times, to inspect her condition or to satisfy themselves about proposed or executed repairs and shall afford all proper facilities for such inspections. All fees and expenses incurred in relation to the appointment of the surveyor or surveyors and preparation and issue of all technical reports pursuant to this Clause 14.9 shall be for the account of the Borrowers (i) prior to the occurrence of an Event of Default, once per Ship and per calendar year and (ii) following the occurrence of an Event of Default, in all cases.

14.10

Prevention of and release from arrest. Each Borrower shall promptly discharge:

(a)	all liabilities which give or may give rise to maritime or possessory liens on or claims enforceable against the Ship owned by it, the Earnings or the Insurances;

(b)	all taxes, dues and other amounts charged in respect of the Ship owned by it, the Earnings or the Insurances; and

(c)	all other outgoings whatsoever in respect of the Ship owned by it, the Earnings or the Insurances

and, forthwith upon receiving notice of the arrest of the Ship owned by it, or of her detention in exercise or purported exercise of any lien or claim, the Borrowers shall procure her release by providing bail or otherwise as the circumstances may require.

14.11

Compliance with laws etc. Each Borrower shall:

(a)

comply, or procure compliance with the ISM Code, the ISPS Code, all Environmental Laws and all other laws or regulations relating to the Ship owned by it, its ownership, operation and management or to the business of that Borrower (including, but not limited to, the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organisation);

(b)	comply, and will use best endeavours to procure that each Security Party and each other Group Member will, comply in all respect with all Sanctions

(c)	not employ the Ship owned by it nor allow her employment in any manner contrary to any law or regulation in any relevant jurisdiction including but not limited to the ISM Code and the ISPS Code; and

(d)

in the event of hostilities in any part of the world (whether war is declared or not), not cause or permit the Ship owned by it to enter or trade to any zone which is declared a war zone by any government or by the Ship's war risks insurers unless the prior written consent of the Agent has been given and that Borrower has (at its expense) effected any special, additional or modified insurance cover which the Agent may require.

14.12

Provision of information. Each Borrower shall promptly provide the Security Trustee with any information which the Security Trustee requests regarding:

(a)	the Ship owned by it, her employment, position and engagements;

(b)	the Earnings and payments and amounts due to the master and crew of the Ship owned by it;

(c)	any expenses incurred, or likely to be incurred, in connection with the operation, maintenance or repair of the Ship owned by it and any payments made in respect of that Ship;

(d)	any towages and salvages; and

(e)	its compliance or the compliance of the Ship owned by it with the ISM Code and the ISPS Code,

and, upon the Agent's request, provide copies of any current charter relating to the Ship owned by it, of any current charter guarantee and, of the ISM Code Documentation and the ISPS Code Documentation and at any time when the Approved Manager is required to have ITF approval, evidence of such approval

14.13

Notification of certain events. Each Borrower shall immediately notify the Agent by letter of:

(a)	any casualty which is or is likely to be or to become a Major Casualty;

(b)	any occurrence as a result of which the Ship owned by it has become or is, by the passing of time or otherwise, likely to become a Total Loss;

(c)	any requirement or recommendation made by any insurer or classification society or by any competent authority which is not immediately complied with;

(d)	any arrest or detention of the Ship owned by it, any exercise or purported exercise of any lien on that Ship or her Earnings or any requisition of that Ship for hire;

(e)	any intended dry docking of the Ship owned by it;

(f)	any Environmental Claim made against that Borrower or in connection with the Ship owned by it, or any Environmental Incident;

(g)	any claim for breach of the ISM Code or the ISPS Code being made against that Borrower or otherwise in connection with the Ship owned by it; or

(h)	any other matter, event or incident, actual or threatened, the effect of which will or could lead to the ISM Code and/or the ISPS Code not being complied with,

and that Borrower shall keep the Agent advised in writing on a regular basis and in such detail as the Agent shall require of that Borrower's, the Approved Manager's or any other person's response to any of those events or matters.

14.14

Restrictions on chartering, appointment of agents etc.

Neither Borrower shall without the prior consent of the Agent:

(a)	let the Ship owned by it on demise charter for any period;

(b)	enter into any time or consecutive voyage charter in respect of the Ship owned by it for a term which exceeds, or which by virtue of any optional extensions may exceed, 12 months;

(c)	enter into any charter in relation to the Ship owned by it under which more than 2 months' hire (or the equivalent) is payable in advance;

(d)	charter the Ship owned by it otherwise than on bona fide arm's length terms at the time when that Ship is fixed;

(e)	appoint an agent of the Ship owned by it other than the Approved Manager or agree to any alteration to the terms of the Approved Manager's appointment;

(f)	de‑activate or lay up the Ship owned by it; or

(g)

put the Ship owned by it into the possession of any person for the purpose of work being done upon her in an amount exceeding or likely to exceed $500,000 (or the equivalent in any other currency) unless that person has first given to the Security Trustee and in terms satisfactory to it a written undertaking not to exercise any lien on that Ship or her Earnings for the cost of such work or otherwise.

14.15

Notice of Mortgage. Each Borrower shall keep the Mortgage registered against the Ship owned by it as a valid first priority mortgage, carry on board that Ship a certified copy of the Mortgage and place and maintain in a conspicuous place in the navigation room and the Master's cabin of that Ship a framed printed notice stating that that Ship is mortgaged by that Borrower to the Security Trustee.

14.16

Sharing of Earnings. Neither Borrower shall:

(a)	enter into any agreement or arrangement for the sharing of any Earnings;

(b)	enter into any agreement or arrangement for the postponement of any date on which any Earnings are due; the reduction of the amount of any Earnings or otherwise for the release or adverse alteration of any right of a Borrower to any Earnings; or

(c)	enter into any agreement or arrangement for the release of, or adverse alteration to, any guarantee or Security Interest relating to any Earnings.

14.17

Charter Assignment. If a Borrower enters into any charter or contract of affreightment in respect of the Ship owned by it which is of 12 months or more in duration, or is capable of exceeding 12 months in duration, that Borrower shall, at the request of the Agent, execute in favour of the Security Trustee an assignment and notice of assignment of such charter and (in the case of bareboat charter) a tripartite deed made with the charterer each in such form and on such terms as the Lenders may require, and shall deliver to the Agent such other documents equivalent to those referred to at paragraphs 3, 4, 5 and 6 of Part A of Schedule 4 hereof as the Agent may require.

14.18

Required Charterparties . Neither Borrower shall terminate or amend as to charterhire, term or any other material respect the Required Charterparty to which it is party.

15	SECURITY COVER

15.1	Provision of additional security cover; prepayment of Loan. Each Borrower undertakes with each Creditor Party that if the Agent (acting on the instructions of the Majority Lenders) notifies the Borrowers that:

(a)	the Market Value (determined as provided below) of a Ship; plus

(b)	the net realisable value of any additional security previously provided under this Clause 15,

is below 140% of the aggregate of the Relevant Tranche and any Swap Exposure relating thereto, the Borrowers will, within 10 days after the date on which the Agent's notice is served, either:

(i)

provide, or ensure that a third party provides, additional security which, in the opinion of the Majority Lenders, has a net realisable value at least equal to the shortfall and which covers such asset or assets, and is documented in such terms, as the Agent may, with authorisation from the Majority Lenders, approve or require; or

(ii)

prepay in accordance with Clause 8 such part (at least) of the Relevant Tranche as will eliminate the shortfall.

15.2	Valuation of Ship. The market value of a Ship at any date is that shown as the average of two valuations each prepared:

(a)	In form and substance acceptable to the Agent;

(b)	as at a date not more than 15 days previously and addressed to the Agent;

(c)	by an Approved Broker which the Agent has appointed or approved for the purpose;

(d)	with or without physical inspection of the relevant Ship (as the Agent may require);

(e)	on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment; and

(f)	after deducting the estimated amount of the usual and reasonable expenses which would be incurred in connection with the sale

provided that if such two valuations differ by more than 10%, then the Agent shall appoint a third Approved Broker to provide a valuation in accordance with this Clause 15.2, and the Market Value of the relevant Ship shall be the average of such 3 valuations.

15.3	Value of additional security. The net realisable value of any additional security which is provided under Clause 15.1 and which consists of a Security Interest over a vessel shall be that shown by a valuation complying with the requirements of Clause 15.2.

15.4	Valuations binding. Any valuation under Clause 15.1(b)(i), 15.2 or 15.3 shall be binding and conclusive as regards the Borrowers, as shall be any valuation which the Majority Lenders make of a security which does not consist of or include a Security Interest.

15.5

Provision of information. The Borrowers shall promptly provide the Agent and any Approved Broker acting under Clause 15.2 or 15.3 with any information which the Agent or the Approved Broker may request for the purposes of the valuation; and, if the Borrowers fail to provide the information by the date specified in the request, the valuation may be made on any basis and assumptions which the Approved Broker or the Majority Lenders (or the expert appointed by them) consider prudent.

15.6

Payment of valuation expenses. Without prejudice to the generality of the Borrowers' obligations under Clauses 20.2, 20.3 and 21.2, the Borrowers shall, on demand, pay the Agent the amount of the fees and expenses of any Approved Broker instructed by the Agent under this Clause and all legal and other expenses incurred by any Creditor Party in connection with any matter arising out of this Clause Provided that until the occurrence of an Event of Default or Potential Event of Default, the Borrowers shall be obliged to pay such fees and expenses in respect of each Ship on each Drawdown Date and six-monthly thereafter after drawdown of the first Advance relating to that Ship only.

15.7

Frequency of Valuations. The Borrowers acknowledge and agree that the Agent may commission valuations of the Ships at such times as any Lender or Lenders shall deem necessary and, in any event, the Agent shall obtain valuations of each Ship, (i) at the Borrowers' cost, on the Drawdown Date of each Advance and at six-monthly intervals after the Drawdown Date of the first Advance in respect of each Tranche and, after the occurrence of an Event of Default, at such times as the Lenders may require and (ii) at any other time at the cost of the Lender or Lenders which requires such valuation to be made.

16	PAYMENTS AND CALCULATIONS

16.1	Currency and method of payments. All payments to be made:

(a)	by the Lenders to the Agent; or

(b)	by either Borrower to the Agent, the Security Trustee or any Lender,

under a Finance Document shall be made to the Agent or to the Security Trustee, in the case of an amount payable to it:

(i)

by not later than 10.00 a.m. (New York City time) on the due date;

(ii)

in same day Dollar funds settled through the New York Clearing House Interbank Payments System (or in such other Dollar funds and/or settled in such other manner as the Agent shall specify as being customary at the time for the settlement of international transactions of the type contemplated by this Agreement); and

(iii)

if in Dollars and in the case of an amount payable by a Lender to the Agent or by a Borrower to the Agent or any Lender, to the account of the Agent at Bank of America, Swift BOFAUS3N, Fed Wire: 026009593 CHIPS 0959, beneficiary account name ABN AMRO Bank N.V,, Amsterdam (Swift: ABNANL2A), beneficiary account No. 06550368324) with reference, or to such other account with such other bank as the Agent may from time to time notify to the Borrowers and the other Creditor Parties or to such other account with such other bank as the Security Trustee may from time to time notify to the Borrowers and the other Creditor Parties .

16.2	Payment on non-Business Day. If any payment by a Borrower under a Finance Document would otherwise fall due on a day which is not a Business Day:

(a)	the due date shall be extended to the next succeeding Business Day; or

(b)	if the next succeeding Business Day falls in the next calendar month, the due date shall be brought forward to the immediately preceding Business Day,

and interest shall be payable during any extension under paragraph (a) at the rate payable on the original due date.

16.3	Basis for calculation of periodic payments. All interest and commitment fee and any other payments under any Finance Document which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a 360 day year.

16.4	Distribution of payments to Creditor Parties. Subject to Clauses 16.5, 16.6 and 16.7:

(a)

any amount received by the Agent or the Security Trustee under a Finance Document for distribution or remittance to a Lender, a Swap Bank or the Security Trustee shall be made available by the Agent to that Lender, that Swap Bank or, as the case may be to the Security Trustee by payment, with funds having the same value as the funds received, to such account as that Lender, that Swap Bank or the Security Trustee may have notified to the Agent not less than 5 Business Days previously; and

(b)	amounts to be applied in satisfying amounts of a particular category which are due to the Lenders generally shall be distributed by the Agent to each Lender pro rata to the amount in that category which is due to it.

16.5

Permitted deductions by Agent. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent may, before making an amount available to a Lender, deduct and withhold from that amount any sum which is then due and payable to the Agent from that Lender under any Finance Document or any sum which the Agent is then entitled under any Finance Document to require that Lender to pay on demand.

16.6

Agent only obliged to pay when monies received. Notwithstanding any other provision of this Agreement or any other Finance Document, the Agent shall not be obliged to make available to the Borrowers or any Lender or any Swap Bank any sum which the Agent is expecting to receive for remittance or distribution to the Borrowers or that Lender or that Swap Bank until the Agent has satisfied itself that it has received that sum.

16.7	Refund to Agent of monies not received. If and to the extent that the Agent makes available a sum to the Borrowers or a Lender or a Swap Bank, without first having received that sum, the Borrowers or (as the case may be) the Lender concerned or the Swap Bank concerned shall, on demand:

(a)	refund the sum in full to the Agent; and

(b)	pay to the Agent the amount (as certified by the Agent) which will indemnify the Agent against any funding or other loss, liability or expense incurred by the Agent as a result of making the sum available before receiving it.

16.8	Agent may assume receipt. Clause 16.7 shall not affect any claim which the Agent has under the law of restitution, and applies irrespective of whether the Agent had any form of notice that it had not received the sum which it made available.

16.9	Creditor Party accounts. Each Creditor Party shall maintain accounts showing the amounts owing to it by the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

16.10

Agent's memorandum account. The Agent shall maintain a memorandum account showing the amounts advanced by the Lenders and all other sums owing to the Creditor Parties from the Borrowers and each Security Party under the Finance Documents and all payments in respect of those amounts made by the Borrowers and any Security Party.

16.11

Accounts prima facie evidence. If any accounts maintained under Clauses 16.9 and 16.10 show an amount to be owing by the Borrowers or a Security Party to a Creditor Party, those accounts shall, absent manifest error, be prima facie evidence that that amount is owing to that Creditor Party.

17	APPLICATION OF RECEIPTS

17.1	Normal order of application. Except as any Finance Document may otherwise provide, any sums which are received or recovered by any Creditor Party under or by virtue of any Finance Document shall be applied:

(a)	FIRST: in or towards satisfaction of any amounts then due and payable under the Finance Documents in the following order and proportions:

(i)

first, in or towards satisfaction pro rata of all amounts then due and payable to the Creditor Parties under the Finance Documents other than those amounts referred to at paragraphs (ii) and (iii) (including, but without limitation, all amounts payable by the Borrowers under Clauses 20, 21 and 22 of this Agreement or by the Borrowers or any Security Party under any corresponding or similar provision in any other Finance Document);

(ii)

secondly, in or towards satisfaction pro rata of interest and default interest payable to the Creditor Parties under the Finance Documents (and, for this purpose, the expression " interest " shall include any net amount which the Borrowers shall have become liable to pay or deliver under section 2(c) (Obligations) of the Master Agreement but shall have failed to pay or deliver to the Swap Bank at the time of application or distribution under this Clause 17); and

(iii)

thirdly, in or towards satisfaction of the Loan and the Swap Exposure (calculated as at the actual Early Termination Date applying to each particular Designated Transaction, or if no such Early Termination Date shall have occurred, calculated as if an Early Termination Date occurred on the date of application or distribution hereunder) ;

(b)

SECONDLY: following the occurrence of an Event of Default, in retention of an amount equal to any amount not then due and payable under any Finance Document but which the Agent (or in the case of a Master Agreement, which the relevant Swap Bank), by notice to the Borrowers, the Security Parties and the other Creditor Parties, states in its opinion will or may become due and payable in the future and, upon those amounts becoming due and payable, in or towards satisfaction of them in accordance with the foregoing provisions of this Clause; and

(c)	THIRDLY: any surplus shall be paid to the Borrowers or to any other person appearing to be entitled to it.

17.2

Variation of order of application. The Security Trustee may, with the authorisation of the Lenders and the Swap Banks by notice to the Borrowers, the Security Parties and the other Creditor Parties provide for a different manner of application from that set out in Clause 17.1 either as regards a specified sum or sums or as regards sums in a specified category or categories.

17.3

Notice of variation of order of application. The Security Trustee may give notices under Clause 17.2 from time to time; and such a notice may be stated to apply not only to sums which may be received or recovered in the future, but also to any sum which has been received or recovered on or after the third Business Day before the date on which the notice is served.

17.4	Appropriation rights overridden. This Clause 17 and any notice which the Security Trustee gives under Clause 17.2 shall override any right of appropriation possessed, and any appropriation made, by either Borrower or any Security Party.

18	APPLICATION OF EARNINGS

18.1

Payment of Earnings and Swap Payments. Each Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period (and subject only to the provisions of the General Assignment), all the Earnings of the Ship owned by it are paid to the Earnings Account for that Ship, and all payments by the Swap Banks to the Borrowers under each Designated Transaction are paid to an Earnings Account.

18.2

Application of Earnings. Each Borrower undertakes with the Lenders that money from time to time credited to, or for the time being standing to the credit of, an Earnings Account shall, unless and until an Event of Default or Potential Event of Default shall have occurred (whereupon the provisions of Clause 17.1 shall be and become applicable), be available for application in the following manner:

(a)	FIRSTLY: in or towards meeting the costs, fees and expenses payable by the Borrowers under the Finance Documents;

(b)	SECONDLY: pari passu in or towards (i) making the transfers to the Retention Account required pursuant to Clause 18.3 and (ii) payment of amounts due and payable under the Master Agreement ;

(c)	THIRDLY: in or towards making the transfers to the Debt Service Reserve Accounts pursuant to Clause 18.7; and

(d)	FOURTHLY: provided no Event of Default or Potential Event of default has occurred which is continuing, in payment to the Borrowers.

18.3

Monthly retentions. Each Borrower undertakes with each Creditor Party to ensure that, throughout the Security Period commencing on the date falling one month after each first Drawdown Date of each Tranche and on the same day in each subsequent month, there is transferred to the Retention Account in the name of the Borrower which is the owner of that Ship:

(a)

one-third of the repayment instalment in respect of the Relevant Tranche falling due under Clause 8.1 on the next Repayment Date relative to such Tranche (and the first retention for each Tranche shall be in such amount as if the second Advance for that Tranche had been made in full prior to the date of that retention, whether or not such Advance has been made in fact); and

(b)

the relevant fraction of the aggregate amount of interest on the Relevant Tranche which is payable on the next due date for payment of interest for that Tranche.

Where:

" relevant fraction ", in respect of each Tranche, is a fraction of which the numerator is 1 and the denominator the number of months comprised in the then current Interest Period applicable to such Tranche (or, if current Interest Period ends after the next date for payment of interest under this Agreement, the number of months from the later of the commencement of the current Interest Period or the last due date for payment of interest to the next date for payment of interest under this Agreement).

18.4	Shortfall in Earnings. If the aggregate Earnings received in the Earnings Accounts are insufficient in any month for the required amount to be transferred to any Retention

Account under Clause 18.3 and/or the Debt Service Reserve Accounts under Clause 18.5, the Borrowers shall make up the amount of the insufficiency by payment in Dollars to the relevant Retention Account and the relevant Debt Service Reserve Account.

18.5

Application of retentions. Until an Event of Default or a Potential Event of Default occurs, the Account Bank shall on each Repayment Date and on each due date for the payment of interest under this Agreement pay to the Agent, for the Agent to distribute to the Lenders in accordance with Clause 16.4 so much of the then balance on the relevant Retention Account as equals:

(a)

the repayment instalment due on that Repayment Date; and, as the case may be,

(b)

the amount of interest payable on that interest payment date

in discharge of the Borrowers' liability for that repayment instalment or that interest.

18.6	Minimum Balance . The balance on each of the Earnings Accounts shall not fall below $2,500,000 while the Ship owned by the owner of such account is subject to a Mortgage.

18.7

Debt Service Reserve accounts. Each Borrower undertakes with each Creditor Party to ensure that on the date falling one month after the Drawdown Date (the " Relevant Drawdown Date ") in respect of the first Advance relating to its Ship and on the same day in each subsequent month, there is transferred to the Debt Service Reserve Account in its name $7,500,000 multiplied by the Relevant Fraction, such transfer to be made up to the earlier of

(i)

30 September 2018 in respect of Ship A and 31 July 2018 in respect of Ship B (the " Anticipated Termination Date ") and

(ii)

the date on which it enters into a Subsequent Qualified Charterparty

where " Relevant Fraction " means one divided by the number of complete months between the Relevant Drawdown Date and the Anticipated Termination Date in respect of the Required Charterparty for that Ship.

If a Borrower enters into a Subsequent Qualified Charterparty on terms and with a charterer acceptable to the Lenders, and that Borrower executes a Charterparty Assignment in respect thereof, then the balance on that Borrower's Debt Service Reserve Account shall be released to it upon the Borrowers' written request.

If a Borrower does not enter into a Subsequent Qualified Charterparty then the balance on its Debt Service Reserve Account shall remain on that account at all times.

18.8	Location of accounts. Each Borrower shall promptly :

(a)	comply with any requirement of the Agent as to the location or re‑location of the Earnings Accounts, the Retention Accounts, the Debt Service Reserve Account or any of them, provided that those accounts must at all times be with the Account Bank; and

(b)	execute any documents which the Agent specifies to create or maintain in favour of the Security Trustee a Security Interest over the Earnings Accounts and the Retention Accounts.

18.9	Debits for expenses etc . The Agent shall be entitled (but not obliged) from time to time to debit the Earnings Accounts, without prior notice following the occurrence of an Event of Default and otherwise with 5 Business Days prior notice, in order to discharge any

amount due and payable under Clause 20 or 21 to a Creditor Party or payment of which any Creditor Party has become entitled to demand under Clause 20 or 21.

18.10

Borrowers' obligations unaffected. The provisions of this Clause 18 do not affect:

(a)	the liability of the Borrowers to make payments of principal and interest on the due dates; or

(b)	any other liability or obligation of the Borrowers or any Security Party under any Finance Document.

19	EVENTS OF DEFAULT

19.1	Events of Default. An Event of Default occurs if:

(a)	either Borrower or any Security Party fails to pay when due or (if so payable) on demand any sum payable under a Finance Document or under any document relating to a Finance Document; or

(b)	any breach occurs of Clause 9.2, 11.2, 11.3, 12.2, 12.3, 12.4, 12.7, 12.8, 12.10, 13.2, 13.3, 13.5, 13.9, 14.11(b) or 15.1; or

(c)

any breach by either Borrower or any Security Party occurs of any provision of a Finance Document (other than a breach covered by paragraphs (a) or (b) above), provided that if, in the opinion of the Majority Lenders, such default is capable of remedy, and such default continues unremedied, no Event of Default shall occur unless such breach continues for 5 days after written notice from the Agent requesting action to remedy the same; or

(d)	any representation, warranty or statement made by, or by an officer of, a Borrower or a Security Party in a Finance Document or in the Drawdown Notice or any other notice or document relating to a Finance Document is untrue or misleading when it is made; or

(e)	any of the following occurs in relation to any Financial Indebtedness of a Relevant Person:

(i)

any Financial Indebtedness of a Relevant Person is not paid when due or, if so payable, on demand; or

(ii)

any Financial Indebtedness of a Relevant Person becomes due and payable or capable of being declared due and payable prior to its stated maturity date as a consequence of any event of default; or

(iii)

a lease, hire purchase agreement or charter creating any Financial Indebtedness of a Relevant Person is terminated by the lessor or owner or becomes capable of being terminated as a consequence of any termination event; or

(iv)

any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of a Relevant Person ceases to be available or becomes capable of being terminated as a result of any event of default, or cash cover is required, or becomes capable of being required, in respect of such a facility as a result of any event of default; or

(v)

any Security Interest securing any Financial Indebtedness of a Relevant Person becomes enforceable; or

(f)	any of the following occurs in relation to a Relevant Person:

(i)

a Relevant Person becomes, in the opinion of the Majority Lenders, unable to pay its debts as they fall due; or

(ii)

any assets of a Relevant Person are subject to any form of execution, attachment, arrest, sequestration or distress in respect of a sum of, or sums aggregating, $100,000 or more or the equivalent in another currency; or

(iii)

any administrative or other receiver is appointed over any asset of a Relevant Person; or

(iv)

a Relevant Person makes any formal declaration of bankruptcy or any formal statement to the effect that it is insolvent or likely to become insolvent, or a winding up or administration order is made in relation to a Relevant Person, or the members or directors of a Relevant Person pass a resolution to the effect that it should be wound up, placed in administration or cease to carry on business, save that this paragraph does not apply to a fully solvent winding up of a Relevant Person which is, or is to be, effected for the purposes of an amalgamation or reconstruction previously approved by the Majority Lenders and effected not later than 3 months after the commencement of the winding up; or

(v)

a petition is presented in any Pertinent Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of a Relevant Person unless the petition is being contested in good faith and on substantial grounds and is dismissed or withdrawn within 30 days of the presentation of the petition; or

(vi)

a Relevant Person petitions a court, or presents any proposal for, any form of judicial or non‑judicial suspension or deferral of payments, reorganisation of its debt (or certain of its debt) or arrangement with all or a substantial proportion (by number or value) of its creditors or of any class of them or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; or

(vii)

any meeting of the members or directors of a Relevant Person is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraphs (iii), (iv), (v) or (vi) above; or

(viii)

in a Pertinent Jurisdiction other than England, any event occurs or any procedure is commenced which, in the opinion of the Majority Lenders, is similar to any of the foregoing; or

(g)	either Borrower or any Security Party ceases or suspends carrying on its business or a part of its business which, in the opinion of the Majority Lenders, is material in the context of this Agreement; or

(h)	it becomes unlawful in any Pertinent Jurisdiction or impossible:

(i)

for either Borrower or any Security Party to discharge any liability under a Finance Document or to comply with any other obligation which the Majority Lenders consider material under a Finance Document; or

(ii)

for the Agent, the Security Trustee or the Lenders or the Swap Banks to exercise or enforce any right under, or to enforce any Security Interest created by, a Finance Document; or

(i)

any official consent necessary to enable either Borrower to own, operate or charter the Ship owned by it or to enable either Borrower or any Security Party to comply with any provision which the Majority Lenders consider material of a Finance Document is not granted, expires without being renewed, is revoked or becomes liable to revocation or any condition of such a consent is not fulfilled; or

(j)

it appears to the Agent that, without its prior written consent, a change has occurred or probably has occurred after the date of this Agreement in the direct and/or ultimate beneficial ownership of any of the shares in any Security Party or in the ultimate control of the voting rights attaching to any of those shares; or

(k)

any provision which the Majority Lenders consider material of a Finance Document proves to have been or becomes invalid or unenforceable, or a Security Interest created by a Finance Document proves to have been or becomes invalid or unenforceable or such a Security Interest proves to have ranked after, or loses its priority to, another Security Interest or any other third party claim or interest; or

(l)	the security constituted by a Finance Document is in any way imperilled or in jeopardy or a Finance document ceases to be valid or enforceable or is otherwise suspended, cancelled or terminated; or

(m)	any other event occurs or any other circumstances arise or develop including, without limitation:

(i)

a material adverse change in the financial position, state of affairs or prospects of any Obligor; or

(ii)

any accident or other event involving either Ship,

in the light of which the Majority Lenders consider that either Borrower or any Security Party is, or will later become, unable to discharge its liabilities under the Finance Documents as they fall due; or

(n)	the Approved Manager ceases to be the agent for either Ship;

(o)

a Ship is arrested, confiscated, seized, taken in execution, impounded, forfeited, detained in exercise or purported exercise of any possessory lien or other claim or otherwise taken from the possession of the Borrower which owns it and that Borrower shall fail to procure the release of such Ship within a period of sixty (60) days thereafter;

(p)

a Required Charterparty or Subsequent Qualified Charterparty is terminated, cancelled, superseded, revoked, rescinded, transferred, novated or otherwise ceases to remain in full force and effect for any reason except through effluxion of time or with the consent of the Agent (acting on the instructions of the Lenders);

(q)

the Approved Flag State of either Ship or the country in which any Security Party is incorporated or domiciled becomes involved in hostilities or civil war or there is a seizure of power in an Approved Flag State by unconstitutional means unless the Ship registered in such Approved Flag State shall have been transferred onto a new Approved Flag acceptable to the Lenders within thirty (30) days of the start of such hostilities or civil war or seizure of power;

(r)	any Security Party repudiates any of the Finance Documents or does or causes or permits to be done any act or thing evidencing an intention to repudiate any of the Finance; Documents;

(s)	there shall occur a Material Adverse Event;

(t)	an Event of Default (as defined in Section 14 of any Master Agreement) occurs; or

(u)	a Master Agreement is terminated, cancelled, suspended, rescinded or revoked or otherwise ceases to remain in full force and effect for any reason except with the prior written consent of the Agent, acting with the authorisation of the Majority Lenders.

19.2	Actions following an Event of Default. On, or at any time after, the occurrence of an Event of Default:

(a)	the Agent may, and if so instructed by the Majority Lenders, the Agent shall:

(i)

serve on the Borrowers a notice stating that the Commitments and all other obligations of each Lender to the Borrowers under this Agreement are terminated; and/or

(ii)

serve on the Borrowers a notice stating that the Loan, all accrued interest and all other amounts accrued or owing under this Agreement are immediately due and payable or are due and payable on demand; and/or

(iii)

take any other action which, as a result of the Event of Default or any notice served under paragraph (i) or (ii) above, the Agent and/or the Lenders are entitled to take under any Finance Document or any applicable law; and/or

(b)

the Security Trustee may, and if so instructed by the Agent, acting with the authorisation of the Majority Lenders, the Security Trustee shall, take any action which, as a result of the Event of Default or any notice served under paragraph (a) (i) or (ii) above, the Security Trustee, the Agent and/or the Lenders and/or the Swap Banks are entitled to take under any Finance Document or any applicable law.

19.3	Termination of Commitments. On the service of a notice under paragraph (a)(i) of Clause 19.2, the Commitments and all other obligations of each Lender to the Borrowers under this Agreement shall terminate.

19.4

Acceleration of Loan. On the service of a notice under paragraph (a)(ii) of Clause 19.2, the Loan, all accrued interest and all other amounts accrued or owing from either Borrower or any Security Party under this Agreement and every other Finance Document shall become immediately due and payable or, as the case may be, payable on demand.

19.5

Multiple notices; action without notice. The Agent may serve notices under paragraphs (a) (i) and (ii) of Clause 19.2 simultaneously or on different dates and it and/or the Security Trustee may take any action referred to in that Clause if no such notice is served or simultaneously with or at any time after the service of both or either of such notices.

19.6

Notification of Creditor Parties and Security Parties. The Agent shall send to each Lender, the Security Trustee, each Swap Bank and each Security Party a copy or the text of any notice which the Agent serves on the Borrowers under Clause 19.2; but the notice shall become effective when it is served on the Borrowers, and no failure or delay by the Agent to send a copy or the text of the notice to any other person shall invalidate the notice or provide either Borrower or any Security Party with any form of claim or defence.

19.7	Lender's rights unimpaired. Nothing in this Clause shall be taken to impair or restrict the exercise of any right given to individual Lenders or individual Swap Banks under a Finance Document or the general law; and, in particular, this Clause is without prejudice to Clause 3.1.

19.8	Exclusion of Creditor Party Liability. No Creditor Party, and no receiver or manager appointed by the Security Trustee, shall have any liability to the Borrowers or a Security Party:

(a)	for any loss caused by an exercise of rights under, or enforcement of a Security Interest created by, a Finance Document or by any failure or delay to exercise such a right or to enforce such a Security Interest; or

(b)	as mortgagee in possession or otherwise, for any income or principal amount which might have been produced by or realised from any asset comprised in such a Security Interest or for any reduction (however caused) in the value of such an asset,

except that this does not exempt a Creditor Party or a receiver or manager from liability for losses shown to have been caused by the gross negligence or the wilful misconduct of such Creditor Party's own officers and employees or (as the case may be) such receiver's or manager's own partners or employees.

19.9	Relevant Persons. In this Clause 19 a " Relevant Person " means an Obligor and any company which is a subsidiary of an Obligor.

19.10

Interpretation. In Clause 19.1(f) references to an event of default or a termination event include any event, howsoever described, which is similar to an event of default in a facility agreement or a termination event in a finance lease; and in Clause 19.1(g) "petition" includes an application.

20	FEES AND EXPENSES

20.1	Arrangement and commitment fees. The Borrowers shall pay to the Agent:

(a)	the arrangement fee as set out in the letter addressed by the Agent to the Borrowers bearing even date with this Agreement for the account of the Lenders pro rata in accordance with their Commitments;

(b)	the agency fee as set out in the letter addressed by the Agent to the Borrowers bearing even date with this Agreement; and

(c)

for the account of the Lenders pro rata in accordance with their Commitments, on each of the dates falling at three (3) monthly intervals after the date of this Agreement until the last day of the Availability Period and on the last day of the Availability Period, commitment commission accruing from the date of this Agreement (in the case of the first payment of commission) and from the date of the preceding payment of commission (in the case of each subsequent payment) at the rate of forty per cent (40.0%) of the Margin per annum on the daily undrawn amount of the Total Commitments.

20.2

Costs of negotiation, preparation etc. The Borrowers shall pay, whether or not any Advance is made, to the Agent on its demand the amount of all expenses (including, but not limited to, legal and other advisers' fees), VAT and disbursements incurred by any Lender, the Agent or the Security Trustee in connection with the negotiation, preparation, printing, execution or registration of any Finance Document or any related document or with any transaction contemplated by a Finance Document or a related document and all other costs related to syndication of the loan and distribution of information in relation thereto.

20.3	Costs of variations, amendments, enforcement etc. The Borrowers shall pay to the Agent, on the Agent's demand, the amount of all expenses incurred by a Lender or a Swap Bank in connection with:

(a)	any amendment or supplement to a Finance Document, or any proposal for such an amendment to be made;

(b)	any consent or waiver by the Lenders, the Majority Lenders, the Swap Banks or the Lender concerned under or in connection with Finance Document, or any request for such a consent or waiver;

(c)	the valuation of any security provided or offered under Clause 15 or any other matter relating to such security;

(d)	where the Agent, in its absolute opinion, considers that there has been a material change to the insurances in respect of either Ship, the review of the insurances or either Ship pursuant to Clause 13.18;

(e)	any step taken by any Lender concerned or the Swap Bank concerned with a view to the protection, exercise or enforcement of any right or Security Interest created by a Finance Document or for any similar purpose.

There shall be recoverable under paragraph (d) the full amount of all legal expenses, whether or not such as would be allowed under rules of court or any taxation or other procedure carried out under such rules.

20.4

Agent's Management time . Any amount payable to the Agent under this Clause 20 and Clause 4 of the Agency and Trust Deed (Limitations on the responsibilities of, and indemnities for, the Agent and the Security Trustee) shall include the cost of utilising the Agent's management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Borrowers and the Lenders, and is in addition to any fee paid or payable to the Agent under the letter referred to in Clause 20.1(b) Error! Reference source not found. .

20.5	Documentary taxes. The Borrowers shall promptly pay any tax payable on or by reference to any Finance Document, and shall, on the Agent's demand, fully indemnify each Creditor Party against any liabilities and expenses resulting from any failure or delay by a Borrower to pay such a tax.

20.6

Certification of amounts. A notice which is signed by two officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 20 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

21	INDEMNITIES

21.1

Indemnities regarding borrowing and repayment of Loan. The Borrowers shall fully indemnify the Agent and each Lender and each Swap Bank on the Agent's demand and the Security Trustee on its demand in respect of all expenses, liabilities and losses which are incurred by that Creditor Party as a result of or in connection with:

(a)	an Advance not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by a Lender or a Swap Bank claiming the indemnity;

(b)	Breakage Costs;

(c)	any failure (for whatever reason) by the Borrowers to make payment of any amount due under a Finance Document on the due date or, if so payable, on demand (after giving

credit for any default interest paid by the Borrowers on the amount concerned under Clause 7);

(d)	the occurrence and/or continuance of an Event of Default or Potential Event of Default and/or the acceleration of repayment of the Loan under Clause 19;

and in respect of any tax (other than (i) tax on its overall net income and (ii) any tax for which a Creditor Party is compensated pursuant to clauses 21.5 or 21.6) for which a Creditor Party is liable in connection with any amount paid or payable to that Creditor Party (whether for its own account or otherwise) under any Finance Document.

21.2

Miscellaneous indemnities. The Borrowers shall fully indemnify each Creditor Party severally on their respective demands in respect of all claims, demands, proceedings, liabilities, taxes, losses and expenses of every kind (" liability items ") which may be made or brought against, or incurred by, any Creditor Party, in any country, in relation to:

(a)	any action taken, or omitted or neglected to be taken, under or in connection with any Finance Document by the Agent, the Security Trustee or any other Creditor Party or by any receiver appointed under a Finance Document;

(b)

any other event, matter or question which occurs or arises at any time during the Security Period and which has any connection with, or any bearing on, any Finance Document, any payment or other transaction relating to a Finance Document or any asset covered (or previously covered) by a Security Interest created (or intended to be created) by a Finance Document,

other than liability items which are shown to have been caused by the gross negligence or the wilful misconduct of the Agent's or (as the case may be) the Security Trustee's own officers or employees.

21.3	Extension of indemnities; environmental indemnity. Without prejudice to its generality, Clause 21.2 covers:

(a)	any matter which would be covered by Clause 20.3 if any of the references in that Clause to a Lender were a reference to the Agent or (as the case may be) to the Security Trustee; and

(b)	any liability items which arise, or are asserted, under or in connection with any law or any regulation relating to safety at sea, pollution or the protection of the environment, including but not limited to the ISM Code and the ISPS Code.

21.4

Currency indemnity. If any sum due from the Borrowers or any Security Party to a Creditor Party under a Finance Document or under any order or judgment relating to a Finance Document has to be converted from the currency in which the Finance Document provided for the sum to be paid (the " Contractual Currency ") into another currency (the " Payment Currency ") for the purpose of:

(a)	making or lodging any claim or proof against the Borrowers or any Security Party, whether in its liquidation, any arrangement involving it or otherwise; or

(b)	obtaining an order or judgment from any court or other tribunal; or

(c)	enforcing any such order or judgment,

the Borrowers shall indemnify the Creditor Party concerned against the loss arising when the amount of the payment actually received by that Creditor Party is converted at the available rate of exchange into the Contractual Currency.

In this Clause 21.4, the " available rate of exchange " means the rate at which the Creditor Party concerned is able at the opening of business (London time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.

This Clause 21.4 creates a separate liability of the Borrowers which is distinct from its other liabilities under the Finance Documents and which shall not be merged in any judgment or order relating to those other liabilities.

21.5

Application of Master Agreements. For the avoidance of doubt, Clause 21.4 does not apply in respect of sums due from the Borrowers to any Swap Bank under or in connection with a Master Agreement as to which sums the provisions of Section 8 (Contractual Currency) of the relevant Master Agreement shall apply.

21.6

Certification of amounts. A notice which is signed by 2 officers of a Creditor Party, which states that a specified amount, or aggregate amount, is due to that Creditor Party under this Clause 21 and which indicates (without necessarily specifying a detailed breakdown) the matters in respect of which the amount, or aggregate amount, is due shall, save for manifest error, be prima facie evidence that the amount, or aggregate amount, is due.

21.7	Sums deemed due to a Lender. For the purposes of this Clause 21, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to a Lender shall be treated as a sum due to that Lender.

22	NO SET-OFF OR TAX DEDUCTION

22.1	No deductions. All amounts due from the Obligors under a Finance Document shall be paid:

(a)	without any form of set‑off, cross-claim or condition; and

(b)	free and clear of any tax deduction except a tax deduction which either Borrower is required by law to make.

22.2	Grossing-up for taxes. If a Borrower is required by law to make a tax deduction from any payment:

(a)	that Borrower shall notify the Agent as soon as it becomes aware of the requirement;

(b)	that Borrower shall pay the tax deducted to the appropriate taxation authority promptly, and in any event before any fine or penalty arises;

(c)

the amount due in respect of the payment shall be increased by the amount necessary to ensure that each Creditor Party receives and retains (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which it would otherwise have received.

22.3	Evidence of payment of taxes. Within 1 month after making any tax deduction, a Borrower concerned shall deliver to the Agent documentary evidence satisfactory to the Agent that the tax had been paid to the appropriate taxation authority.

22.4	Exclusion of tax on overall net income. In this Clause 22 " tax deduction " means any deduction or withholding for or on account of any present or future tax except tax on a Creditor Party's overall net income.

22.5	FATCA Deduction

(i)

a party to any Security Document may make any FATCA Deduction it is required to make by FATCA, and any payment required in connection with that FATCA Deduction, and no party to any Security Document 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.

(ii)

a party to any Security Document 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 Creditor Parties .

22.6

Application of Master Agreements For the avoidance of doubt, Clause 22 does not apply in respect of sums due from the Borrowers to any Swap Bank under or in connection with a Master Agreement as to which sums the provisions of Section 2(d) (Deduction or Withholding Tax) of the relevant Master Agreement shall apply.

22.7

Notice of prepayment. If the Borrowers are not willing to continue to pay an increased amount under clause 22.2, the Borrowers may give the Agent not less than is 10 Business Days' notice of their intention to prepay the Contribution of any Lender whose Contribution is giving rise to such increased payment (a " Relevant Lender "), at the end of an Interest Period.

22.8	Prepayment; termination of Commitment. A notice under Clause 22.7 shall be irrevocable; the Agent shall promptly notify the Relevant Lender of the Borrowers' notice of intended prepayment; and:

(a)	on the date on which the Agent serves that notice, the Commitment of the Relevant Lender shall be cancelled; and

(b)	on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Relevant Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin.

23	ILLEGALITY, ETC

23.1	Illegality. This Clause 23 applies if a Lender (the " Notifying Lender ") notifies the Agent that it has become, or will with effect from a specified date, become:

(a)	unlawful or prohibited as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or

(b)	contrary to, or inconsistent with, any regulation,

for the Notifying Lender to maintain or give effect to any of its obligations under this Agreement in the manner contemplated by this Agreement.

23.2	Notification of illegality. The Agent shall promptly notify the Borrowers, the Security Parties, the Security Trustee and the other Lenders of the notice under Clause 23.1 which the Agent receives from the Notifying Lender.

23.3	Prepayment; termination of Commitment. On the Agent notifying the Borrowers under Clause 23.2, the Lenders' Commitment shall terminate; and thereupon or, if later, on the date specified in the Notifying Lender's notice under Clause 23.1 as the date on

which the notified event would become effective the Borrowers shall prepay the Loan in accordance with Clause 8.

23.4

Mitigation . If circumstances arise which would result in a notification under Clause 23.1 then, without in any way limiting the rights of the Notifying Lender under Clause 23.3, the Notifying Lender shall use reasonable endeavours to transfer its obligations, liabilities and rights under this Agreement and the Finance Documents to another office or financial institution not affected by the circumstances but the Notifying Lender shall not be under any obligation to take any such action if, in its opinion, to do would or might:

(a)	have an adverse effect on its business, operations or financial condition; or

(b)	involve it in any activity which is unlawful or prohibited or any activity that is contrary to, or inconsistent with, any regulation; or

(c)	involve it in any expense (unless indemnified to its satisfaction) or tax disadvantage.

24	INCREASED COSTS

24.1	Increased costs. This Clause 24 applies if a Lender (the " Notifying Lender ") notifies the Agent that the Notifying Lender considers that as a result of:

(a)

the introduction or alteration after the date of this Agreement of a law or an alteration after the date of this Agreement in the manner in which a law is interpreted or applied (disregarding any effect which relates to the application to payments under this Agreement of a tax on the Lender's overall net income); or

(b)

the effect of complying with any regulation (including, but not limited to, pursuant to Basel III, CRD IV and CRR and any other which relates to capital adequacy or liquidity controls or which affects the manner in which the Notifying Lender allocates capital resources to its obligations under this Agreement) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Agreement,

is that the Notifying Lender (or a parent company of it) has incurred or will incur an " increased cost ", that is to say,:

(i)

an additional or increased cost incurred as a result of, or in connection with, the Notifying Lender having entered into, or being a party to, this Agreement or a Transfer Certificate, of funding or maintaining its Commitment or Contribution or performing its obligations under this Agreement, or of having outstanding all or any part of its Contribution or other unpaid sums; or

(ii)

a reduction in the amount of any payment to the Notifying Lender under this Agreement or in the effective return which such a payment represents to the Notifying Lender or on its capital;

(iii)

an additional or increased cost of funding all or maintaining all or any of the advances comprised in a class of advances formed by or including the Notifying Lender's Contribution or (as the case may require) the proportion of that cost attributable to the Contribution; or

(iv)

a liability to make a payment, or a return foregone, which is calculated by reference to any amounts received or receivable by the Notifying Lender under this Agreement,

but not (aa) an item attributable to a change in the rate of tax on the overall net income of the Lender (or a parent company of it) or (bb) an item covered by the indemnity for tax in Clause 21.1 of by Clause 22.

For the purposes of this Clause 24.1 the Notifying Lender may in good faith allocate or spread costs and/or losses among its assets and liabilities (or any class thereof) on such basis as it considers appropriate.

24.2	Notification to Borrowers of claim for increased costs. The Agent shall promptly notify the Borrowers and the Security Parties of the notice which the Agent received from the Notifying Lender under Clause 24.1.

24.3

Payment of increased costs. The Borrowers shall pay to the Agent, on the Agent's demand, for the account of the Notifying Lender the amounts which the Agent from time to time notifies the Borrowers that the Notifying Lender has specified to be necessary to compensate the Notifying Lender for the increased cost.

24.4

Notice of prepayment. If the Borrowers are not willing to continue to compensate the Notifying Lender for the increased cost under Clause 24.3, the Borrowers may give the Agent not less than is 10 Business Days' notice of its intention to prepay the Notifying Lender's Contribution at the end of an Interest Period.

24.5	Prepayment; termination of Commitment. A notice under Clause 24.4 shall be irrevocable; the Agent shall promptly notify the Notifying Lender of the Borrowers' notice of intended prepayment; and:

(a)	on the date on which the Agent serves that notice, the Commitment of the Notifying Lender shall be cancelled; and

(b)	on the date specified in its notice of intended prepayment, the Borrowers shall prepay (without premium or penalty) the Notifying Lender's Contribution, together with accrued interest thereon at the applicable rate plus the Margin and Mandatory Costs (if any) .

24.6	Application of prepayment. Clause 8 shall apply in relation to the prepayment.

SET‑OFF

25.1	Application of credit balances. Each Creditor Party may without prior notice:

(a)

apply any balance (whether or not then due) which at any time stands to the credit of any account in the name of either Borrower at any office in any country of that Creditor Party in or towards satisfaction of any sum then due from the Borrowers to that Creditor Party under any of the Finance Documents; and

(b)	for that purpose:

(i)

break, or alter the maturity of, all or any part of a deposit of either Borrower;

(ii)

convert or translate all or any part of a deposit or other credit balance into Dollars;

(iii)

enter into any other transaction or make any entry with regard to the credit balance which the Creditor Party concerned considers appropriate.

25.2	Existing rights unaffected. No Creditor Party shall be obliged to exercise any of its rights under Clause 25.1; and those rights shall be without prejudice and in addition to

any right of set‑off, combination of accounts, charge, lien or other right or remedy to which a Creditor Party is entitled (whether under the general law or any document).

25.3

Sums deemed due to a Lender. For the purposes of this Clause 25, a sum payable by the Borrowers to the Agent or the Security Trustee for distribution to, or for the account of, a Lender shall be treated as a sum due to that Lender; and each Lender's proportion of a sum so payable for distribution to, or for the account of, the Lenders shall be treated as a sum due to such Lender.

26	TRANSFERS AND CHANGES IN LENDING OFFICES

26.1	Transfer by Borrower. Neither Borrower may, without the prior written consent of the Agent, given on the instructions of all the Lenders:

(a)	transfer any of its rights or obligations under any Finance Document; or

(b)	enter into any merger, de-merger or other reorganisation, or carry out any other act, as a result of which any of its rights or liabilities would vest in, or pass to, another person.

26.2	Transfer by a Lender. Subject to Clause 26.4, a Lender (the " Transferor Lender ") may at any time, without the consent of any Security Party, transfer:

(a)	its rights in respect of all or part of its Contribution (including but not limited to those under clause 22); or

(b)	its obligations in respect of all or part of its Commitment; or

(c)	a combination of (a) and (b),

to be (in the case of its rights) transferred to, or (in the case of its obligations) assumed by, another bank or financial institution, trust fund 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 (a " Transferee Lender ") by delivering to the Agent a completed certificate in the form set out in Schedule 5 with any modifications approved or required by the Agent (a " Transfer Certificate ") executed by the Transferor Lender and the Transferee Lender

However any rights and obligations of the Transferor Lender in its capacity as Agent or Security Trustee will have to be dealt with separately in accordance with the Agency and Trust Deed.

26.3	Transfer Certificate, delivery and notification. As soon as reasonably practicable after a Transfer Certificate is delivered to the Agent, it shall (unless it has reason to believe that the Transfer Certificate may be defective):

(a)	sign the Transfer Certificate on behalf of itself, the Borrowers, the Security Parties, the Security Trustee, each Swap Bank and each of the other Lenders;

(b)	on behalf of the Transferee Lender, send to the Borrowers and each Security Party letters or faxes notifying them of the Transfer Certificate and attaching a copy of it; and

(c)	send to the Transferee Lender copies of the letters or faxes sent under paragraph (b) above.

26.4	Effective Date of Transfer Certificate. A Transfer Certificate shall become effective on the date, if any, specified in the Transfer Certificate as its effective date Provided that it is signed by the Agent under Clause 26.3 on or before that date.

26.5

No transfer without Transfer Certificate. No assignment or transfer of any right or obligation of a Lender under any Finance Document shall be binding on, or effective in relation to, the Borrowers, any Security Party, the Agent or the Security Trustee unless it is effected, evidenced or perfected by a Transfer Certificate.

26.6

Lender re-organisation; waiver of Transfer Certificate. However, if a Lender enters into any merger, de-merger or other reorganisation as a result of which all its rights or obligations vest in another person (the " successor "), the Agent may, if it sees fit, by notice to the successor and the Borrowers and the Security Trustee waive the need for the execution and delivery of a Transfer Certificate; and, upon service of the Agent's notice, the successor shall become a Lender with the same Commitment and Contribution as were held by the predecessor Lender.

26.7	Effect of Transfer Certificate. A Transfer Certificate shall take effect in accordance with English law as follows:

(a)

to the extent specified in the Transfer Certificate, all rights and interests (present, future or contingent) which the Transferor Lender has under or by virtue of the Finance Documents shall be assigned to the Transferee Lender absolutely, free of any defects in the Transferor Lender's title and of any rights or equities which either Borrower or any Security Party had against the Transferor Lender;

(b)	the Transferor Lender's Commitment shall be discharged to the extent specified in the Transfer Certificate;

(c)	the Transferee Lender shall become a Lender with the Contribution previously held by the Transferor Lender and a Commitment of an amount specified in the Transfer Certificate;

(d)

the Transferee Lender shall become bound by all the provisions of the Finance Documents which are applicable to the Lenders generally, including those about pro‑rata sharing and the exclusion of liability on the part of, and the indemnification of, the Agent and the Security Trustee and, to the extent that the Transferee Lender becomes bound by those provisions (other than those relating to exclusion of liability), the Transferor Lender shall cease to be bound by them;

(e)

any part of the Loan which the Transferee Lender advances after the Transfer Certificate's effective date shall rank in point of priority and security in the same way as it would have ranked had it been advanced by the transferor, assuming that any defects in the transferor's title and any rights or equities of the Borrowers or any Security Party against the Transferor Lender had not existed;

(f)

the Transferee Lender shall become entitled to all the rights under the Finance Documents which are applicable to the Lenders generally, including but not limited to those relating to the Majority Lenders and those under Clause 5.7 and Clause 20, and to the extent that the Transferee Lender becomes entitled to such rights, the Transferor Lender shall cease to be entitled to them; and

(g)

in respect of any breach of a warranty, undertaking, condition or other provision of a Finance Document or any misrepresentation made in or in connection with a Finance Document, the Transferee Lender shall be entitled to recover damages by reference to the loss incurred by it as a result of the breach or misrepresentation, irrespective of whether the original Lender would have incurred a loss of that kind or amount.

The rights and equities of the Borrowers or any Security Party referred to above include, but are not limited to, any right of set off and any other kind of cross‑claim.

26.8	Authorisation of Agent to sign Transfer Certificates. The Borrowers, the Security Trustee and each Lender irrevocably authorise the Agent to sign Transfer Certificates on its behalf.

26.9	Registration fee. In respect of any Transfer Certificate, the Agent shall be entitled to recover a registration fee of $2,500 from the Transferor Lender or (at the Agent's option) the Transferee Lender.

26.10

Sub-participation; subrogation assignment. A Lender may sub‑participate all or any part of its rights and/or obligations under or in connection with the Finance Documents without the consent of, or any notice to, the Borrowers, any Security Party, the Agent or the Security Trustee; and the Lenders may assign, in any manner and terms agreed by the Majority Lenders, the Agent and the Security Trustee, all or any part of those rights to an insurer or surety who has become subrogated to them.

26.11

Disclosure of information. A Lender may disclose to a potential Transferee Lender or sub‑participant, credit reinsurer or similar party, any information which the Lender has received in relation to the Borrowers, any Security Party or their affairs under or in connection with any Finance Document, provided that such recipient has first signed a confidentiality undertaking substantially in the form recommended by the Loan Market Association.

26.12

Change of lending office. A Lender may change its lending office by giving notice to the Agent and the change shall become effective on the later of:

(a)	the date on which the Agent receives the notice; and

(b)	the date, if any, specified in the notice as the date on which the change will come into effect.

26.13

Notification. On receiving such a notice, the Agent shall notify the Borrowers and the Security Trustee; and, until the Agent receives such a notice, it shall be entitled to assume that a Lender is acting through the lending office of which the Agent last had notice.

27	VARIATIONS AND WAIVERS

27.1

Variations, waivers etc. by Majority Lenders. Subject to Clause 27.2, a document shall be effective to vary, waive, suspend or limit any provision of a Finance Document, or any Creditor Party's rights or remedies under such a provision or the general law, only if the document is signed, or specifically agreed to by fax, by the Borrowers, by the Agent on behalf of the Majority Lenders, by the Agent and the Security Trustee in their own rights, and, if the document relates to a Finance Document to which a Security Party is party, by that Security Party.

27.2	Variations, waivers etc. requiring agreement of all Lenders. However, as regards the following, Clause 27.1 applies as if the words "by the Agent on behalf of the Majority Lenders" were replaced by the words "by or on behalf of every Lender and every Swap Bank":

(a)	a change in the Margin or in the definition of LIBOR;

(b)	a change to the date for, the amount of, any payment of principal, interest, fees, or other sum payable under this Agreement;

(c)	a change to any Lender's Commitment;

(d)	an extension of Availability Period;

(e)	a change to the definition of "Majority Lenders" or "Finance Documents";

(f)	a change to the definitions of "Restricted Person", "Sanctions" or "Sanctions List" or to any of clauses 4.8, 12.10 or 14.11(b);

(g)	a change to the preamble or to Clause 2, 3, 4, 5.1, 17, 18 or 30;

(h)	a change to this Clause 27;

(i)	any change, variation or amendment to any Required Charterparty or Subsequent Qualified Charterparty;

(j)	any release of, or material variation to, a Security Interest, guarantee, indemnity or subordination arrangement set out in a Finance Document; and

(k)	any other change or matter as regards which this Agreement or another Finance Document expressly provides that each Lender's consent is required.

27.3

Exclusion of other or implied variations. Except for a document which satisfies the requirements of Clauses 27.1 and 27.2, no document, and no act, course of conduct, failure or neglect to act, delay or acquiescence on the part of the Creditor Parties or any of them (or any person acting on behalf of any of them) shall result in the Creditor Parties or any of them (or any person acting on behalf of any of them) being taken to have varied, waived, suspended or limited, or being precluded (permanently or temporarily) from enforcing, relying on or exercising:

(a)	a provision of this Agreement or another Finance Document; or

(b)	an Event of Default; or

(c)	a breach by the Borrowers or a Security Party of an obligation under a Finance Document or the general law; or

(d)	any right or remedy conferred by any Finance Document or by the general law,

and there shall not be implied into any Finance Document any term or condition requiring any such provision to be enforced, or such right or remedy to be exercised, within a certain or reasonable time.

NOTICES

28.1

General. Unless otherwise specifically provided, any notice under or in connection with any Finance Document shall be given by letter, email or fax; and references in the Finance Documents to written notices, notices in writing and notices signed by particular persons shall be construed accordingly.

28.2	Addresses for communications. A notice shall be sent:

(a) to the Borrowers: 91 Poseidonos Avenue & 2 Foivis Street

166 75 Glyfada

Athens

Greece

Fax No: +30 210 894 7275

FAO: Finance department

(b)

to a Lender:

At the address below its name in Schedule 1 or (as the

case may require) in the relevant Transfer Certificate.

to the Agent and the Daalsesingel 71,

Security Trustee 3511 SW Utrecht,

The Netherlands

Fax No: [ ]

FAO: Agency Syndicated Loans (PAC EA 8550)

(c)

to a Swap Bank:

At the address below its name in Schedule 2

or to such other address as the relevant party may notify the Agent or, if the relevant party is the Agent or the Security Trustee, the Borrowers, the Lenders and the Security Parties.

28.3	Effective date of notices. Subject to Clauses 28.4 and 28.5:

(a)	a notice which is delivered personally or posted shall be deemed to be served, and shall take effect, at the time when it is delivered; and

(b)	a notice which is sent by fax or email shall be deemed to be served, and shall take effect, 2 hours after its transmission is completed.

28.4	Service outside business hours. However, if under Clause 28.3 a notice would be deemed to be served:

(a)	on a day which is not a business day in the place of receipt; or

(b)	on such a business day, but after 5 p.m. local time,

the notice shall (subject to Clause 28.5) be deemed to be served, and shall take effect, at 9 a.m. on the next day which is such a business day.

28.5	Illegible notices. Clauses 28.3 and 28.4 do not apply if the recipient of a notice notifies the sender within one hour after the time at which the notice would otherwise be deemed to be served that the notice has been received in a form which is illegible in a material respect.

28.6

Valid notices. A notice under or in connection with a Finance Document shall not be invalid by reason that its contents or the manner of serving it do not comply with the requirements of this Agreement or, where appropriate, any other Finance Document under which it is served if: the failure to serve it in accordance with the requirements of this Agreement or other Finance Document, as the case may be, has not caused any party to suffer any significant loss or prejudice; or

(a)	in the case of incorrect and/or incomplete contents, it should have been reasonably clear to the party on which the notice was served what the correct or missing particulars should have been.

28.7	Electronic communication

(a)

any communication to be made between any two parties under or in connection with the Finance Documents may be made by electronic mail or other electronic means to the extent that those two parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication, and if those two parties;

(A)

notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and

(B)

notify each other of any change to their address or any other such information supplied by them by not less than five (5) Business Days' notice; and

(b)

any electronic communication made between those two parties will be effective only when actually received in readable form and, in the case of any electronic communication made by a party to the Agent or the Security Trustee, only if it is addressed in such a manner as the Agent or Security Trustee shall specify for this purpose.

28.8	English language. Any notice under or in connection with a Finance Document shall be in English.

28.9	Meaning of "notice". In this Clause "notice" includes any demand, consent, authorisation, approval, instruction, waiver or other communication.

29	SUPPLEMENTAL

29.1	Rights cumulative, non-exclusive. The rights and remedies which the Finance Documents give to each Creditor Party are:

(a)	cumulative;

(b)	may be exercised as often as appears expedient; and

(c)	shall not, unless a Finance Document explicitly and specifically states so, be taken to exclude or limit any right or remedy conferred by any law.

29.2	Severability of provisions. If any provision of a Finance Document is or subsequently becomes void, unenforceable or illegal, that shall not affect the validity, enforceability or legality of the other provisions of that Finance Document or of the provisions of any other Finance Document.

29.3	Third party rights. A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement.

29.4	Counterparts. A Finance Document may be executed in any number of counterparts.

30	JOINT AND SEVERAL LIABILITY

30.1	General. All liabilities and obligations of the Borrowers under this Agreement shall, whether expressed to be so or not, be several and, if and to the extent consistent with Clause 30.2, joint.

30.2	No impairment of Borrower's obligations. The liabilities and obligations of a Borrower shall not be impaired by:

(a)

this Agreement being or later becoming void, unenforceable or illegal as regards the other Borrower;

(b)

any Lender entering into any rescheduling, refinancing or other arrangement of any kind with the other Borrower;

(c)

any Lender releasing the other Borrower or any Security Interest created by a Finance Document; or

(d)

any combination of the foregoing.

30.3

Principal debtors. Each Borrower declares that it is and will, throughout the Security Period, remain a principal debtor for all amounts owing under this Agreement and the Finance Documents and neither Borrower shall in any circumstances be construed to be a surety for the obligations of the other Borrower under this Agreement.

30.4	Subordination. Subject to Clause 30.5, during the Security Period, neither Borrower shall:

(a)

claim any amount which may be due to it from the other Borrower whether in respect of a payment made, or matter arising out of, this Agreement or any Finance Document, or any matter unconnected with this Agreement or any Finance Document; or

(b)

take or enforce any form of security from the other Borrower for such an amount, or in any other way seek to have recourse in respect of such an amount against any asset of the other Borrower; or

(c)

set off such an amount against any sum due from it to the other Borrower; or

(d)

prove or claim for such an amount in any liquidation, administration, arrangement or similar procedure involving the other Borrower or other Security Party; or

(e)

exercise or assert any combination of the foregoing.

30.5

Borrowers' required action. If during the Security Period, the Agent, by notice to a Borrower, requires it to take any action referred to in paragraphs (a) to (d) of clause 30.4, in relation to the other Borrower, that Borrower shall take that action as soon as practicable after receiving the Agent's notice.

31	LAW AND JURISDICTION

31.1	English law. This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

31.2	Exclusive English jurisdiction. Subject to Clause 31.3, the courts of England shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Agreement (or any non-contractual obligation arising out of or in connection with this Agreement ) .

31.3	Choice of forum for the exclusive benefit of the Creditor Parties. Clause 31.2 is for the exclusive benefit of the Creditor Parties, each of which reserves the right:

(a)

to commence proceedings in relation to any matter which arises out of or in connection with this Agreement (or any non-contractual obligation arising out of or in connection with this Agreement ) in the courts of any country other than England and which have or claim jurisdiction to that matter; and

(b)	to commence such proceedings in the courts of any such country or countries concurrently with or in addition to proceedings in England or without commencing proceedings in England.

Neither Borrower shall commence any proceedings in any country other than England in relation to a matter which arises out of or in connection with this Agreement.

31.4

Process agent. Each Borrower irrevocably appoints Intermar Chartering (UK) Ltd. at their office for the time being, presently at 52-54 Gracechurch Street, London EC3V 0EH, England, to act as its agent to receive and accept on its behalf any process or other document relating to any proceedings in the English courts which are connected with this Agreement.

31.5

Creditor Party rights unaffected. Nothing in this Clause 31 shall exclude or limit any right which any Creditor Party may have (whether under the law of any country, an international convention or otherwise) with regard to the bringing of proceedings, the service of process, the recognition or enforcement of a judgment or any similar or related matter in any jurisdiction.

31.6	Meaning of "proceedings". In this Clause 31, " proceedings " means proceedings of any kind, including an application for a provisional or protective measure.

AS WITNESS the hands of the duly authorised officers or attorneys of the parties the day and year first before written.

For the Year Ended	High (US$)		Low (US$)
December 31, 2013*		23.79		16.75
December 31, 2014		25.50		13.66
December 31, 2015		20.95		7.80
* For the period beginning November 13, 2013

For the Quarter Ended:	High (US$)		Low (US$)
March 31, 2014		22.77		20.71
June 30, 2014		25.50		20.85
September 30, 2014		25.13		22.33
December 31, 2014		23.43		13.66
March 31, 2015		20.95		14.50
June 30, 2015		20.83		14.59
September 30, 2015		16.99		11.03
December 31, 2015		15.00		7.80
March 31, 2016		11.59		6.70

Most Recent Six Months:	High (US$)			Low (US$)
October 2015			15.00			13.22
November 2015			14. 66			12.09
December 2015			12.92			7.80
January 2016			10.54			6.70
February 2016			10.20			7.06
March 2016			11.59			8.88
April 2016 (through and including April 15, 2016)		14.37			10.81

For the Year Ended	High (US$)		Low (US$)
December 31, 2015		25.60		14.25
* For the period beginning July 14, 2015

For the Quarter Ended:	High (US$)		Low (US$)
September 30, 2015*		25.60		16.95
December 31, 2015		19.99		15.01
* For the period beginning July 14, 2015

	2015		2014
Audit Fees	€	175,000	€	250,000
Audit-Related Fees		-		-
Tax Fees		6,000		-
All Other Fees		-		-
	€	181,000	€	250,000

	Exhibit Number		Description
	1.1		Certificate of Limited Partnership of Dynagas LNG Partners LP ⁽¹⁾
	1.2		Third Amended and Restated Agreement of Limited Partnership of Dynagas LNG Partners LP ⁽³⁾
	1.3		Certificate of Formation of Dynagas GP LLC ⁽¹⁾
	1.4		Limited Liability Company Agreement of Dynagas GP LLC ⁽¹⁾
	1.5		Certificate of Limited Partnership of Dynagas Operating LP ⁽¹⁾
	1.6		Limited Partnership Agreement of Dynagas Operating LP ⁽¹⁾
	1.7		Certificate of Formation of Dynagas Operating GP LLC ⁽¹⁾
	1.8		Limited Liability Company Agreement of Dynagas GP LLC ⁽¹⁾
	4.1		Form of Vessel Management Agreement
	4.2		Omnibus Agreement, dated November 18, 2013 ⁽²⁾
	4.3		First Amended and Restated Omnibus Agreement, dated April 12, 2016
	4.4		Contribution Agreement ⁽¹⁾
	4.5		$30 Million Revolving Credit Facility with Dynagas Holding Ltd. ⁽²⁾
	4.6		2013 Senior Secured Revolving Credit Facility ⁽²⁾
	4.7		Executive Services Agreement ⁽²⁾
	4.8		Administrative Services Agreement ⁽⁴⁾
	4.9		Share Purchase Agreement dated April 17, 2014 ⁽⁴⁾
	4.10		Share Purchase Agreement dated September 22, 2014 ⁽⁴⁾
	4.11		Share Purchase Agreement dated December 17, 2015
	4.12		$340 Million Senior Secured Credit Facility ⁽⁴⁾
	4.13		Base Indenture, dated as of September 15, 2014, by and among the Partnership and Dynagas Finance Inc., as Issuers, and Deutsche Bank Trust Company Americas, as Trustee, relating to 6.25% Senior Notes Due 2019. ⁽⁴⁾

	4.14		First Supplemental Indenture, dated as of September 15, 2014, by an among by and among the Partnership and Dynagas Finance Inc., as Issuers, and Deutsche Bank Trust Company Americas, as Trustee, relating to 6.25% Senior Notes Due 2019. ⁽⁴⁾
	4.15		$200 Million Term Loan Facility
	8.1		Subsidiaries of Dynagas LNG Partners LP
	12.1		Rule 13a-14(a)/15d-14(a) Certification of Dynagas LNG Partners LP Principal Executive Officer
	12.2		Rule 13a-14(a)/15d-14(a) Certification of Dynagas LNG Partners LP Principal Financial and Accounting Officer.
	13.1		Certification under Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer
	13.2		Certification under Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Financial and Accounting Officer
	15.1		Consent of Independent Registered Accounting Firm
	15.2		Consent of Drewry Shipping Consultants, Ltd.
	101.INS		XBRL Instance Document **
	101.SCH		XBRL Taxonomy Extension Schema **
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase **
	101.DEF		XBRL Taxonomy Extension Definition Linkbase **
	101.LAB		XBRL Taxonomy Extension Label Linkbase **
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase **


(1)	Incorporated by reference to the Partnership's Registration Statement on Form F-1, which was declared effective by the Securities and Exchange Commission on November 12, 2013 (Registration No. 333-191653)
(2)	Incorporated by reference to the Partnership's Annual Report on Form 20-F, which was filed with the Securities and Exchange Commission on March 25, 2014
(3)	Incorporated by reference to the Partnership's Registration Statement on Form 8-A12B, filed with the Securities and Exchange Commission on July 23, 2015.
(4)	Incorporated by reference to the Partnership's Annual Report on Form 20-F, which was filed with the Securities and Exchange Commission on March 10, 2015.
**	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under such sections.

		DYNAGAS LNG PARTNERS LP


		By:	/s/ Michael Gregos
			Name:	Michael Gregos
			Title:	Chief Financial Officer (Principal Financial Officer)

Date:	April 18, 2016

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2015 and 2014	F-3
Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013	F-4
Consolidated Statements of Partners' Equity for the years ended December 31, 2015, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013	F-6
Notes to the Consolidated Financial Statements	F-7

	Note		2015			2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	24,293		$	11,949
Trade receivables				103			—
Prepayments and other assets				610			737
Inventories				348			357
Due from related party		3		460			889
Total current assets				25,814			13,932

FIXED ASSETS, NET:
Vessels, net		4		1,036,157			839,883
Total fixed assets, net				1,036,157			839,883
OTHER NON CURRENT ASSETS:
Restricted cash		5		25,000			24,000
Deferred revenue				—			943
Due from related party		3		1,350			1,125
Above-market acquired time charter contract		7		19,782			—
Total assets			$	1,108,103		$	879,883

LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current portion of long term debt, net of deferred financing fees		5	$	27,467		$	19,584
Trade payables				4,935			2,369
Due to related party, current		3		230			142
Accrued liabilities				3,595			3,716
Unearned revenue				15,126			7,022
Total current liabilities				51,353			32,833
NON-CURRENT LIABILITIES:
Deferred revenue				1,094			1,429
Due to related party, non-current		3		35,000			—
Long—term debt, net of current portion and deferred financing fees		5		652,818			547,923
Total non-current liabilities				688,912			549,352

Commitments and contingencies		8		—			—

PARTNERS' EQUITY:
Common unitholders (unlimited authorized; 20,505,000 units issued and outstanding as at December 31, 2015 and 2014)		9		302,954			304,729
Preferred unitholders (3,450,000 authorized; 3,000,000 Series A Preferred Units issued and outstanding as at December 31, 2015)		9		73,216			—
Subordinated unitholders(14,985,000 units issued and outstanding as at December 31, 2015 and 2014)		9		(8,427	)		(7,131	)
General Partner(35,526 units issued and outstanding as at December 31, 2015 and 2014)		9		95			100
Total partners' equity				367,838			297,698

Total liabilities and partners' equity			$	1,108,103		$	879,883

									Partners' Capital
	Series A Preferred		Common		Subordinated		General Partner		Series A Preferred			Common			Subordinated			General Partner			Total
BALANCE, December 31, 2012		—		6,735,000		14,985,000		30,000	$	—		$	23,278		$	51,793		$	104		$	75,175
—Net income		—		—		—		—		—			22,787			22,787			46			45,620
—Issuance of common units, net of issuance costs (Note 9)		—		8,250,000		—		—		—			136,904			—			—			136,904
BALANCE, December 31, 2013		—		14,985,000		14,985,000		30,000	$	—		$	182,969		$	74,580		$	150		$	257,699
—Net income		—		—		—		—		—			28,323			22,170			68			50,561
—Issuance of common units, net of issuance costs (Note 9)		—		5,520,000		—		5,526		—			120,444			—			126			120,570
—Distributions declared and paid (Note 9)		—		—		—		—		—			(23,568	)		(19,398	)		(44	)		(43,010	)
—Preferential deemed dividend (Note 9)		—		—		—		—		—			(3,439	)		(84,483	)		(200	)		(88,122	)
BALANCE, December 31, 2014		—		20,505,000		14,985,000		35,526	$	—		$	304,729		$	(7,131	)	$	100		$	297,698
—Net income		—		—		—		—		3,019			32,878			24,028			125			60,050
—Issuance of preferred units, net of issuance costs (Note 9)		3,000,000		—		—		—		72,297			—			—			—			72,297
—Distributions declared and paid (Note 9)		—		—		—		—		(2,100	)		(34,653	)		(25,324	)		(130	)		(62,207	)
BALANCE, December 31, 2015		3,000,000		20,505,000		14,985,000		35,526	$	73,216		$	302,954		$	(8,427	)	$	95		$	367,838

Company Name	Country of incorporation	Vessel Name	Delivery Date to Partnership	Year Built	Cbm Capacity
Pegasus Shipholding S.A. ("Pegasus")	Marshall Islands	Clean Energy	March 2007	2007	149,700
Lance Shipping S.A. ("Lance")	Marshall Islands	Ob River	July 2007	2007	149,700
Seacrown Maritime Ltd. ("Seacrown")	Marshall Islands	Amur River ⁽¹⁾	January 2008	2008	149,700
Fareastern Shipping Limited ("Fareastern")	Malta	Arctic Aurora	June 2014	2013	155,000
Navajo Marine Limited ("Navajo")	Marshall Islands	Yenisei River	September 2014	2013	155,000
Solana Holding Ltd. ("Solana")	Marshall Islands	Lena River	December 2015	2013	155,000

Company Name	Country of incorporation	Purpose of incorporation
Quinta Group Corp. ("Quinta")	Nevis	Holding company that owns all of the outstanding capital stock of Pegasus.
Pelta Holdings S.A. ("Pelta")	Nevis	Holding company that owns all of the outstanding capital stock of Lance.
Dynagas Equity Holdings Ltd.("Dynagas Equity")	Liberia	Holding company that owns all of the outstanding capital stock of Quinta, Pelta, Seacrown, Fareastern, Navajo, Solana and Arctic LNG.
Dynagas Operating GP LLC. ("Dynagas Operating GP")	Marshall Islands	Limited Liability Company, in which the Partnership holds 100% membership interests and that has 100% of the Non-Economic General Partner Interest in Dynagas Operating LP.

Dynagas Operating LP. ("Dynagas Operating")	Marshall Islands	Limited partnership in which the Partnership holds 100% percentage interests.
Dynagas Finance Inc. ("Dynagas Finance")	Marshall Islands	Wholly owned subsidiary of the Partnership whose activities are limited to co-issuing the Notes discussed under Note 5 and engaging in other activities incidental thereto.
Arctic LNG Carriers Ltd. ("Arctic LNG")	Marshall Islands	Wholly owned subsidiary of Dynagas Equity that currently has no operations in place nor is it engaged in any other activities.

	(a)	Principles of Consolidation: The accompanying consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America ("U.S. GAAP"). The consolidated financial statements include the accounts of Dynagas Partners and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Dynagas Partners, as the holding company, determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity. Under Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 810 "Consolidation" a voting interest entity is an entity in which the total equity investment at risk is deemed sufficient to absorb the expected losses of the entity, the equity holders have all the characteristics of a controlling financial interest and the legal entity is structured with substantive voting rights. The holding company consolidates voting interest entities in which it owns all, or at least a majority (generally, greater than 50%) of the voting interest. Variable interest entities ("VIE") are entities as defined under ASC 810 that in general either has equity investors with non-substantive voting rights or that have equity investors that do not provide sufficient financial resources for the entity to support its activities. The holding company has a controlling financial interest in a VIE and is, therefore, the primary beneficiary of a VIE if it has the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. A VIE should have only one primary beneficiary which is required to consolidate the VIE. A VIE may not have a primary beneficiary if no party meets the criteria described above. The Partnership evaluates all arrangements that may include a variable interest in an entity to determine if it is the primary beneficiary, and would be required to include assets, liabilities and operations of a VIE in its consolidated financial statements. As of December 31, 2015 and 2014, no such interests existed.
	(b)	Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

	(c)	Other Comprehensive Income: The Partnership follows the provisions of ASC 220, "Comprehensive Income" which requires separate presentation of certain transactions, which are recorded directly as components of equity. The Partnership has no such transactions which affect other comprehensive income and, accordingly, for the years ended December 31, 2015, 2014 and 2013 comprehensive income equaled net income.
	(d)	Foreign Currency Translation: The functional currency of the Partnership is the U.S. Dollar because the Partnership's vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Partnership's books of accounts are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities, which are denominated in other currencies, are translated into U.S. Dollars using the balance sheet date exchange rates. Resulting gains or losses are included in Other, net in the accompanying consolidated statements of income.

	(e)	Cash and Cash Equivalents: The Partnership considers highly liquid investments such as time deposits with an original maturity of three months or less to be cash equivalents.
	(f)	Restricted cash: Restricted cash may comprise of i) minimum liquidity collateral requirements or minimum required cash deposits that are required to be maintained under the Partnership's financing arrangements, ii) cash deposits in so-called "retention accounts" which may only be used as per the Partnership's borrowing arrangements for the purpose of serving the loan installments coming due or iii) other cash deposits required to be retained until other specified conditions prescribed in the Partnership's debt agreements are met. In the event that the obligation to maintain such deposits is expected to be elapsed within the next operating cycle, these deposits are classified as current assets. Otherwise they are classified as non-current assets.
	(g)	Trade Receivables: The amount shown as trade receivables, net, at each balance sheet date, includes receivables from charterers for hire net of any provision for doubtful accounts. At each balance sheet date, all potentially uncollectible accounts are assessed individually for purposes of determining the appropriate provision for doubtful accounts primarily based on the aging of such balances and any amounts in disputes. Provision for doubtful accounts as of December 31, 2015 and 2014 was nil.
	(h)	Inventories: Inventories consist of lubricants which are stated at the lower of cost or market. Cost is determined by the first in, first out method. Inventories may also consist of bunkers during periods when vessels are unemployed or under voyage charters, that are also stated at the lower of cost or market and cost is still determined by the first in, first out method.
	(i)	Insurance Claims: The Partnership records insurance claim recoveries for insured losses incurred on damage to fixed assets, loss of hire and for insured crew medical expenses. Insurance claim recoveries are recorded, net of any deductible amounts, at the time the Partnership's vessels suffer insured damages or when crew medical expenses are incurred, when recovery is probable under the related insurance policies, the Partnership can make an estimate of the amount to be reimbursed following submission of the insurance claim and when the claim is not subject to litigation.

	(j)	Vessels, Net: Vessels are stated at cost, which consists of the contract price and any material expenses incurred upon delivery (initial repairs, improvements and delivery expenses, capitalized interest and on-site supervision costs incurred during the construction periods). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels; otherwise these amounts are charged to expense as incurred. The cost of each of the Partnership's vessels is depreciated beginning when the vessel is ready for her intended use, on a straight-line basis over the vessel's remaining economic useful life, after considering the estimated residual value. With effect from October 1, 2014, the Partnership revised its' initial scrap rate estimate from an average fleet scrap rate of $0.717 per lightweight ton (or a vessel specific of 12% of the initial vessel cost) to $0.685 per lightweight ton per LNG carrier and that change in estimate is expected to decrease the Partnership's net income in future periods. Management estimates the useful life of the Partnership's vessels to be 35 years from the date of initial delivery from the shipyard. Secondhand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its remaining useful life is adjusted at the date such regulations are adopted.
	(k)	Impairment of Long-Lived Assets: The Partnership follows ASC 360-10-40 "Impairment or Disposals of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The standard requires that long-lived assets held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. When the estimate of undiscounted projected operating cash flows, excluding interest charges, expected to be generated by the use of the asset is less than its carrying amount, the Partnership evaluates the asset for an impairment loss. Measurement of the impairment loss is based on the fair value of the asset. The fair values are determined through Level 2 inputs of the fair value hierarchy as defined in ASC 820 "Fair value measurements and disclosures" based on management's estimates and assumptions and by making use of available market data and taking into consideration third party valuations and other market observable data that allow value to be determined. The Partnership reviews its long-lived assets for impairment whenever events or changes in circumstances, such as undiscounted projected operating cash flows, business plans to dispose a vessel earlier than the end of its useful life and prevailing market conditions, indicate that the carrying amount of the assets may not be recoverable. The Partnership determines undiscounted projected net operating cash flows, for each vessel and compares it to the vessel's carrying value. In developing estimates of future cash flows, the Partnership must make assumptions about future charter rates, vessel operating expenses, fleet utilization, and the estimated remaining useful life of the vessels. These assumptions are based on historical trends as well as future expectations. The projected net operating cash flows are determined by considering the charter revenues from existing time charters for the fixed fleet days and an estimated charter rate for the unfixed days. Expected outflows for scheduled vessels' maintenance and vessel operating expenses are based on historical data, and adjusted annually assuming an average annual inflation rate prevailing at the time of test. An estimate is also applied to effective fleet utilization, taking into account the period(s) each vessel is expected to undergo her scheduled maintenance (dry-docking and special surveys) and vessels loss of hire from repositioning or other conditions. Estimates for the remaining estimated useful lives of the current fleet and scrap values are identical with those employed as part of the Partnership's depreciation policy. As of December 31, 2015, 2014 and 2013, the Partnership concluded that there were no events or changes in circumstances indicating that the carrying amount of its vessels may not be recoverable and accordingly no impairment loss was recorded for these years.

	(l)	Intangible assets/liabilities related to time charter acquired: Where the Partnership identifies any assets or liabilities associated with the acquisition of a vessel, the Partnership records all such identified assets or liabilities at fair value. Fair value is determined by reference to market data. The Partnership values any asset or liability arising from the market value of the time charters assumed when a vessel is acquired. The amount to be recorded as an asset or liability at the date of vessel acquisition is determined by comparing the existing charter rate in the acquired time charter agreement with the market rates for equivalent time charter agreements prevailing at the time the vessel is acquired.When the present value of the time charter assumed is greater than the current fair value of such charter, the difference is recorded as an asset; otherwise, the difference is recorded as liability. Such assets and liabilities, respectively, are amortized as an adjustment to revenues, over the remaining term of the assumed time charter and are classified as non-current asset/ liability in the accompanying consolidated balance sheets. Impairment testing is performed when events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable.
	(m)	Accounting for Special Survey and Dry-Docking Costs: The Partnership follows the direct expense method of accounting for dry-docking and special survey costs where such are expensed in the period incurred. The vessels undergo dry-dock or special survey approximately every five years during the first fifteen years of their life and subsequently every two and a half years to the end of their useful life. Costs relating to routine repairs and maintenance are also expensed as incurred.

	(n)	Financing Costs: Costs associated with long-term debt, including fees paid to lenders or required to be paid to third parties on the lender's behalf for obtaining debt financing or refinancing existing one, are recorded contra to long-term debt. Such fees are deferred and amortized to interest and finance costs during the life of the related debt instrument using the effective interest method. Unamortized fees relating to loans repaid or refinanced as debt extinguishments and loan commitment fees are expensed as interest and finance costs in the period incurred in the accompanying statements of income. Any unamortized balance of costs relating to refinanced long-term debt are deferred and amortized over the term of the respective credit facility in the period the refinancing occurs, subject to the provisions of the accounting guidance relating to Debt – Modifications and Extinguishments. Following the early adoption of ASU. 2015-03 "Interest – Imputation of Interest" to simplify the presentation of debt issuance costs, the Partnership, effective December 31, 2015, and with retrospective effect, presents unamortized deferred financing costs as a reduction of long term debt in the accompanying balance sheets. In order to conform with the current period presentation requirements, the Partnership has reclassified deferred financing costs, net from Deferred Charges and has decreased the amount of Current portion of long-term debt by $416 and the amount of Long-term portion of long-term debt by $7,077 on the consolidated balance sheet as of December 31, 2014. This reclassification has no impact on the Partnership's net income, cash flows and net assets for any period presented.
	(o)	Concentration of Credit Risk: Financial instruments, which potentially subject the Partnership to significant concentrations of credit risk, consist principally of cash and cash equivalents and trade receivables. The maximum exposure to loss due to credit risk is the book value at the balance sheet date. The Partnership places its cash and cash equivalents, consisting mostly of deposits, with high credit qualified financial institutions. The Partnership performs periodic evaluations of the relative credit standing of those financial institutions. The Partnership limits its credit risk with accounts receivable by performing ongoing credit evaluations of its charterers' financial condition and generally does not require collateral for its accounts receivable.

	(t)	Fair Value Measurements: The Partnership adopted ASC 820, "Fair Value Measurements and Disclosures", which defines, and provides guidance as to the measurement of fair value. This guidance creates a fair value hierarchy of measurement and indicates that, when possible, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable data that are not corroborated by market data (Level 3), for example, the reporting entity's own data. Observable market based inputs or unobservable inputs that are corroborated by market data are classified under Level 2 of the fair value hierarchy. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. ASC 820 applies when assets or liabilities in the financial statements are to be measured at fair value, but does not require additional use of fair value beyond the requirements in other accounting principles. Upon issuance of guidance on the fair value option in 2007, the Partnership elected not to report the then existing financial assets or liabilities at fair value that were not already reported as such.
	(u)	Commitments and Contingencies: Commitments are recognized when the Partnership has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle this obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the present value of the expenditure expected to be required to settle the obligation. Contingent liabilities are not recognized in the financial statements but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized in the financial statements but are disclosed when an inflow of economic benefits is probable.
	(v)	Accounting for Financial Instruments: The principal financial assets of the Partnership consist of cash and cash equivalents, restricted cash, amounts due from related parties and trade receivables, net. The principal financial liabilities of the Partnership consist of trade and other payables, accrued liabilities, long-term debt and amounts due to related parties. The Partnership may also consider from time to time entering into interest rate swap agreements to manage its exposure to fluctuations of interest rate risk associated with its borrowings Derivative financial instruments are generally used to manage risk related to fluctuations of interest rates. ASC 815, Derivatives and Hedging, requires all derivative contracts to be recorded at fair value, as determined in accordance with ASC 820, Fair Value Measurements and Disclosures (Note 6). The changes in fair value of a derivative contract are recognized in earnings unless specific hedging criteria are met. At the inception of a hedge relationship, the Partnership formally designates and documents the hedge relationship to which the Partnership wishes to apply hedge accounting and the risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument's effectiveness in offsetting exposure to changes in the hedged item's cash flows attributable to the hedged risk. A cash flow hedge is a hedge of the exposure to

	Vessel Cost		Accumulated Depreciation			Net Book Value


Balance December 31, 2013	$	540,454	$	(87,279	)	$	453,175
—Vessel acquisitions (Note (3(c))		404,530		—			404,530
—Depreciation		—		(17,822	)		(17,822	)
Balance December 31, 2014	$	944,984	$	(105,101	)	$	839,883
—Vessel acquisitions and other additions to vessels' cost (Note (3(c))		220,661		—			220,661
—Depreciation		—		(24,387	)		(24,387	)
Balance December 31, 2015	$	1,165,645	$	(129,488	)	$	1,036,157

		December 31,
Debt instruments	Borrowers-Issuers	2015			2014

$340.0 million Credit Facility	Pegasus-Lance-Seacrown-Fareastern		305,000			325,000
$250.0 million Senior Unsecured Notes	Dynagas LNG Partners LP – Dynagas Finance Inc.		250,000			250,000
$200 Million Term Loan Facility	Navajo- Solana		133,333			—
Total debt		$	688,333		$	575,000
Less deferred financing fees			(8,048	)		(7,493	)
Total debt, net of deferred finance costs		$	680,285		$	567,507
Less current portion, net of deferred financing fees		$	(27,467	)	$	(19,584	)
Long-term portion		$	652,818		$	547,923

Year ending December 31,	Amount
2016	$	28,333
2017		28,333
2018		28,333
2019		278,334
2020		120,000
2021 and thereafter		205,000
Total long term debt	$	688,333

Period/ Year ending December 31,	Amount
2016	$	6,000
2017		6,162
2018		6,347
2019		6,537
2020		6,752
Total	$	31,798

	Total Quarterly Distribution Target Amount		Unitholders			General Partner			Holders of IDRs
Minimum Quarterly Distribution	$	0.365		99.9	%		0.1	%		0.0	%
First Target Distribution	up to $0.420			99.9	%		0.1	%		0.0	%
Second Target Distribution	above $0.420 up to $0.456			85.0	%		0.1	%		14.9	%
Third Target Distribution	Above $0.456 up to $0.548			75.0	%		0.1	%		24.9	%
Thereafter	above $0.548			50.0	%		0.1	%		49.9	%

1. Date of Agreement	THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO) STANDARD SHIP MANAGEMENT AGREEMENT CODE NAME: "SHIPMAN 98"
2. Owners (name, place of registered office and law of registry) (Cl. 1) Name Place of registered office Law of registry	3. Managers (name, place of registered office and law of registry) (Cl. 1) Dynagas Ltd. Name Poseidonos Ave. & 2 Foivis Street 166-74 Glyfada, Athens, Greece Place of registered office Law of Registry
4. Day and year of commencement of Agreement (Cl. 2)
5. Crew Management (state "yes" or "no" as agreed) (Cl. 3.1) YES	6. Technical Management (state "yes" or "no" as agreed) (Cl. 3.2) YES
7. Commercial Management (state "yes" or "no" as agreed) (Cl. 3.3) YES	8. Insurance Arrangements (state "yes" or "no" as agreed) (Cl. 3.4) YES
9. Accounting Services (state "yes" or "no" as agreed) (Cl. 3.5) YES	10. Sale or purchase of the Vessel (state "yes" or "no" as agreed) Cl. 3.6) NO
11. Provisions (state "yes" or "no" as agreed) (Cl. 3.7) YES	12. Bunkering (state "yes" or "no" as agreed) (Cl. 3.8) YES
13. Chartering Services Period (only to be filled in if "yes" stated in Box 7) (Cl. 3.3(i))	14. Owners' Insurance (state alternative (i), (ii) or (iii) of Cl. 6.3) 6.3 (ii)
15. Annual Management Fee (state annual amount) (Cl. 8.1) See Clause 23	16. Severance Costs (state maximum amount) (Cl. 8.4 (ii)) As per applicable Agreement
17. Day and year of termination of Agreement (Cl. 17)	18. Law and Arbitration (state alternative 19.1, 19.2 or 19.3; if 19.3 place of arbitration must be stated) (Cl. 19) 19.1
19. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Owners) (Cl. 20)	20. Notices (state postal and cable address, telex and telefax number for serving notice and communication to the Managers) (Cl. 20) Dynagas Ltd. Poseidonos Ave. & 2 Foivis Street 166-74 Glyfada, Athens, Greece Email: lngcoordination@dynagas.com Fax: +30-2109680571

		Page
ARTICLE I DEFINITIONS		1
Section 1.1	Definitions.	1
ARTICLE II FOUR-YEAR LNG CARRIER RESTRICTED BUSINESS OPPORTUNITIES		5
Section 2.1	Four-Year LNG Carrier Restricted Businesses.	5
Section 2.2	Permitted Exceptions.	5
ARTICLE III BUSINESS OPPORTUNITIES PROCEDURES		6
Section 3.1	Procedures.	6
Section 3.2	Scope of Prohibition.	8
Section 3.3	Enforcement.	8
ARTICLE IV RIGHTS OF FIRST OFFER		8
Section 4.1	Rights of First Offer.	8
Section 4.2	Procedures for Rights of First Offer.	8
ARTICLE V PURCHASE OPTIONS - OPTIONAL VESSELS		9
Section 5.1	Options to Purchase the Optional Vessels.	9
Section 5.2	Procedures.	10
ARTICLE VI INDEMNIFICATION		11
Section 6.1	Dynagas Holding Indemnification.	11
Section 6.2	Limitation Regarding Indemnification.	11
Section 6.3	Indemnification Procedures.	11
ARTICLE VII MISCELLANEOUS		12
Section 7.1	Choice of Law; Arbitration.	12
Section 7.2	Notice.	13
Section 7.3	Entire Agreement.	13
Section 7.4	Termination.	13
Section 7.5	Waiver; Effect of Waiver or Consent.	13
Section 7.6	Amendment or Modification.	13
Section 7.7	Assignment.	14
Section 7.8	Counterparts.	14
Section 7.9	Severability.	14
Section 7.10	Gender, Parts, Articles and Sections.	14
Section 7.11	Further Assurances.	14
Section 7.12	Withholding or Granting of Consent.	14
Section 7.13	Laws and Regulations.	14
Section 7.14	Negotiation of Rights of Dynagas Holding, Members, Assignees and Third Parties	14

DYNAGAS HOLDING LTD.


By:	/s/ Konstantinos Lampsias
	Name:	Konstantinos Lampsias
	Title:	Sole Director

Address for Notice



	lngcoordination@dynagas.com
	Fax: ( ) -
	Attention:


DYNAGAS LNG PARTNERS LP


By:	/s/ Michael Gregos
	Name:	Michael Gregos
	Title:	Authorized Signatory

Address for Notice



	lngcoordination@dynagas.com
	Fax: ( ) -
	Attention:


DYNAGAS GP LLC


By:	/s/ Konstantinos Lampsias
	Name:	Konstantinos Lampsias
	Title:	Director Dynagas Holding Ltd. as Sole Director

Address for Notice



	lngcoordination@dynagas.com
	Fax: ( ) -
	Attention:

DYNAGAS OPERATING LP


By:	/s/ Michael Gregos
	Name:	Michael Gregos
	Title:	Authorized Signatory

Address for Notice



	lngcoordination@dynagas.com
	Fax: ( ) -
	Attention:


DYNAGAS OPERATING GP LLC


By:	/s/ Michael Gregos
	Name:	Michael Gregos
	Title:	Authorized Signatory

Address for Notice



	lngcoordination@dynagas.com
	Fax: ( ) -
	Attention:

Vessel Name	Vessel-Owning Entity
Hull 2421	Arctic LNG 1 Ltd.
Hull 2422	Arctic LNG 2 Ltd.
Hull 2427	Arctic LNG 3 Ltd.
Hull 2428	Arctic LNG 4 Ltd.
Hull 2429	Arctic LNG 5 Ltd.

ARTICLE I Interpretation
	1
SECTION 1.01. Definitions

ARTICLE II Purchase and Sale of Shares; Closing

SECTION 2.01. Purchase and Sale of Shares	4
SECTION 2.02. Closing	4
SECTION 2.03. Place of Closing	5
SECTION 2.04. Purchase Price for Shares	5
SECTION 2.05. Payment of the Purchase Price	5

ARTICLE III Representations and Warranties of the Buyer

SECTION 3.01. Organization and Limited Partnership Authority	5
SECTION 3.02. Agreement Not in Breach of Other Instruments	5
SECTION 3.03. No Legal Bar	5
SECTION 3.04. Securities Act	6
SECTION 3.05. Independent Investigation	6

ARTICLE IV Representations and Warranties Regarding the Sponsor

SECTION 4.01. Organization and Corporate Authority	6
SECTION 4.02. Agreement Not in Breach	6
SECTION 4.03. No Legal Bar	7

ARTICLE V Representations and Warranties Regarding the Seller and Vessel Owner

SECTION 5.01. Organization Good Standing and Authority	7
SECTION 5.02. Capitalization; Title to Shares	7

SECTION 5.03. Organizational Documents	7
SECTION 5.04. Agreement Not in Breach	7
SECTION 5.05. The Shares	8
SECTION 5.06. Litigation	8
SECTION 5.07. Indebtedness to and from Officers, etc	8
SECTION 5.08. Personnel	8
SECTION 5.09. Contracts and Agreements	8
SECTION 5.10. Compliance with Law	9
SECTION 5.11. No Undisclosed Liabilities	9
SECTION 5.12. Disclosure of Information	9
SECTION 5.13. Payment of Taxes	9
SECTION 5.14. Permits	9
SECTION 5.15. No Material Adverse Change in Business	10

ARTICLE VI Representations and Warranties Regarding the Vessel

SECTION 6.01. Title to Vessel	10
SECTION 6.02. No Encumbrances	10
SECTION 6.03. Condition	10

ARTICLE VII Covenants

SECTION 7.01. Financial Statements	11
SECTION 7.02. Expenses	11

ARTICLE VIII Amendments and Waivers

SECTION 8.01. Amendments and Waivers	11

ARTICLE IX Indemnification

SECTION 9.01. Indemnity by the Seller	11
SECTION 9.02. Indemnity by the Buyer	12
SECTION 9.03. Exclusive Post-Closing Remedy	12